Document:

rng-ex105_217.htm

EXHIBIT 10.5

RingCentral, Inc. 

Equity acceleration policy

Effective as of July 28, 2017

This RingCentral, Inc. Equity Acceleration Policy (the “Policy”) is designed to provide equity acceleration benefits to a select group of key employees of RingCentral, Inc. (the “Company”) or any of its subsidiaries if their employment is involuntarily terminated under the circumstances described in this Policy.  The Policy is designed to be an “employee welfare benefit plan” (as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), and this document is both the formal plan document and the required summary plan description for the Policy.  The Policy is effective July 28, 2017.

	
 
	
1.
	
Administration:  The Policy will be administered by the Compensation Committee of the Board of Directors of the Company or its delegate (in each case, an “Administrator”).  The Administrator will have full discretion to administer and interpret the Policy.  Any decision made or other action taken by the Administrator with respect to the Policy and any interpretation by the Administrator of any term or condition of the Policy, or any related document, will be conclusive and binding on all persons and be given the maximum possible deference allowed by law.  The Administrator is the “plan administrator” of the Policy for purposes of ERISA and will be subject to the fiduciary standards of ERISA when acting in such capacity.

	
 
	
2.
	
Eligibility: An individual is only eligible for the benefits under this Policy if he or she is an Eligible Employee and complies with its terms (including any terms in such Eligible Employee’s Participation Agreement (as defined below)).  An “Eligible Employee” is an employee of the Company or any subsidiary of the Company who has (a) been designated by the Administrator as eligible to participate in the Policy, whether individually or by position or category of position and (b) executed a participation agreement in the form attached hereto as Exhibit A (a “Participation Agreement”).  

	
 
	
3.
	
Equity Acceleration: On a Qualified Termination, a percentage as shall be set forth in the Eligible Employee’s Participation Agreement of the then-unvested shares subject to each of the Eligible Employee’s then-outstanding Equity Awards, will immediately vest and, in the case of Equity Awards that are stock options and stock appreciation rights, will become exercisable.  For the avoidance of doubt, if an Eligible Employee’s employment with the Company or any subsidiary of the Company terminates in a manner where such termination will constitute a Qualified Termination if a Change of Control occurs within 60 days of the termination date, then any unvested portion of the Eligible Employee’s Equity Awards will remain outstanding for 60 days so that any benefits on a Qualified Termination can be provided if a Change of Control occurs within 60 days following such Eligible Employee’s termination date (provided that in no event will the terminated Eligible Employee’s Equity Awards that are stock options or similar Equity Awards remain outstanding beyond the Equity Award’s maximum term).  In such case, if no Change of Control occurs within 60 days following the termination date, any unvested portion of the Eligible Employee’s Equity Awards automatically will be forfeited permanently without having vested.

	
 
	
4.
	
Death of Eligible Employee: If the Eligible Employee dies before all payments or benefits he or she is entitled to receive have been paid under this Policy, such unpaid amounts will be paid to his or her designated beneficiary, if living, or otherwise to his or her personal representative in a lump-sum payment as soon as possible following his or her death.

 

 

 

	
 
	
5.
	
Forfeiture/Clawback: If the Company discovers after the Eligible Employee’s receipt of payments or benefits under this Policy that grounds for the termination of the Eligible Employee’s employment for Cause existed, then the Eligible Employee will cease receiving any further payments or benefits under this Policy and, to the extent permitted under applicable laws, will be required to repay to the Company any payments or benefits he or she received under the Policy (or any financial gain derived from such payments or benefits).

	
 
	
6.
	
Release:  The Eligible Employee’s receipt of the benefits under this Policy is subject to the Eligible Employee signing and not revoking the Company’s then-standard separation agreement and release of claims (which may include an agreement not to disparage the Company, non-solicit provisions, and other standard terms and conditions) (the “Release”) which must become effective and irrevocable no later than the 60th day following the Eligible Employee’s termination of employment (the “Release Deadline”).  If the Release does not become effective and irrevocable by the Release Deadline, the Eligible Employee will forfeit any right to benefits under this Policy.  In no event will benefits under the Policy be paid or provided until the Release actually becomes effective and irrevocable.  

	
 
	
7.
	
Section 409A:  The Company intends that all payments and benefits provided under this Policy or otherwise are exempt from, or comply with, the requirements of Section 409A of the Code and any guidance promulgated thereunder (collectively, “Section 409A”) so that none of the payments or benefits will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted in accordance with this intent.  No payment or benefits to be paid to an Eligible Employee, if any, under this Policy or otherwise, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A (together, the “Deferred Payments”) will be paid or otherwise provided until such Eligible Employee has a “separation from service” within the meaning of Section 409A.  If, at the time of the Eligible Employee’s termination of employment, the Eligible Employee is a “specified employee” within the meaning of Section 409A, then the payment of the Deferred Payments will be delayed to the extent necessary to avoid the imposition of the additional tax imposed under Section 409A, which generally means that the Eligible Employee will receive payment on the first payroll date that occurs on or after the date that is 6 months and 1 day following his or her termination of employment.  The Company reserves the right to amend the Policy as it deems necessary or advisable, in its sole discretion and without the consent of any Eligible Employee or any other individual, to comply with any provision required to avoid the imposition of the additional tax imposed under Section 409A or to otherwise avoid income recognition under Section 409A prior to the actual payment of any benefits or imposition of any additional tax.  Each payment, installment, and benefit payable under this Policy is a separate payment for purposes of U.S. Treasury Regulation Section 1.409A-2(b)(2).  In no event will the Company reimburse any Eligible Employee for any taxes that may be imposed on him or her as a result of Section 409A.  

	
 
	
8.
	
Parachute Payments:

	
 
	
a.
	
Reduction of Severance Benefits.  Notwithstanding anything set forth herein to the contrary, if any payment or benefit that an Eligible Employee would receive from the Company or any other party whether in connection with the provisions herein or otherwise (the “Payment”) would (a) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (b) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will be equal to the Best Results Amount. The “Best Results Amount” will be either (x) the full amount of such Payment or (y) such lesser amount as would result in no portion of the Payment being subject to the Excise Tax, 

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whichever of the foregoing amounts, taking into account the applicable federal, state and local employment taxes, income taxes and the Excise Tax, results in the Eligible Employee’s receipt, on an after-tax basis, of the greater amount notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting parachute payments is necessary so that the Payment equals the Best Results Amount, reduction will occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; and reduction of employee benefits.  In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of the Eligible Employee’s equity awards.  

	
 
	
b.
	
Determination of Excise Tax Liability.  The Company will select a professional services firm to make all of the determinations required to be made under these paragraphs relating to parachute payments.  The Company will request that firm provide detailed supporting calculations both to the Company and the Eligible Employee prior to the date on which the event that triggers the Payment occurs if administratively feasible, or subsequent to such date if events occur that result in parachute payments to the Eligible Employee at that time.  For purposes of making the calculations required under these paragraphs relating to parachute payments, the firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith determinations concerning the application of the Code.  The Company and the Eligible Employee will furnish to the firm such information and documents as the firm may reasonably request in order to make a determination under these paragraphs relating to parachute payments.  The Company will bear all costs the firm may reasonably incur in connection with any calculations contemplated by these paragraphs relating to parachute payments.  Any such determination by the firm will be binding upon the Company and the Eligible Employee, and the Company will have no liability to the Eligible Employee for the determinations of the firm.

	
 
	
9.
	
Attorneys Fees:  The Company and each Eligible Employee will bear their own attorneys’ fees incurred in connection with any disputes between them.

	
 
	
10.
	
Amendment: The Administrator may amend the Policy at any time, without advance notice to any Eligible Employee or other individual and without regard to the effect of the amendment on any Eligible Employee or on any other individual; provided, however, that any amendment of the Policy that is adverse to an Eligible Employee will not be effective with respect to such Eligible Employee without such Eligible Employee’s prior written consent.  Any action to amend the Policy will be taken in a non-fiduciary capacity.

	
 
	
11.
	
Claims Procedure:  Any Eligible Employee who believes he or she is entitled to any payment under the Policy may submit a claim in writing to the Administrator.  If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of the Policy on which the denial is based.  The notice will also describe any additional information needed to support the claim and the Policy’s procedures for appealing the denial.  The denial notice will be provided within 90 days after the claim is received.  If special circumstances require an extension of time (up to 90 days), written notice of the extension will be given within the initial 90-day period.  This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Administrator expects to render its decision on the claim.

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12.
	
Appeal Procedure: If the claimant’s claim is denied, the claimant (or his or her authorized representative) may apply in writing to the Administrator for a review of the decision denying the claim.  Review must be requested within 60 days following the date the claimant received the written notice of their claim denial or else the claimant loses the right to review.  The claimant (or representative) then has the right to review and obtain copies of all documents and other information relevant to the claim, upon request and at no charge, and to submit issues and comments in writing.  The Administrator will provide written notice of the decision on review within 60 days after it receives a review request.  If additional time (up to 60 days) is needed to review the request, the claimant (or representative) will be given written notice of the reason for the delay.  This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Administrator expects to render its decision.  If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of the Policy on which the denial is based.  The notice will also include a statement that the claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents and other information relevant to the claim and a statement regarding the claimant’s right to bring an action under Section 502(a) of ERISA.

	
 
	
13.
	
Successors: Any successor to the Company of all or substantially all of the Company’s business and/or assets (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or other transaction) will assume the obligations under the Policy and agree expressly to perform the obligations under the Policy in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession.  For all purposes under the Policy, the term “Company” will include any successor to the Company’s business and/or assets which becomes bound by the terms of the Policy by operation of law, or otherwise.

	
 
	
14.
	
Effect of Other Benefits/At Will-Status.  All other compensation and benefits shall be governed by the applicable Company plan or agreement.  This Policy is not intended to, and does not, create an employment or service relationship for any fixed term.

	
 
	
15.
	
Applicable Law: The provisions of the Policy will be construed, administered, and enforced in accordance with ERISA and, to the extent applicable, the internal substantive laws of the state of California (but not its conflict of laws provisions).

	
 
	
16.
	
Definitions:  Unless otherwise defined in an Eligible Employee’s Participation Agreement, the following terms will have the following meanings for purposes of this Policy and the Eligible Employee’s Participation Agreement:

	
 
	
a.
	
“Cause” means, unless otherwise defined in the Participation Agreement, the Eligible Employee’s (i) commission of fraud, misappropriation, embezzlement or breach of fiduciary duty, (ii) material breach or repeated failure to perform the Eligible Employee’s employment duties to the Company or the subsidiary of the Company employing the Eligible Employee, (iii) material breach of the Eligible Employee’s confidentiality agreement or any other similar agreement between the Eligible Employee and the Company or any subsidiary of the Company, (iv) conviction of, or entry of a plea of guilty or nolo contendere to, a felony (other than motor vehicle offenses the effect of which do not materially impair the Eligible Employee’s performance of the Eligible Employee’s employment duties), or (v)  commission of any act of fraud or embezzlement or any act of dishonesty or any other willful misconduct that has caused or is reasonably expected to result in a material injury to the Company or any of its subsidiaries.

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b.
	
“Change of Control” means the occurrence of any of the following events: (i) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization after which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, fail to own at least 50% of the voting power of the surviving entity immediately following such consolidation, merger or reorganization, (ii) any transaction or series of related transactions to which the Company is a party in which in excess of 50% of the Company’s voting power is transferred, but excluding in the case of (i) and (ii), (x) any consolidation or merger effected exclusively to change the domicile or state of incorporation of the Company, or (y) any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or indebtedness of the Company is cancelled or converted or a combination thereof, or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company. 

	
 
	
c.
	
“Change of Control Period” means the period beginning 60 days prior to a Change of Control and ending 12 months following a Change of Control.

	
 
	
d.
	
“Disability” means the Eligible Employee has been unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. Alternatively, the Eligible Employee will be deemed disabled if determined to be totally disabled by the Social Security Administration. Termination resulting from Disability may only be effected after at least 30 days’ written notice by the Company of its intention to terminate the Eligible Employee’s employment. In the event that the Eligible Employee resumes the performance of substantially all of the Eligible Employee’s duties hereunder before the termination of his or her employment becomes effective, the notice of intent to terminate based on Disability will automatically be deemed to have been revoked.

	
 
	
e.
	
“Equity Awards” means, individually or collectively, a grant by the Company of stock options, stock appreciation rights, restricted stock, restricted stock units or any other award of equity interests in the Company as determined by the Administrator.  

	
 
	
f.
	
“Good Reason” means, unless otherwise defined in the Participation Agreement, an Eligible Employee’s resignation of employment from all positions the Eligible Employee holds with the Company and its subsidiaries (or the acquirer) following the occurrence of at least one of the following events that occurs without the Eligible Employee’s consent:  (i) a material diminution of at least five percent (5%) in the Eligible Employee’s overall annual compensation (it being agreed that the Eligible Employee’s failure to achieve or be paid any target bonus does not constitute a 5% reduction of the Eligible Employee’s overall compensation), (ii) a material diminution in the Eligible Employee’s authority, responsibilities, or duties (except that a change in job position or title, without more, shall not be a material diminution), (iii) a material diminution in the authority, responsibilities, or duties of the supervisor to whom the Eligible Employee reports either immediately prior to or after the Change of Control, or (iv) the Company or acquirer’s requirement that the Eligible Employee relocate his or her primary work location to a location that would increase the Eligible Employee’s one-way commute distance by more than 30 miles (than the Eligible Employee’s current commute distance to the Company’s then-current corporate offices).  For Good Reason to be established, the Eligible Employee must provide written notice to the Company’s General Counsel within 90 days immediately following such event, the Company must fail to remedy such event within 30 days after receipt of such notice, and the Eligible Employee’s resignation must be effective not later than 90 

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days after the expiration of such cure period.  For purposes of notice, if a “diminution” occurs incrementally over a period of time (not to exceed 12 months from the date of the Change of Control), the “event” shall not be deemed to occur until the end of such diminution period.

	
 
	
g.
	
“Qualified Termination” means a termination of the Eligible Employee’s employment (i) either (A) by the Company (or any of its subsidiaries) other than for Cause, death, or Disability or (B) by the Eligible Employee for Good Reason, in either case, during the Change of Control Period. 

	
 
	
17.
	
Additional Information:

 

			
	
 
	
 
	
 

	
Plan Name:
	
 
	
RingCentral, Inc. Equity Acceleration Policy

	
 
	
 
	
 

	
Plan Sponsor:
	
 
	
RingCentral, Inc.

	
 
	
 
	
20 Davis Drive

	
 
	
 
	
Belmont, CA 94002

	
 
	
 
	
 

	
Identification Numbers:
	
 
	
EIN: 94-3322844

	
 
	
 
	
 

	
 
	
 
	
Plan Number:  501

	
 
	
 
	
 

	
Plan Year:
	
 
	
Company’s Fiscal Year

	
 
	
 
	
 

	
Plan Administrator:
	
 
	
RingCentral, Inc.

	
 
	
 
	
Attention:  Administrator of the RingCentral, Inc. Equity Acceleration Policy

	
 
	
 
	
20 Davis Drive

	
 
	
 
	
Belmont, CA 94002

	
 
	
 
	
 

	
Agent for Service of
	
 
	
 

	
Legal Process:
	
 
	
RingCentral, Inc.

	
 
	
 
	
Attention:  General Counsel

	
 
	
 
	
20 Davis Drive

	
 
	
 
	
Belmont, CA 94002

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
Service of process may also be made upon the Plan Administrator.

	
 
	
 
	
 

	
Type of Plan
	
 
	
Severance Plan/Employee Welfare Benefit Plan

	
 
	
 
	
 

	
Plan Costs
	
 
	
The cost of the Policy is paid by the Company.

	
 
	
 
	
 

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Statement of ERISA Rights:

Eligible Employees have certain rights and protections under ERISA:

They may examine (without charge) all Policy documents, including any amendments and copies of all documents filed with the U.S. Department of Labor, such as the Policy’s annual report (Internal Revenue Service Form 5500).  These documents are available for review in the Company’s Human Resources Department.

They may obtain copies of all Policy documents and other Policy information upon written request to the Plan Administrator.  A reasonable charge may be made for such copies.

In addition to creating rights for Eligible Employees, ERISA imposes duties upon the people who are responsible for the operation of the Policy.  The people who operate the Policy (called “fiduciaries”) have a duty to do so prudently and in the interests of Eligible Employees.  No one, including the Company or any other person, may fire or otherwise discriminate against an Eligible Employee in any way to prevent them from obtaining a benefit under the Policy or exercising rights under ERISA.  If an Eligible Employee’s claim for a severance benefit is denied, in whole or in part, they must receive a written explanation of the reason for the denial.  An Eligible Employee has the right to have the denial of their claim reviewed.  (The claim review procedure is explained above.)

Under ERISA, there are steps Eligible Employees can take to enforce the above rights.  For instance, if an Eligible Employee requests materials and does not receive them within 30 days, they may file suit in a federal court.  In such a case, the court may require the Administrator to provide the materials and to pay the Eligible Employee up to $110 a day until they receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.  If an Eligible Employee has a claim which is denied or ignored, in whole or in part, he or she may file suit in a state or federal court.  If it should happen that an Eligible Employee is discriminated against for asserting their rights, he or she may seek assistance from the U.S. Department of Labor, or may file suit in a federal court.

In any case, the court will decide who will pay court costs and legal fees.  If the Eligible Employee is successful, the court may order the person sued to pay these costs and fees.  If the Eligible Employee loses, the court may order the Eligible Employee to pay these costs and fees, for example, if it finds that the claim is frivolous.

If an Eligible Employee has any questions regarding the Policy, please contact the Plan Administrator.  If an Eligible Employee has any questions about this statement or about their rights under ERISA, they may contact the nearest area office of the Employee Benefits Security Administration (formerly the Pension and Welfare Benefits Administration), U.S. Department of Labor, listed in the telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W. Washington, D.C. 20210.  An Eligible Employee may also obtain certain publications about their rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

 

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EXHIBIT A

RingCentral, Inc. Equity Acceleration Policy 

Participation Agreement

This Participation Agreement (“Agreement”) is made and entered into by and between _________________ on the one hand, and RingCentral, Inc. (the “Company”) on the other.

You have been designated as eligible to participate in the Policy, a copy of which is attached hereto, pursuant to which you are eligible to receive equity acceleration in accordance with the terms and conditions of the Policy.

Equity Acceleration: [percentage] of the then-outstanding unvested Equity Awards (for avoidance of doubt, no more than 100% of the shares subject to the outstanding portion of an Equity Award may vest and become exercisable pursuant to this provision).

Other Provisions

Except as set forth in this paragraph, you agree that the Policy and the Agreement constitute the entire agreement of the parties hereto and supersede in their entirety all prior representations, understandings, undertakings or agreements (whether oral or written and whether expressed or implied) of the parties, and will specifically supersede any double trigger equity acceleration provisions of any offer letter, employment agreement, or equity award agreement entered into between you and the Company.  To the extent not amended by the Policy or the Agreement, each offer letter, employment agreement or equity award agreement entered into between you and the Company remains in full force and effect.

This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.  

By its signature below, each of the parties signifies its acceptance of the terms of this Agreement, in the case of the Company by its duly authorized officer effective as of the last date set forth below.

 

							
	
RingCentral, Inc.
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
By:
	
 
	
 
	
 
	
Signature:
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Date:
	
 
	
 
	
 
	
Date:rng-ex1015_218.htm

 

EXHIBIT 10.15

 

RINGCENTRAL, INC.

 

BONUS PLAN

1.Purposes of the Plan. This Bonus Plan (the “Plan”) is intended to increase shareholder value and the success of the Company by motivating Employees to (a) perform to the best of their abilities, and (b) achieve the Company’s objectives. 

2.Definitions.

(a)“Affiliate” means any corporation or other entity (including, but not limited to, partnerships and joint ventures) controlled by the Company.

(b)“Actual Award” means as to any Performance Period, the actual award (if any) payable to a Participant for the Performance Period, subject to the Committee’s authority under Section 3(d) to modify the award.

(c)“Board” means the Board of Directors of the Company.  

(d)“Bonus Pool” means the pool of funds available for distribution to Participants.  Subject to the terms of the Plan, the Committee establishes the Bonus Pool for each Performance Period.

(e)“Code” means the Internal Revenue Code of 1986, as amended.  Reference to a specific section of the Code or regulation thereunder will include such section or regulation, any valid regulation promulgated thereunder, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

(f)“Committee” means the committee appointed by the Board (pursuant to Section 5) to administer the Plan.  Unless and until the Board otherwise determines, the Board’s Compensation Committee will administer the Plan.  

(g)“Company” means RingCentral, Inc., or any successor thereto.

(h)“Disability” means a permanent and total disability determined in accordance with uniform and nondiscriminatory standards adopted by the Committee from time to time.

(i)“Employee” means any executive or key employee of the Company or of an Affiliate, whether such individual is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.

(j)“Participant” means as to any Performance Period, an Employee who has been selected by the Committee for participation in the Plan for that Performance Period.

 

 

(k)“Performance Period” means the period of time for the measurement of the performance criteria that must be met to receive an Actual Award, as determined by the Committee in its sole discretion.  A Performance Period may be divided into one or more shorter periods if, for example, but not by way of limitation, the Committee desires to measure some performance criteria over 12 months and other criteria over 3 months.

(l)“Plan” means this Bonus Plan, as set forth in this instrument and as hereafter amended from time to time. 

(m)“Target Award” means the target award, at 100% performance achievement, payable under the Plan to a Participant for the Performance Period, as determined by the Committee in accordance with Section 3(b).

(n)“Termination of Service” means a cessation of the employee-employer relationship between an Employee and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate.

3.Selection of Participants and Determination of Awards. 

(a)Selection of Participants.  The Committee, in its sole discretion, will select the Employees who will be Participants for any Performance Period.  Participation in the Plan is in the sole discretion of the Committee, on a Performance Period by Performance Period basis.  Accordingly, an Employee who is a Participant for a given Performance Period in no way is guaranteed or assured of being selected for participation in any subsequent Performance Period or Periods.  

(b)Determination of Target Awards.  The Committee, in its sole discretion, will establish a Target Award for each Participant, which generally will be a percentage of a Participant’s average annual base salary for the Performance Period.  

(c)Bonus Pool.  Each Performance Period, the Committee, in its sole discretion, will establish a Bonus Pool.  Actual Awards will be paid from the Bonus Pool.  

(d)Discretion to Modify Awards.  Notwithstanding any contrary provision of the Plan, the Committee may, in its sole discretion and at any time, (i) increase, reduce or eliminate a Participant’s Actual Award, and/or (ii) increase, reduce or eliminate the amount allocated to the Bonus Pool.  The Committee may determine the amount of any increase or reduction on the basis of such factors as it deems relevant, and will not be required to establish any allocation or weighting with respect to the factors it considers.  

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(e)Discretion to Determine Criteria.  Notwithstanding any contrary provision of the Plan, the Committee will, in its sole discretion, determine the performance goals applicable to any Target Award which requirement may include, without limitation, (i) cash flow, (ii) cash position, (ii) earnings (which may include earnings before interest and taxes, earnings before taxes and net earnings), (iii) earnings per share, (iv) net income, (v) net profit, (vi) net sales, (vii) operating cash flow, (xxiv) operating expenses, (xxv) operating income, (xxvi) operating margin, (xxvii) overhead or other expense reduction, (xxviii) product defect measures, (xxix) product release timelines, (xxx) productivity, (xxxi) profit, (xxxii) return on assets, (xxxiii) return on capital, (xxxiv) return on equity, (xxxv) return on investment, (xxxvi) return on sales, (xxxvii) revenue, (xxxviii) revenue growth, (xxxix) sales results, (xl) sales growth, (xli) stock price, (xlii) time to market, (xliii) total stockholder return, (xliv) working capital, and individual objectives such as peer reviews or other subjective or objective criteria.  As determined by the Committee, the performance goals may be based on GAAP or Non-GAAP results and any actual results may be adjusted by the Committee for one-time items or unbudgeted or unexpected items when determining whether the performance goals have been met.  The goals may be on the basis of any factors the Committee determines relevant, and may be on an individual, divisional, business unit or Company-wide basis.  The performance goals may differ from Participant to Participant and from award to award.  The Committee may, in its discretion, determine to set forth the applicable performance goals in writing from time-to-time, which writing shall be attached hereto as Appendix A.  Failure to meet the goals will result in a failure to earn the Target Award, except as provided in Section 3(d).  

4.Payment of Awards.

(a)Right to Receive Payment.  Each Actual Award will be paid solely from the general assets of the Company.  Nothing in this Plan will be construed to create a trust or to establish or evidence any Participant’s claim of any right other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.  

(b)Timing of Payment.  Payment of each Actual Award shall be made as soon as practicable as determined by the Committee after the end of the Performance Period during which the Actual Award was earned, but in no event later than the fifteenth day of the third month of the Fiscal Year following the date the Participant’s Actual Award is no longer subject to a substantial risk of forfeiture.  Unless otherwise determined by the Committee, a Participant must be employed by the Company or any Affiliate on the last day of the Performance Period to receive a payment under the Plan.

It is the intent that this Plan comply with the requirements of Code Section 409A so that none of the payments to be provided hereunder will be subject to the additional tax imposed under Code Section 409A, and any ambiguities herein will be interpreted to so comply.

(c)Form of Payment.  Each Actual Award will be paid in cash (or its equivalent) in a single lump sum.  

(d)Payment in the Event of Death or Disability.  If a Participant dies or becomes Disabled prior to the payment of an Actual Award earned by him or her prior to death or Disability for a prior Performance Period, the Actual Award will be paid to his or her estate or to the Participant, as the case may be, subject to the Committee’s discretion to reduce or eliminate any Actual Award otherwise payable.

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5.Plan Administration.

(a)Committee is the Administrator.  The Plan will be administered by the Committee or, if no Committee has been appointed, the Plan shall be administered by the Board.  The Committee will consist of not less than two (2) members of the Board.  The members of the Committee will be appointed from time to time by, and serve at the pleasure of, the Board.

(b)Committee Authority.  It will be the duty of the Committee to administer the Plan in accordance with the Plan's provisions.  The Committee will have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (i) determine which Employees will be granted awards, (ii) prescribe the terms and conditions of awards, (iii) interpret the Plan and the awards, (iv) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by Employees who are foreign nationals or employed outside of the United States, (v) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (vi) interpret, amend or revoke any such rules.  

(c)Decisions Binding.  All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan will be final, conclusive, and binding on all persons, and will be given the maximum deference permitted by law.  

(d)Delegation by Committee.  The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company.  

(e)Indemnification.  Each person who is or will have been a member of the Committee will be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any award, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she will give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

-4-

 

6.General Provisions. 

(a)Tax Withholding.  The Company will withhold all applicable taxes from any Actual Award, including any federal, state and local taxes (including, but not limited to, the Participant’s FICA and SDI obligations).  

(b)No Effect on Employment or Service.  Nothing in the Plan will interfere with or limit in any way the right of the Company to terminate any Participant's employment or service at any time, with or without cause.  For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) will not be deemed a Termination of Service.  Employment with the Company and its Affiliates is on an at-will basis only.  The Company expressly reserves the right, which may be exercised at any time and without regard to when during a Performance Period such exercise occurs, to terminate any individual’s employment with or without cause, and to treat him or her without regard to the effect that such treatment might have upon him or her as a Participant.  

(c)Participation.  No Employee will have the right to be selected to receive an award under this Plan, or, having been so selected, to be selected to receive a future award.  

(d)Successors.  All obligations of the Company under the Plan, with respect to awards granted hereunder, will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.  

(e)Beneficiary Designations.  If permitted by the Committee, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid award will be paid in the event of the Participant's death.  Each such designation will revoke all prior designations by the Participant and will be effective only if given in a form and manner acceptable to the Committee.  In the absence of any such designation, any vested benefits remaining unpaid at the Participant's death will be paid to the Participant's estate.  

(f)Nontransferability of Awards.  No award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 6(e).  All rights with respect to an award granted to a Participant will be available during his or her lifetime only to the Participant.  

7.Amendment, Termination, and Duration.

(a)Amendment, Suspension, or Termination.  The Board, in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan will not, without the consent of the Participant, alter or impair any rights or obligations under any Actual Award theretofore earned by such Participant.  No award may be granted during any period of suspension or after termination of the Plan.  

(b)Duration of Plan.  The Plan will commence on the date specified herein, and subject to Section 7(a) (regarding the Board's right to amend or terminate the Plan), will remain in effect thereafter.

-5-

 

8.Legal Construction.  

(a)Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also will include the feminine; the plural will include the singular and the singular will include the plural.  

(b)Severability.  In the event any provision of the Plan will be held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included.  

(c)Requirements of Law.  The granting of awards under the Plan will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.  

(d)Governing Law.  The Plan and all awards will be construed in accordance with and governed by the laws of the State of California, but without regard to its conflict of law provisions.  

(e)Bonus Plan.  The Plan is intended to be a “bonus program” as defined under U.S. Department of Labor regulation 2510.3-2(c) and will be construed and administered in accordance with such intention.  

(f)Captions.  Captions are provided herein for convenience only, and will not serve as a basis for interpretation or construction of the Plan. 

-6-

 

APPENDIX A-2018

To RingCentral, Inc. Executive Bonus Plan

2018 Performance Goals

(Effective as of January 1, 2018)

 

	
1.
	
2018 Performance Periods and Performance Goals.  For the calendar year 2018, there are four quarterly Performance Periods, ending on March 31, June 30, September 30 and December 31, 2018 (each, a “2018 Performance Period”).  For each of the four 2018 Performance Periods, there are two equally weighted (50% each) performance goals (each, a “2018 Performance Goal”): Revenue and Operating Margin (each as defined below).   The chart below set forth the Revenue and Operating Margin Performance Goals for the four 2018 Performance Periods.

 

			
	
2018 Performance Period
	
Revenue Performance Goal

(in millions)
	
Operating Margin Performance Goal

 

	
Q1
	
$147.5
	
7.6%

	
Q2
	
$156.6
	
8.3%

	
Q3
	
$167.4
	
8.4%

	
Q4
	
$179.3
	
8.7%

   

“Revenue” means as to each of the 2018 Performance Periods, the Company’s net revenues generated from third parties, including both services revenues and product revenues as defined in the Company’s Form 10-K filed for the calendar year ended December 31, 2017.  Net revenue is defined as gross sales less any pertinent discounts, refunds or other contra-revenue amounts, as presented on the Company’s press releases reporting its quarterly financial results.

   

“Operating Margin” means as to each of the 2018 Performance Periods, the Company’s non-GAAP operating income divided by its Revenue.  Non-GAAP operating income means the Company’s Revenues less cost of revenues and operating expenses, excluding the impact of stock-based compensation expense, amortization of acquisition related intangibles, legal settlement related charges and as adjusted for certain acquisitions, as presented on the Company’s press releases reporting its quarterly financial results.

	
2.
	
Funding of 2018 Bonus Pool.  Subject to the terms of the Plan, including but not limited to Section 3(d) of the Plan, following the end of each of the 2018 Performance Periods, the Committee will determine the extent to which each of the 2018 Performance Goals are achieved in accordance with the following guidelines.

 

-7-

 

	
a.
	
If the Company achieves Revenue in the 2018 Performance Period that is lower than the amount of Revenue expected by analyst consensus estimates after the Company has released its guidance for such 2018 Performance Period (“Revenue Floor”), the 2018 Bonus Pool related to the Revenue Performance Goal for such 2018 Performance Period will not fund. 

 

	
b.
	
If the Company achieves Operating Margin in the 2018 Performance Period that is lower than the Operating Margin expected by analyst consensus estimates after the Company has released its guidance for such 2018 Performance Period (“Operating Margin Floor”), the 2018 Bonus Pool related to the Operating Margin Performance Goal for such 2018 Performance Period will not fund.

 

	
c.
	
If the Company achieves Revenue that is at least equal to the Revenue Floor, the 2018 Bonus Pool related to the Revenue Performance goal for the 2018 Performance Period will fund as follows based on the achievement relative to the applicable Performance Goal.  

 

Revenue:  For 100% of the Bonus Pool with respect to Revenue to fund, 100% to 101% of the Performance Goal for Revenue must be achieved.  For each 0.5% of Revenue that is achieved above 101% of the Performance Goal for Revenue, the Bonus Pool with respect to Revenue will be increased by 5%, and for each 0.5% of Revenue that is achieved below 100% of the Performance Goal for Revenue, the Bonus Pool with respect to Revenue will be reduced by 5%.

 

	
d.
	
If the Company achieves Operating Margin that is at least equal to the Operating Margin Floor, the 2018 Bonus Pool related to the Operating Margin Performance goal for the 2018 Performance Period will fund as follows based on the achievement relative to the applicable Performance Goal.  

 

Operating Margin: For 100% of the Bonus Pool with respect to Operating Margin to fund, 100% of the Performance Goal for Operating Margin must be achieved.  For each 0.5% of Operating Margin that is achieved above the Performance Goal for Operating Margin, the Bonus Pool with respect to operating Margin will be increased by 5% (up to a maximum of 120%), and for each 0.5% of Operating Margin that is achieved below the Performance Goal for Operating Margin, the Bonus Pool with respect to Operating Margin will be reduced by 5%.

 

-8-

 

The chart below illustrates examples of the funding multiple that will apply to each Performance Goal.

 

 

				
	
Performance Goal Achievement

Revenue
	
2018 Bonus Pool Funding Multiple for Revenue*
	
 

Performance Goal Achievement 

Operating Margin 
	
2018 Bonus Pool Funding Multiple for Operating Margin*

	
97%
	
.70x
	
1.5% below Goal
	
.85x

	
97.5%
	
.75x
	
1.0% below Goal
	
.90x

	
98%
	
.80x
	
0.5% below Goal
	
.95x

	
98.5%
	
.85x
	
At Goal
	
1.00x

	
99%
	
.90x
	
0.5% above Goal
	
1.05x

	
99.5%
	
.95x
	
1.0% above Goal
	
1.10x

	
100% - 101%
	
1.00x
	
1.5% above Goal
	
1.15x

	
101.5%
	
1.05x
	
2.0% above Goal
	
1.20x

	
102%
	
1.10x
	
--
	
--

	
102.5%
	
1.15x
	
--
	
--

	
103%
	
1.20x
	
--
	
--

 

* “x” equals the target bonus amount at achievement of 100%-101% of the 2018 Performance Goal for Revenue, and equals the target bonus amount at achievement of 100% of the 2018 Performance Goal for Operating Margin.  The lowest Funding Multiple for Revenue set forth above assumes that the achievement of the 2018 Performance Goal for Revenue is equal to at least the Revenue Floor required to fund the 2018 Bonus Plan.  The maximum Funding Multiple for Operating Margin shall be 1.20x.  There is no maximum Funding Multiple for Revenue.

 

Illustration 

For example, if the Company achieves its Revenue at 101% of the 2018 Performance Goal for Revenue and achieves its Operating Margin at 1.3% above the 2018 Performance Goal for Operating Margin, the 2018 Bonus Pool will fund as to 106.5%, determined as follows:

	
 
	
-
	
50% on achievement of the Revenue 2018 Performance Goal (50% weighted target * 1.00x)

	
 
	
-
	
56.5% on achievement of the Operating Margin 2018 Performance Goal (50% weighted target * 1.13x)

	
3.
	
Timing of Bonus Payments.  Quarterly bonuses earned under this 2018 Bonus Plan shall be paid in the quarter following the quarter in which earned.  

-9-

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