Document:

Exhibit

Standard
2017 Long Term Incentive Program PSU Awards
Time Inc.
2016 Omnibus Incentive Compensation Plan
Performance Stock Units Agreement
WHEREAS, the Company has adopted the “Plan” (as defined below), the terms of which are hereby incorporated by reference and made a part of this Performance Stock Units Agreement, including any appendices attached hereto (collectively the “Agreement”); and
WHEREAS, the Committee has adopted an Long Term Incentive Program to be administered under the Plan pursuant to which Shares may be issued in settlement of Performance Stock Units (“PSUs”) subject to attainment of time-based and performance-based vesting conditions, the terms of the Plan and the additional terms set forth herein; 
WHEREAS, the PSUs are considered Other Stock Based Awards under the Plan, and are hereby designated by the Committee as Performance-Based Awards;
NOW, THEREFORE, the Company grants the PSUs subject to the following terms and conditions:
		
	1.
	Definitions.  Whenever the following terms are used in this Agreement, they shall have the meanings set forth below.  Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.

		
	a)
	“Cause” means, “Cause” as defined in an employment agreement between the Company or any of its Affiliates and the Grantee or, if not defined therein or if there is no such agreement, “Cause” means (i) the Grantee’s continued failure substantially to perform such Grantee’s duties (other than as a result of total or partial incapacity due to physical or mental illness) for a period of ten (10) days following written notice by the Company or any of its Affiliates to the Grantee of such failure, (ii) dishonesty in the performance of the Grantee’s duties, (iii) the Grantee’s conviction of, or plea of nolo contendere to, a crime constituting (A) a felony or equivalent crime under the laws of the United States or any state thereof or foreign country or (B) a misdemeanor or other crime involving moral turpitude, (iv) the Grantee’s insubordination, willful malfeasance or willful misconduct in connection with the Grantee’s duties or any act or omission which is injurious to the financial condition or business reputation of the Company or any of its Affiliates, or (v) the Grantee’s breach of any non-competition, non-solicitation or confidentiality provisions to which the Grantee is subject.  The determination of the Committee as to the existence of “Cause” will be conclusive on the Grantee and the Company.

		
	b)
	“Date of Grant” has the meaning assigned to such term in the Notice.

		
	c)
	“Disability” means, “Disability” as defined in an employment agreement between the Company or any of its Affiliates and the Grantee or, if not defined therein or if there shall be no such agreement, “disability” of the Grantee shall have the meaning ascribed to such term in the Company’s long-term disability plan or policy, as in effect from time to time, to the extent that such definition also constitutes such Grantee being considered “disabled” under Section 409A(a)(2)(C) of the Code.

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	d)
	“Employer” has the meaning assigned to such term in Section 6(a) of the Agreement.

		
	e)
	“Employment” means a Grantee’s service as (i) an employee of the Company or any of its Affiliates or (ii) a member of the Company’s board of directors.  A leave of absence shall not constitute a termination of Employment if such leave of absence is approved by the Company or its Affiliate in writing; provided, that such leave of absence constitutes a bona fide leave of absence and not a “separation from service” under Treas. Reg. 1.409A-1(h)(1)(i).  Employment shall continue if a Grantee transfers (including a termination with an immediate rehire) between the Company and one of its Affiliates or between its Affiliates without a break in service.  For purposes of the Plan, unless otherwise provided in an employment agreement between the Grantee and the Company or an Affiliate, a Grantee shall not be deemed to be providing services during any statutory or common-law notice period or any period of “garden leave” mandated under employment laws.  The Committee will have sole discretion to determine whether a Grantee has ceased to provide services and the effective date on which the Grantee ceased to provide services.

		
	f)
	“Good Reason” means “Good Reason” as defined in an employment agreement between the Company or any of its Affiliates and the Grantee or, if not defined therein or if there is no such agreement, “Good Reason” means (i) the failure of the Company to pay or cause to be paid the Grantee’s base salary or annual bonus when due or (ii) any substantial and sustained diminution in the Grantee’s authority or responsibilities materially inconsistent with the Grantee’s position; provided that either of the events described in clauses (i) and (ii) will constitute Good Reason only if the Company fails to cure such event within 30 days after receipt from the Grantee of written notice of the event which constitutes Good Reason; provided, further, that “Good Reason” will cease to exist for an event on the sixtieth (60th) day following the later of its occurrence or the Grantee’s knowledge thereof, unless the Grantee has given the Company written notice of his or her termination of employment for Good Reason prior to such date.  

		
	g)
	“Grantee” means the individual to whom this grant of PSUs has been awarded pursuant to the Plan.

		
	h)
	“Notice” means (i) the Notice of Grant of Performance Stock Units that accompanies this Agreement, if this Agreement is delivered to the Grantee in “hard copy,” and (ii) the screen display(s) of the website for the stock plan administration with the heading “Grant Details” and “Vesting Schedule” or a substantially similar heading, which contains the details of the grant governed by this Agreement, if this Agreement is delivered electronically to the Grantee.

		
	i)
	“Plan” means the equity plan maintained by the Company that is specified in the Notice, which equity plan has been provided to the Grantee separately and forms a part of this Agreement, as such plan may be amended, supplemented or modified from time to time.

		
	j)
	“Retirement” means a voluntary termination of Employment by the Grantee following the attainment of age 55 with ten (10) or more years of Employment.  The Grantee’s Employment with Time Warner Inc. and its Affiliates prior to the spinoff shall be taken into account in determining whether the Grantee satisfies the requirements for Retirement.

		
	k)
	“Severance Period” means the period following a termination of Employment during which a Grantee is entitled to receive both salary continuation payments and continued participation under the health benefit plans of the Company or any of its Affiliates, whether pursuant to a 

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separation agreement or an employment contract with, or a severance plan or other arrangement maintained by, the Company or any Affiliate.  
		
	l)
	“Tax-Related Items” has the meaning assigned to such term in Section 6(a) of the Agreement.

		
	2.
	Grant of Performance Stock Units.  The Company hereby grants to the Grantee, on the terms and conditions hereinafter set forth, the target number of PSUs set forth in the Notice (the “Award”), provided that the number of PSUs that actually vest shall be based on the extent to which the time-based and performance-based vesting conditions set forth in Section 4 are attained.  Each PSU represents the unfunded, unsecured right to receive a Share subject to the terms and conditions specified herein.  The maximum number of PSUs that may vest is equal to 200% of the target number of PSUs set forth in the Notice.  PSUs do not constitute issued and outstanding Shares for any corporate purposes and do not confer on the Grantee any right to vote on matters that are submitted to a vote of holders of Shares.

		
	3.
	No Dividend Equivalent Rights or Retained Distributions.  The Grantee shall not be entitled to any Dividend Equivalent Rights or Retained Distributions with respect to the PSUs. 

		
	4.
	Vesting and Delivery of Vested Securities.

		
	a)
	PSUs Eligible to Vest.  The percentage of the Award that shall be eligible to vest shall be determined based upon the Company’s achievement of performance-based goals as set forth in the Vesting Appendix.

		
	b)
	Measuring Performance.  The Committee shall evaluate and certify the Company’s performance against the goals described in the Vesting Appendix on or before the second anniversary of the Date of Grant. 

		
	c)
	Impact of Certain Changes in Control.  In the event of a Change in Control prior to December 31, 2018, the Company shall be deemed to have achieved target performance on the performance goals described in the Vesting Appendix.

		
	d)
	Vesting and Settlement.  Subject to the terms and provisions of the Plan and this Agreement (including the Separation from Service Addendum), this Award shall vest and Shares issued in settlement of the Award issued as follows:  

		
	i.
	The Award shall vest with respect to 50% of the Shares determined to be eligible to vest in accordance with Section 4(a) of this Agreement (rounded down to, the next whole Share), on the earlier of (i) the date the Committee certifies the Company’s performance as described in Section 4(b) of this Agreement), and (ii) the second anniversary of the Date of Grant, and the Company shall issue or transfer to the Grantee the number of Shares corresponding to such vested Shares no later than sixty (60) days after the second anniversary of the Date of Grant;

		
	ii.
	The Award shall vest with respect to the remainder of the Shares determined to be eligible to vest in accordance with Section 4(a) of this Agreement on the earlier of (i) the first anniversary of the date the Committee certifies the Company’s performance as described in Section 4(b) of this Agreement, and (ii) the third anniversary of the Date of Grant, and the Company shall issue or transfer to the Grantee the number of Shares corresponding to such vested Shares no later than sixty (60) days after the third anniversary of the Date of Grant.

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Except as otherwise provided in Section 5 (which incorporates by reference the Separation from Service Addendum), this Award shall only vest, and Shares shall only be eligible to vest and be distributed in settlement of this Award, if the Grantee’s Employment has continued from the Date of Grant through the applicable vesting date.
		
	e)
	PSUs Extinguished.  The PSUs subject to this Award shall be extinguished (i) on the date the number of Shares eligible to vest is determined, with respect to that percentage of the PSU that are not determined to be eligible to vest, and (ii) on each date that Shares are issued with respect to this Award, with respect to an equal number of PSUs.  PSUs so extinguished shall not be considered held by the Grantee for any purpose.

		
	f)
	Final Issuance.  Shares issued or transferred upon vesting and settlement of this Award shall be issued in whole Shares.  

		
	g)
	Section 409A.  Notwithstanding anything else contained in this Agreement, for U.S. taxpayer Grantees, no Shares shall be issued or transferred to a Grantee pursuant to the settlement of this Award before the first date on which a payment could be made without subjecting the Grantee to tax under the provisions of Section 409A.

		
	5.
	Termination of Employment.  If the Grantee’s Employment terminates for any reason (regardless of the reason for such termination and whether later found to be invalid or in breach of employment laws in the jurisdiction where the Grantee is providing services) prior to the date all or a percentage of the Award has not vested, then except as otherwise provided in the Separation from Service Addendum or an employment agreement between the Grantee and the Company or an Affiliate entered into after the Date of Grant, the unvested PSUs covered by the unvested percentage of the Award shall be completely forfeited on the date of such termination.  Anything in the foregoing to the contrary notwithstanding, no Award shall vest prior to the first anniversary of the Date of Grant.

		
	6.
	Responsibility for Taxes; Compliance with Laws; Incorporation of Plan Terms.

		
	a)
	Obligation to Pay Withholding Taxes.  The Grantee acknowledges and agrees that, regardless of any action taken or failed to be taken by the Company or, if different, the Grantee’s employer (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax and payment on account or other tax-related items related to Grantee’s participation in the Plan and legally applicable to Grantee (the “Tax-Related Items”), is and remains the Grantee’s responsibility and may exceed the amount actually withheld by the Company or the Employer.  The Grantee further agrees and acknowledges that the Company and the Employer (A) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including, but not limited to, the grant of the Award, the vesting or settlement of the PSUs, the subsequent sale of any Shares acquired pursuant to such settlement, the receipt of any dividends; and (B) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the PSUs to reduce or eliminate the Grantee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Grantee is subject to tax in more than one jurisdiction, the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.  

The Company’s obligation to deliver the Shares subject to the Award issued in settlement of the PSUs shall be subject to payment of all Tax-Related Items by the Grantee.  
		
	b)
	Satisfaction of Company’s Withholding Obligations.  No later than any relevant taxable or tax withholding event, as applicable, the Grantee agrees to make adequate arrangements 

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satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items due as a result of such taxable or tax withholding event.  In this regard, Grantee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:
		
	(i)
	by requiring or allowing the Grantee to deliver a properly executed notice together with irrevocable instructions to a broker approved by the Company to sell a sufficient number of Shares to generate net proceeds (after commission and fees) equal to the Tax-Related Items and promptly deliver such amount to the Company;

		
	(ii)
	by requiring or allowing the Grantee to pay the Tax-Related Items in cash or by check; 

		
	(iii)
	by deducting the Tax-Related Items from the Grantee’s wages or other cash compensation paid to the Grantee by the Company and/or the Employer; 

		
	(iv)
	for U.S. Grantees, by allowing the Grantee to surrender other Shares that (A) in the case of Shares initially acquired from the Company (upon exercise of a stock option or otherwise), have been owned by the Grantee for such period (if any) as may be required to avoid a charge to the Company’s earnings, and (B) have a Fair Market Value on the date of surrender equal to the Tax-Related Items;

		
	(v)
	by withholding a number of Shares to be issued upon delivery of Shares that have a Fair Market Value equal to the Tax-Related Items; 

		
	(vi)
	by selling any Shares (on the Grantee’s behalf pursuant to this authorization) to the extent required to pay the Tax-Related Items; or

		
	(vii)
	by such other means or method as the Committee in its sole discretion and without notice to the Grantee deems appropriate;

provided, however, that if the Grantee is a Section 16 officer of the Company, within the meaning of the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event, as applicable, unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case the obligation for Tax-Related Items shall be satisfied by one or a combination of the other methods above as directed by the Committee.
Depending on the withholding method, the Company shall withhold or account for Tax-Related Items by considering rates up to, but not exceeding, the maximum tax rates in the Grantee’s jurisdiction, in which case the Grantee may receive a refund of any over-withheld amount not remitted to applicable tax authorities on the Grantee’s behalf in cash and will have no entitlement to the Share equivalent.  If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Grantee is deemed to have been issued the full number of Shares to be settled in respect of the vested Award, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.
The Company will not issue any Shares unless and until the Grantee satisfies its obligations for Tax-Related Items.
		
	c)
	Compliance with Applicable Laws.  The Committee may also require the Grantee to acknowledge that he or she shall not sell or transfer Shares except in compliance with all 

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applicable securities and exchange control laws, and may apply such other restrictions on the sale or transfer of the Shares as it deems appropriate.
		
	d)
	Changes in Capitalization and Government and Other Regulations.  The Award shall be subject to all of the terms and provisions as provided in this Agreement and in the Plan, which are incorporated by reference herein and made a part hereof, including, without limitation, the provisions of Section 4 of the Plan (generally relating to adjustments to the number of Shares subject to the Award, upon certain changes in capitalization and certain reorganizations and other transactions).  

		
	7.
	Forfeiture; Waiver.  A breach of any of the foregoing restrictions or a breach of any of the other restrictions, terms and conditions of the Plan or this Agreement, with respect to any of the PSUs, except as waived by the Board or the Committee, will cause a forfeiture of such PSUs.  The Grantee acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Grantee or any other grantee.

		
	8.
	Right of Company to Terminate Employment.  Nothing contained in the Plan or this Agreement shall confer on the Grantee any right to continued Employment and the Company and any of its Affiliates shall have the right to terminate the Employment of the Grantee at any such time, with or without Cause, notwithstanding the fact that some or all of the PSUs covered by this Agreement may be forfeited as a result of such termination.  The granting of the PSUs under this Agreement shall not confer on the Grantee any right to any future Awards under the Plan.

		
	9.
	Notices.  Any notice which either party hereto may be required or permitted to give the other shall be in writing and may be delivered personally or by mail, postage prepaid, addressed to Time Inc., at 225 Liberty Street, New York, NY 10281, attention Stock Plan Administration and to the Grantee at his or her address, as it is shown on the records of the Company or its Affiliate, or in either case to such other address as the Company or the Grantee, as the case may be, by notice to the other may designate in writing from time to time.

		
	10.
	Interpretation and Amendments.  The Committee has plenary authority to interpret this Agreement and the Plan, to prescribe, amend and rescind rules relating thereto and to make all other determinations in connection with the administration of the Plan.  The Committee may from time to time modify or amend this Agreement in accordance with the provisions of the Plan.

		
	11.
	Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and shall be binding upon and inure to the benefit of the Grantee and his or her legatees, distributees and personal representatives.

		
	12.
	Copy of the Plan and Documents.  By accepting this Award, the Grantee agrees and acknowledges that he or she has received and had an opportunity to read a copy of the Plan.  The Grantee acknowledges and agrees that the Grantee may be entitled from time to time to receive certain other documents related to the Company, including the Company’s annual report to Shareholders and proxy statement related to its annual meeting of Shareholders (which become available each year approximately three months after the end of the calendar year), and the Grantee consents to receive such documents electronically through the Internet or as the Company otherwise directs.

		
	13.
	Governing Law.  The Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without regard to any choice of law rules thereof which might apply the laws of any other jurisdiction.

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	14.
	Waiver of Jury Trial.  To the extent not prohibited by applicable law which cannot be waived, each party hereto hereby waives, and covenants that it will not assert (whether as plaintiff, defendant or otherwise), any right to trial by jury in any forum in respect of any suit, action, or other proceeding arising out of or based upon this Agreement.

		
	15.
	Submission to Jurisdiction; Service of Process.  Each of the parties hereto hereby irrevocably submits to the jurisdiction of the state courts of the State of New York located in the County of New York and the jurisdiction of the United States District Court for the Southern District of New York for the purposes of any suit, action or other proceeding arising out of or based upon this Agreement.  Each of the parties hereto to the extent permitted by applicable law hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding brought in such courts, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that such suit, action or proceeding in the above-referenced courts is brought in an inconvenient forum, that the venue of such suit, action or proceedings, is improper or that this Agreement may not be enforced in or by such court.  Each of the parties hereto hereby consents to service of process by mail at its address to which notices are to be given pursuant to Section 9 hereof.

		
	16.
	Data Privacy.  The Grantee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Grantee’s personal data as described in this Agreement and any other grant materials by and among, as applicable, the Employer, the Company and its Affiliates for the exclusive purpose of implementing, administering and managing the Grantee’s participation in the Plan.

The Grantee understands that the Employer, the Company and its Affiliates may hold certain personal information about the Grantee, including, but not limited to, the Grantee’s name, home address and telephone number, e-mail address, date of birth, passport number social insurance  or other identification number (e.g., resident registration number), salary, nationality, job title, any Shares or directorships held in the Company, or any Affiliate, details of all PSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Grantee’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.  
The Grantee understands that Data will be transferred to Fidelity Stock Plan Services, LLC or any other stock plan service provider, which is presently or in the future, assisting the Company with the implementation, administration and management of the Plan.  The Grantee understands these recipients of Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Grantee’s country.  The Grantee understands that he or she may request a list with the names and addresses of any potential recipients of Data by contacting his or her local human resources representative.  The Grantee authorizes the Company, Fidelity Stock Plan Services, LLC and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Grantee may elect to deposit any Shares received upon vesting of the PSUs.  The Grantee understands that Data will be held only as long as is necessary to implement, administer and manage the Grantee’s participation in the Plan.  The Grantee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative.  Further, the Grantee understands that he or she is providing the consents 

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herein on a purely voluntary basis.  If the Grantee does not consent, or if the Grantee later seeks to withdraw his or her consent, his or her employment status or service with the Employer, the Company, or any Affiliate will not be affected; the only consequence of refusing or withdrawing the Grantee’s consent is that the Company would not be able to grant the Grantee PSUs or other equity awards or to administer or maintain PSUs or other equity awards granted to the Grantee prior or subsequent to such refusal or withdrawal.  Therefore, the Grantee understands that refusing or withdrawing his or her consent may affect the Grantee’s ability to participate in the Plan.  For more information on the consequences of the Grantee’s refusal to consent or withdrawal of consent, the Grantee understands that he or she may contact his or her local human resources representative.
		
	17.
	No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Grantee’s participation in the Plan, or the Grantee’s acquisition or sale of the underlying Shares.  The Grantee should consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

		
	18.
	Imposition of Other Requirements.  Subject to any restrictions on amendments to PSUs found in the Plan, the Company reserves the right to impose other requirements on the Grantee’s participation in the Plan, on the PSUs and on any Shares acquired under the Plan to the extent that the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Grantee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

		
	19.
	Severability.  The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

		
	20.
	Repayment/Forfeiture.  As an additional condition of receiving this Award, the Grantee  agrees that the Award and any proceeds or other benefits the Grantee may receive hereunder shall be subject to forfeiture and/or repayment to the Company  to the extent and in the manner required (i) under the terms of any policy adopted by the Company as may be amended from time to time to the extent the recovery of compensation is mandated in the event of fraud or a violation of restrictive covenants, to give effect to governance considerations or other similar circumstances (and such requirements shall be deemed incorporated into this Agreement without the consent of the Grantee) or (ii) to comply with any requirements imposed under applicable laws and/or the rules and regulations of the securities exchange or inter-dealer quotation system on which the Shares are listed or quoted, including, without limitation, pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

		
	21.
	Rejection of Award.  If the Grantee does not wish to receive this Award and/or does not consent and agree to the terms and conditions upon which this Award is offered, as set forth in the Plan and this Agreement, including the Appendices A and B attached hereto, then the Grantee must reject the Award by notifying the Company at Time Inc., at 225 Liberty Street, New York, NY 10281, attention General Counsel no later than 60 days following the Date of Grant, in which case the Award will be cancelled.  The Grantee’s failure to notify the Company of his or her rejection of the Award within this specified period will constitute the Grantee’s acceptance of the Award and the terms and conditions upon which the Award is offered, as set forth in the Plan and this Agreement, including the Appendices A and B attached hereto.

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Standard
2017 Long Term Incentive Program PSU Awards
Separation from Service Addendum
The following terms and conditions shall apply to a Grantee’s PSU Award unless the Grantee is party to a written agreement with the Company or one of its Affiliates that provides for a more favorable treatment.  Where no such other agreement exists, a Grantee whose Employment with the Company or any of its Affiliates terminates shall have no claim against the Company with respect to the PSUs or underlying Shares, other than as set forth in this Addendum, and this Addendum shall be the Grantee’s sole basis for any remedy under this Award related to such termination of Employment.  A termination of Employment shall not be deemed to have occurred for purposes of any provision of this Addendum (or Agreement) providing for the delivery of any Shares or payment of any Retained Distributions or other amounts subject to Section 409A upon or following a termination of Employment until such termination is also a “separation from service” within the meaning of Section 409A, and for purposes of any such provision of this Addendum (or Agreement), references to a “resignation,” “termination,” “terminate,” “termination of employment” or like terms shall mean separation from service.
	
		
	Before Performance Conditions Determined

	Event Triggering Employment Termination
	Vesting on or Following Employment Termination

	Death, Disability or Termination w/o Cause
(Before First Anniversary of Date of Grant if Performance Conditions Not Determined (i.e., no Change in Control)):
If, prior to the first anniversary of the Date of Grant and prior to the PSUs have not become eligible to vest in accordance with Section 4(c) of the Agreement, the Grantee’s Employment ends because of the Grantee’s death, Disability or termination without Cause, then:
	Forfeiture:   The Award shall be completely forfeited on the date of the Grantee’s termination of Employment.

	Death, Disability or Termination w/o Cause
(On or after First Anniversary of Date of Grant if Performance Conditions Not Determined): 
If, on or following the first anniversary of the Date of Grant and prior to the date the Committee determines the number of PSUs eligible to vest in accordance with Section 4(a) of the Agreement, the Grantee’s Employment ends because of the Grantee’s death, Disability or termination without Cause, then:
	Pro Rata Vesting:  The Grantee (or the Grantee’s estate) shall vest in a pro rata number of the PSUs determined eligible to vest (which shall be determined by multiplying the PSUs determined eligible to vest in accordance by Section 4 of the Agreement by a fraction, the numerator of which is the number of days of the Grantee’s Employment from the Date of Grant until the second anniversary of the Date of Grant, and rounding down to the next whole Share) in accordance with the following schedule:
i.  50% of such pro rata number of PSUs shall vest and be settled by the issuance or transfer to the Grantee (or the Grantee’s estate) of an equal number of Shares as soon as practicable, but no later than 60 days, following the second anniversary of the Date of Grant.

ii.  the remainder of such pro rata number of PSUs shall vest and be settled by the issuance or transfer to the Grantee (or the Grantee’s estate) of an equal number of Shares as soon as practicable, but no later than 60 days, following the third anniversary of the Date of Grant.
The portion of the Award that is not determined to be eligible to vest in accordance with the foregoing shall be completely forfeited as of the date such determination is made.

	Other Terminations: 
(If Performance Conditions Not Determined):
If the Grantee’s Employment terminates for any reason other than death or Disability or termination without Cause prior to the date the Committee determines the number of PSUs eligible to vest in accordance with Section 4(a) of the Agreement, then
	Forfeiture:   The Award shall be completely forfeited on the date of the Grantee’s termination of Employment.

ADD - 1

	
		
	On or After Performance Conditions Determined

	Event Triggering Employment Termination
	Vesting on or Following Employment Termination

	Death or Disability 
(On or After Performance Conditions Determined)
If the Committee has determined the number of PSUs eligible to vest in accordance with Section 4(a) of the Agreement or the PSUs become eligible to vest pursuant to Section 4(c) of the Agreement, and the Grantee’s Employment ends on or following the first anniversary of the Date of Grant because of the Grantee’s death or Disability, then:
	Full Vesting (subject, as applicable, to net after-tax benefit rule):  The Grantee shall fully vest in the number of PSUs that are outstanding under this Award and an equal number of Shares shall be distributed to the Grantee (or the Grantee’s estate) in full settlement of this Award, as follows:  
If No Change in Control Has Occurred:  Shares shall be distributed as soon as practicable, but no later than 60 days, following the third anniversary of the Date of Grant.
If a Change in Control Has Occurred: Shares shall be distributed as soon as practicable, but no later than 60 days, following (i) the date Grantee’s Employment ends (due to death or Disability) or (ii) the third anniversary of the Date of Grant if the Change in Control does not constitute a “change in control event” within the meaning of the Treasury Regulations promulgated under Section 409A, unless the accelerated vesting would subject the award to an excise tax under Section 280G of the Code in which case the portion of the Award that vests will be reduced to the extent such reduction results in a greater net after tax benefit to the Grantee.

	Termination without Cause:
If the Committee has determined the number of PSUs eligible to vest in accordance with Section 4(a) of the Agreement or the PSUs become eligible to vest pursuant to Section 4(c) of the Agreement, and the Grantee’s Employment ends on or following the first anniversary of the Date of Grant because of the Grantee’s termination without Cause, then:
	If No Change in Control Has Occurred (or if Termination of Employment Occurs More than 24 months from Change in Control):
Pro Rata Vesting.  The Grantee shall vest in a number of PSUs determined by multiplying the number of outstanding PSUs under this Award on the date the Grantee’s Employment ends by a fraction, the numerator of which shall be the number of days the Grantee has been employed on and after the second anniversary of the Date of Grant (if any) and the third anniversary of the Date of Grant and the denominator of which shall be 366 and such number of Shares shall be issued or transferred to the Grantee in full settlement of this Award, as soon as practicable, but no later than 60 days, following the third anniversary of the Date of Grant.  The portion of the Award that does not vest in accordance with the foregoing shall be completely forfeited as of the date the other portion of the Award is vested.
If Change in Control Has Occurred Within 24 months Preceding Termination of Employment:
Full Vesting (subject to net after-tax benefit rule):  The Grantee shall fully vest in the number of PSUs that are outstanding under this Award and an equal number of Shares shall be distributed to the Grantee in full settlement of this Award, as soon as practicable, but no later than 60 days, following (i) the date Grantee’s Employment ends or (ii) the third anniversary of the Date of Grant if the Change in Control does not constitute a “change in control event” within the meaning of the Treasury Regulation promulgated under Section 409A, unless the accelerated vesting would subject the award to an excise tax under Section 280G of the Code in which case the portion of the Award that vests will be reduced to the extent such reduction results in a greater net after tax benefit to the Grantee.

ADD - 2

	
		
	Resignation for Good Reason or Retirement:  
If the Committee has determined the number of PSUs eligible to vest in accordance with Section 4(a) of the Agreement or the PSUs have become eligible to vest in accordance with Section 4(c) of the Agreement, and the Grantee’s Employment ends on or following the first anniversary of the Date of Grant because of the Grantee’s resignation for Good Reason or Retirement, then
	If No Change in Control Has Occurred (or Termination of Employment Occurs More than 24 months from Change in Control):  
Forfeiture: The unvested portion of the Award shall be completely forfeited on the date of the Grantee’s termination of Employment.  
If Change in Control Has Occurred Within 24 months Prior to Termination of Employment:
Full Vesting (subject to net after-tax benefit rule):  The Grantee shall fully vest in the number of PSUs that are outstanding under this Award and an equal number of Shares shall be distributed to the Grantee in full settlement of this Award, as soon as practicable, but no later than 60 days, following (i) the date Grantee’s Employment ends or (ii) the third anniversary of the Date of Grant if the Change in Control does not constitute a “change in control event” within the meaning of the Treasury Regulation promulgated under Section 409A, unless the accelerated vesting would subject the award to an excise tax under Section 280G of the Code in which case the portion of the Award that vests will be reduced to the extent such reduction results in a greater net after tax benefit to the Grantee

	Other Termination:
(On or After Performance Conditions Determined):  
If the Grantee’s Employment terminates for any reason other than death, Disability, termination without Cause, resignation for Good Reason or Retirement on or after to the date the Committee has determined the number of PSUs eligible to vest in accordance with Section 4(a) of the Agreement or the PSUs have become eligible to vest in accordance with Section 4(c) of the Agreement, then
	Forfeiture: The unvested portion of the Award shall be completely forfeited on the date of the Grantee’s termination of Employment.

ADD - 3

Standard
2017 Long Term Incentive Program PSU Awards
VESTING APPENDIX
The number of PSUs eligible to vest shall be determined based upon the Company’s achievement against goals on two equally weighted metrics, 2018 Adjusted Revenue and 2018 Adjusted OIBDA, as follows.
	
				
	 
	Threshold
	Target
	Maximum

	% of Target PSU Award Eligible to Vest
	50%
	 100%
	 200%

* Percentage of Target PSU eligible to vest between levels to be determined by interpolating between levels and rounding down to the next whole RSU
	
			
	Example

	Target Award:
100 PSUs

	Achieved Performance Levels:
Threshold Performance (2018 Adjusted Revenue)
Maximum Performance (2018 Adjusted OIBDA)

	Metric
	Calculation
	PSUs Eligible to Vest

	2018 Adjusted Revenue
	50%(Target * 50%) 
50%(100 PSUs * 50%)
	25 PSUs

	2018 Adjusted OIBDA
	50%(Target * 200%) 
50%(100 PSUs * 200%)
	100 PSUs

	 
	Total PSUs Eligible to Vest
	125 PSUs

1EX-10.3

 Exhibit 10.3 
  

			
	

	  	PEGASYSTEMS INC.
	  	One Rogers Street
	  	Cambridge, MA 02142-1209 USA

 Notice of Grant of Stock Option and Option Agreement 

You have been granted an award of Nonstatutory Stock Options pursuant to the terms of the Pegasystems Inc. Amended and Restated 2004 Long-Term Incentive Plan
(the “Plan”). 
 If you have not yet completed the acceptance process for any of your awards, you may complete the acceptance process by
(A) reviewing your award details, (B) reviewing your award documents listed in this Section B of your Online Award Acceptance (the “Award Documents”), and (C) confirming your acceptance of your award. 

By accepting this award, you agree that this award is granted and governed by the terms and conditions of the Plan, this notice, and all your Award Documents
listed herein, including Exhibit A to this Notice of Stock Option and Option Agreement, and incorporated by reference. This notice, together with your Award Documents and your electronic acceptance, collectively comprise your total agreement (the
“Award Agreement”). 
  

			
	Pegasystems Inc.
		
	By:	 	

		 	Alan Trefler, Chairman and
		 	Chief Executive Officer

  

					
	         PHONE 617.374 9600

 
	  	         FAX 617.374.9620

 
	  	         WWW.PEGA.COM

 

 Exhibit A 

Notice of Grant of Stock Option and Option Agreement for {Non-}U.S. Employees 

1.    Exercise Price. The Exercise Price is equal to Fair Market Value, as defined in Section 2(n)
of the Plan, of a share of the Company’s Common Stock on the date of the Notice of Grant of Stock Option and Option Agreement for {Non-U.S. Employees} (of which this Exhibit A is a part) (the
“Option Agreement”). 
 2.    Option Exercise. Once vested, and subject to the other
provisions of this Option Agreement, the Option shall remain exercisable in whole or in part at any time through and including the day immediately preceding the date set forth under the heading “Expiration” on the Option Agreement (the
“Expiration Date”), after which the Option shall expire and no longer be exercisable. 
 The Option shall be exercisable by notice
to the Company or the Company’s designated stock option administrator, which shall: 
 (a)    state the election to
exercise the Option, the number of shares of Common Stock with respect to which it is being exercised, and, if different than the Optionee, the person in whose name the stock certificate or certificates for such shares of Common Stock are to be
registered, and the address and Social Security number of such person; 
 (b)    be signed by the person or persons
entitled to exercise the Option, and if the Option is being exercised by a person or persons other than the Optionee, be accompanied by proof satisfactory to the Company’s legal counsel of the right of such person or persons to exercise the
Option; and 
 (c)    if to the Company, be in writing and delivered in person or by certified mail to the Chief
Financial Officer of the Company or, if to the Company’s designated stock option administrator, be in the manner and form specified by such stock option administrator. 

Payment of the full purchase price of any shares of Common Stock, with respect to which the Option is being exercised, shall accompany the notice of exercise
of the Option and such payment may be made in cash or check payable to the Company. Alternatively, the Optionee may elect to pay the full purchase price of any shares of Common Stock, with respect to which the Option is being exercised, by having
the Company withhold, such number of shares of Common Stock as are equal in value to the full purchase price. Unless the Company has elected to have shares recorded in book entry form, the certificate or certificates for shares of Common Stock as to
which the Option is exercised shall be registered in the name of the person or persons exercising the Option. 

3.    Termination of Service. If the Optionee terminates Service other than by reason of the
Optionee’s death, Disability or Retirement, the Optionee may exercise his or her Option for three months following such termination to the extent that the Option is vested on the date of termination (but in no event later than the expiration of
the term of the Option). 
 4.    Retirement of Optionee. If the Optionee terminates Service as a
result of Retirement, the Optionee may exercise his or her Option for 24 months following such termination to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option). 

5.    Disability of Optionee. If the Optionee terminates Service as a result of
the Optionee’s Disability, the Optionee may exercise his or her Option for 24 months following such termination to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the
Option). 

 6.    Death of Optionee. If the Optionee dies while a
Service Provider, the Option may be exercised by the Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance for 12 months following the Optionee’s termination of Service because of death.

 7.    Optionee’s Agreement. The Optionee agrees to all the terms stated in the Option
Agreement (of which this Exhibit is a part), as well as to the terms of the Plan (which shall control in case of conflict with the Option Agreement), a copy of which is attached and of which the Optionee acknowledges receipt. 

8.    Withholding. The Optionee consents to fulfill all withholding obligations for all applicable
payroll and income taxes with respect to the Option when they are due and arrange for satisfactory payment of all withholding obligations in a manner as set forth in Section 13(h) of the Plan. The Company may delay issuance of a certificate until
proper payment of such taxes has been made by the Optionee. The Company may satisfy such withholding obligations by withholding such number of shares of Common Stock as are equal in value to the amount of the required withholding. 

{8.    Withholding. Regardless of any action the Company and/or the Optionee’s employer (the
“Employer”) take with respect to any or all income tax (including U.S. federal, state and local tax and/or non-U.S. tax), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Optionee acknowledges that the ultimate liability for all Tax-Related
Items legally due by the Optionee is and remains the Optionee’s responsibility and that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of the Option, including the grant, vesting or exercise of the Options, the subsequent sale of any shares of Common Stock acquired at exercise and the receipt of
any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Optionee’s liability for Tax-Related Items. 

Prior to the relevant taxable event, the Optionee shall pay or make arrangements satisfactory to the Company and/or the Employer to satisfy
all withholding and payment on account obligations of the Company and/or the Employer. In this regard, the Optionee authorizes the Company and/or the Employer to withhold all applicable Tax-Related Items
legally payable by the Optionee from any wages or other cash compensation paid to the Optionee by the Company and/or the Employer. Alternatively, or in addition, if permissible under local law, the Optionee authorizes the Company and/or the
Employer, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by the Optionee by one or a
combination of the following: (i) withholding otherwise deliverable shares of Common Stock, provided that the Company only withholds the amount of shares of Common Stock necessary to satisfy the minimum withholding amount; (ii) arranging
for the sale of shares of Common Stock otherwise deliverable to the Optionee (on the Optionee’s behalf and at the Optionee’s direction pursuant to this authorization); or (iii) withholding from the proceeds of the sale of shares of
Common Stock acquired upon exercise of the Option. If the obligation for Tax-Related Items is satisfied by withholding a number of shares of Common Stock as described herein, the Optionee is deemed to have
been issued the full number of shares of Common Stock subject to the Option, notwithstanding that a number of the shares of Common Stock are held back solely for the purpose of paying the Tax-Related Items due
as a result of any aspect of the Option. The Optionee shall pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or the Employer may be required to withhold as a result
of the Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to deliver to the Optionee any shares of Common Stock pursuant to the Option if the Optionee fails to comply with the
Optionee’s obligations in connection with the Tax-Related Items as described in this section.} 

 9.    Rights as Shareholders. The Optionee shall have no
rights as a shareholder of the Company with respect to any of the shares of Common Stock covered by the Option until the issuance of a stock certificate or certificates upon the exercise of the Option, and then only with respect to the shares of
Common Stock represented by such certificate or certificates. 

10.    Non-Transferability. The Option may not be transferred
in any manner other than as permitted in Section 13(j) of the Plan {by will or by the laws of descent and distribution}. The terms of the Option shall be binding upon the executors, administrators, heirs and successors of the Optionee. 

{11.     Employment Agreement. In consideration for this Option, the Recipient reaffirms the terms of the
Recipient’s Employment Agreement with Employer, including but not limited to the provisions (if any) related to competition and solicitation. The Recipient further agrees that to the extent the nature of the Employer’s business has evolved
since the date of the Employment Agreement the covenants shall also apply to the business as evolved.} 
 11.    {12.}
Compliance with Securities, Tax and Other Law. The Option may not be exercised if the issuance of shares of Common Stock upon such exercise would constitute a violation of any applicable federal or state securities
law or any other law or valid regulation. As a condition to the exercise of the Option, the Company may require the Optionee, or any person acquiring the right to exercise the Option, to make any representation or warranty that the Company deems to
be necessary under any applicable securities, tax, or other law or regulation. 
 12.    {13.} Adjustments upon Changes in
Capitalization. In the event of any change in the shares subject to the Plan or to any Option granted under the Plan by reason of a merger, consolidation, reorganization, recapitalization, stock dividend, stock split,
combination or exchange of shares {of Common Stock}, or other change in the structure of the Company, the number of shares {of Common Stock} subject to each outstanding Option and/or the Option price with respect to the shares {of Common Stock}
shall be appropriately adjusted by the Company and such adjustment shall be final, binding and conclusive. 
 13.    {14.} No
Right to Employment. The granting of the Option does not confer upon the Optionee the right to continue in the Service of the Company {and/or the Employer}, or affect in any way the right and power of the Company {and/or
the Employer} to terminate the Service of the Optionee at any time with or without assigning a reason therefor, to the same extent as the Company {and/or the Employer} might have done if the Option had not been granted. 

14.    {15.} No Guarantee. The Company offers no guarantee or assurance that the Company’s stock
has any value at the time of this grant or will have any value or liquidity at any future time. 
 {16. Acknowledgment of Nature of Plan and
Option. In accepting the Option, the Optionee acknowledges that: 
 (a)    the Plan is established
voluntarily by the Company, it is discretionary in nature, and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Option Agreement; 

(b)    the Option is voluntary and occasional and does not create any contractual or other right to receive future grants
of Options, or benefits in lieu of Options, even if Options have been granted repeatedly in the past; 

 (c)    all decisions with respect to future Options, if any, will be at the
sole discretion of the Company; 
 (d)    the Optionee’s participation in the Plan is voluntary; 

(e)    the Option is an extraordinary item that does not constitute compensation for services of any kind rendered to the
Company or any Related Company, and which is outside the scope of the employment contract, if any; 
 (f)    the Option
is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or
retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or any Related Company; 

(g)    in the event that the Optionee is not an Employee of the Company or any Related Company, the Option and the
Optionee’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Related Company; 

(h)    the future value of the underlying shares of Common Stock is unknown and cannot be predicted with any certainty;

 (i)    if you exercise your Option and obtain shares of Common Stock, the value of those shares of Common Stock
acquired upon exercise may increase or decrease in value, even below the Option price; 
 (j)    in consideration of the
Option, no claim or entitlement to compensation or damages shall arise from termination of the Option or from any diminution in value of the Option or shares of Common Stock acquired upon exercise of the Option resulting from termination of the
Optionee’s service by the Company or any Related Company (for any reason whatsoever and whether or not in breach of local labor laws) and the Optionee irrevocably releases the Company and any Related Company from any such claim that may arise;
if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing the Option Agreement, the Optionee shall be deemed irrevocably to have waived the Optionee’s entitlement to pursue
such claim; 
 (k)    in the event of termination of the Optionee’s Service (whether or not in breach of local
labor laws), the Optionee’s right to receive an Option and vest in the Option under the Plan, if any, will terminate effective as of the date that the Optionee is no longer actively employed and will not be extended by any notice period
mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); the Administrator shall have the exclusive discretion to determine when the Optionee is no
longer actively employed for purposes of the Option; 
 (l)    the Company is not providing any tax, legal or financial
advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan or the Optionee’s acquisition or sale of the underlying shares of Common Stock; and 

(m)    the Optionee is hereby advised to consult with the Optionee’s personal tax, legal and financial advisors
regarding the Optionee’s participation in the Plan before taking any action related to the Plan.} 

 {17. Data Privacy Notice and Consent. The Optionee hereby explicitly and unambiguously
consents to the collection, use and transfer, in electronic or other form, of the Optionee’s personal data as described in this Option Agreement and any other Option grant materials by and among, as applicable, the Employer, the Company and its
Subsidiaries for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan. 

The Optionee understands that the Company and the Employer may hold certain personal information about the Optionee, including, but not
limited to, the Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all
Options or any other entitlement to shares of stock granted, exercised, canceled, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”).

 The Optionee understands that Data will be transferred to a third party stock plan service provider(s) as may be selected
by the Company, which is assisting the Company with the implementation, administration and management of the Plan. The Optionee understands the recipients of the Data may be located in the Optionee’s country, in the United States or elsewhere,
and that the data recipients’ country may have different data privacy laws and protections than the Optionee’s country. The Optionee understands that the Optionee may request a list with the names and addresses of any potential recipients
of the Data by contacting the Optionee’s local human resources representative. The Optionee authorizes the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and
managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Optionee’s participation in the Plan. The Optionee understands that Data
will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan. The Optionee understands that the Optionee may, at any time, view Data, request additional information about the storage and
processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Optionee’s local human resources representative. The Optionee understands, however,
that refusing or withdrawing the Optionee’s consent may affect the Optionee’s ability to participate in the Plan. For more information on the consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee
understands that the Optionee may contact the Optionee’s local human resources representative.} 
 15.    {18.}
Amendment and Termination of Option. The Company may amend, modify or terminate any outstanding Option, provided that the Recipient’s consent to such action shall be required unless it occurs pursuant to a
Sale of the Company or the Committee determines that the action would not materially and adversely affect the Recipient. 

16.    Standards Letter. In consideration for this Option, the Recipient reaffirms the terms of the
Recipient’s Standards Letter agreement with Pegasystems, including but not limited to the provisions related to competition and solicitation. The Recipient further agrees that to the extent the nature of the Company’s business has evolved
since the date of the Standards Letter the covenants shall also apply to the business as evolved. 

{19.    Language. If the Optionee has received this Option Agreement or any other document related to the Plan
translated into a language other than English and if the translated version is different from the English version, the English version will control.} 

 {20.    Electronic Delivery. The Company may, in its sole
discretion, decide to deliver any documents related to the Option or future grants made under the Plan by electronic means or request that the Optionee consent to participate in the Plan by electronic means. The Optionee hereby consents to receive
such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.} 

17.    {21.} Governing Law and Venue. The Option Agreement shall be governed by and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, without regard to any applicable conflicts of law provisions thereof. 
 For
purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Option or this Option Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of The Commonwealth
of Massachusetts and agree that such litigation shall be conducted only in the courts of Middlesex County, Massachusetts, or the federal courts for the United States for the district of Massachusetts, and no other courts, where this grant of Options
is made and/or to be performed. 
 18.    {22.} Severability. In the event any one or more of the
provisions of the Option Agreement shall for any reason be held to be invalid, illegal or unenforceable, the remaining provisions of the Option Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a
mutually acceptable provision, which being valid, legal and enforceable, comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision. 

19.    {23.} Definitions. All capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Plan. 
 {24.    Exhibit B. Notwithstanding any provision herein, the
Optionee’s participation in the Plan shall be subject to any special terms and conditions as set forth in Exhibit B for the Optionee’s country of residence, if any. The Exhibit B constitutes part of this Option Agreement.} 

 {Exhibit B 

To Notice of Grant of Option and Option Agreement for Non-U.S. Employees 

This Exhibit B includes additional terms and conditions that govern the Options granted to the Optionee if the Optionee resides in the countries contained
herein. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Notice of Grant of Option and Option Agreement for Non-U.S. Employees (of which this Exhibit B is a
part) or the Plan. 
 This Exhibit B also includes information regarding exchange controls and certain other issues of which the Optionee should be
aware with respect to the Optionee’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of December 2009, unless otherwise notated. Such laws are often
complex and change frequently. As a result, the Company strongly recommends that the Optionee not rely on the information noted herein as the only source of information relating to the consequences of the Optionee’s participation in the Plan
because the information may be out of date at the time the Optionee acquires shares of Common Stock or sells shares of Common Stock the Optionee acquires under the Plan. 

In addition, the information is general in nature and may not apply to the Optionee’s particular situation, and the Company is not in a position to
assure the Optionee of any particular result. Accordingly, the Optionee is strongly advised to seek appropriate professional advice as to how the relevant laws in the Optionee’s country apply to the Optionee’s specific situation.

 If the Optionee is a citizen or resident of another country, or is considered a resident of another country for local law purposes, the information
contained in this Exhibit B may not be applicable to the Optionee. 
 Australia 

Withholding 
 This provision supplements Section 8
(Withholding): 
 Prior to the relevant taxable event, the Optionee will provide the Company with their Australian Tax File Number (TFN) or Australian
Business Number (ABN). Failure to do so will result in the requirement for the Company to withhold Australian tax at the rate of 46.5%. 
 Reform to the
taxation of employee share schemes 
 With effect from 1 July 2009, Optionee share options shall be taxed upfront, unless there is a “real risk
of forfeiture”. Where there is a “real risk of forfeiture,” options shall generally be taxed at the earliest of: 
  

	 	•	 	Vesting of the option 

  

	 	•	 	Cessation of employment 

  

	 	•	 	7 years after grant 

 Canada 

Option Exercise 
 The paragraphs below replace
Section 2 (Option Exercise) of Exhibit A to the Option Agreement: 
 Once vested, the Option shall remain exercisable in whole or in part at any time
through and including the day immediately preceding the date set forth under the heading “Expiration” on the Option Agreement (the “Expiration Date”), after which the Option shall expire and no longer be exercisable. 

 The Option shall be exercisable by notice to the Company or the Company’s designated stock option
administrator, which shall: 
  

	(a)	state the election to exercise the Option and the number of shares of Common Stock with respect to which it is being exercised, 

  

	(b)	be signed by the Optionee; and 

  

	(c)	if to the Company, be in writing and delivered in person or by certified mail to the Chief Financial Officer of the Company or, if to the Company’s designated stock option administrator, be in the manner and form
specified by such stock option administrator. 

 Payment of the full purchase price of any shares of Common Stock, with respect to which the
Option is being exercised, shall accompany the notice of exercise of the Option and such payment may be made in cash or check payable to the Company. Alternatively, the Optionee may elect to pay the full purchase price of any shares of Common Stock,
with respect to which the Option is being exercised, by having the Company withhold such number of shares of Common Stock as are equal in value to the full purchase price. The certificate or certificates for shares of Common Stock as to which the
Option is exercised shall be registered in the name of the Optionee. 
 For further clarity, any shares issued of the Common Stock of the Company upon
exercise of an Option shall be issued solely in the name of the Optionee and not in the name of any other person, including a person with whom the Optionee is dealing at non-arm’s length. 

Upon exercise of the Option, the Optionee shall receive shares of the Common Stock of the Company and under no circumstances shall the Administrator elect to
have the employee receive cash (or any other security) in lieu of the Common Stock of the Company. To this effect, section 13(e) of the Plan (and any other similar section) do not apply in Canada. 

Furthermore, at all times the Optionee should hold less than 10% of the shares of the Common Stock of the Company or any Related Company. 

Withholding 
 The paragraphs below replace Section 8
of Exhibit A to the Option Agreement: 
 Generally, there are Canadian requirements to withhold source deductions on stock options benefits. Although stock
options benefits are considered to be remuneration subject to source deductions, Canada recognizes that requiring additional withholding from cash payments, such as normal salary, as a result of a stock option benefit can create hardship for the
employee. This hardship will be created when either the benefit is very large in proportion to the employee’s normal salary or the option is exercised later in the year. As a result, employers may make withholdings from employees’ cash
remuneration to the extent possible, without imposing actual hardship. Where the non-cash benefit is the only form of income received from that employer, the employer will not be required to withhold tax on
the amount of such benefits. 
 Stock option benefits are also subject to social security taxes in Canada. These benefits are subject to Canada Pension Plan
withholdings but not Employment Insurance withholdings. The province of Ontario will also levy payroll taxes to fund the Canadian health service. 
 The
employment benefit and, if applicable, related 50% deduction will be reported on the Optionee T4 for the year in which the tradable options are exercised or sold. The Optionee must report these amounts on his or her individual income tax return for
the same year. 
 If the Optionee qualifies and elects to defer a part of the employment benefit arising on exercise to the date of sale, the employer (i.e.
the Related Company) will report the deferred benefit on the T4 slip in the year of exercise, however the benefit will not be included in income for that year. The Optionee must 

 
complete and file Form T1212, “Statement of Deferred Security Option Benefits” with his or her federal tax return for each year in which arises a balance of deferred benefit
outstanding. In the year the Optionee sells the shares, the Optionee must report the deferred benefit on his or her tax return. 
 Acknowledgement of
nature of plan 
 The paragraphs below replace Section 15 of Exhibit A to the Option Agreement [new or amended paragraphs are shown in italics at g
and j]: 
 In accepting the Option, the Optionee acknowledges that: 
  

	(a)	the Plan is established voluntarily by the Company, it is discretionary in nature, and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this
Option Agreement; 

  

	(b)	the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, or benefits in lieu of Options, even if Options have been granted repeatedly in the past;

  

	(c)	all decisions with respect to future Options, if any, will be at the sole discretion of the Company; 

  

	(d)	the Optionee’s participation in the Plan is voluntary; 

  

	(e)	the Option is an extraordinary item that does not constitute compensation for services of any kind rendered to the Company or any Related Company, and which is outside the scope of the employment contract, if any;

  

	(f)	the Option is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or any Related Company; 

 

	(g)	the Company has decided to grant Options under the Plan to individuals who are employees of the Company or any Related Company; and under no circumstances, the Optionee should be considered a Consultant or a “non-employee Officer or non-employee Director” of the Company or any Related Company; 

 

	(h)	the future value of the underlying shares of Common Stock is unknown and cannot be predicted with any certainty; 

  

	(i)	if you exercise your Option and obtain shares of Common Stock, the value of those shares of Common Stock acquired upon exercise may increase or decrease in value, even below the Option price; 

 

	(j)	at all times the Optionee should hold less than 10% of the shares of the Common Stock of the Company or any Related Company; 

  

	(k)	in consideration of the Option, no claim or entitlement to compensation or damages shall arise from termination of the Option or from any diminution in value of the Option or shares of Common Stock acquired upon
exercise of the Option resulting from termination of the Optionee’s service by the Company or any Related Company (for any reason whatsoever and whether or not in breach of local labor laws) and the Optionee irrevocable releases the Company and
any Related Company from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing the Option Agreement, the Optionee shall be deemed irrevocably
to have waived the Optionee’s entitlement to pursue such claim; 

	(l)	in the event of termination of the Optionee’s Service (whether or not in breach of local labor laws), the Optionee’s right to receive an Option and vest in the Option under the Plan, if any, will terminate
effective as of the date that the Optionee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period
pursuant to local law); the Administrator shall have the exclusive discretion to determine when the Optionee is no longer actively employed for purposes of the Option; 

 

	(m)	the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan or the Optionee’s acquisition or sale of the
underlying shares of Common Stock; and 

  

	(n)	the Optionee is hereby advised to consult with the Optionee’s personal tax, legal and financial advisors regarding the Optionee’s participation in the Plan before taking any action related to the Plan.

 France 
 This information is
correct as of November 2011. 
 Exchange Control Information 

If the Optionee retains Shares outside of France or maintains a foreign bank account, the Optionee is required to report such to the French tax authorities
when filing his or her annual tax return. 
 Germany 

Exchange Control Information 
 Cross-border payments in
excess of €12,500 must be reported monthly to the German Federal Bank. If the Optionee uses a German bank to transfer a cross-border payment in excess of €12,500 in connection with the sale of shares of Common Stock acquired under the
Plan, the bank will make the report for the Optionee. In addition, the Optionee must report any receivables or payables or debts in foreign currency exceeding €5,000,000 on a monthly basis. 

Hong Kong 
 Obligation to report the share
option gains to the tax authority 
 The Optionee is obliged to declare the gains realized by the exercise, assignment or release of the share options to
the Hong Kong Inland Revenue Department (“IRD”) in their Individual Tax Return for the year of assessment in which the share options are exercised, assigned or released. If the Optionee is eligible to lodge any offshore non-taxable claim on their share option gains, the Optionee is required to lodge such claim in their Individual Tax Return. Therefore, it is the Optionee’s responsibility to prove to the satisfaction of the IRD
on their non-taxable claim lodged with documentary evidence in support. 
 Reporting requirement 

Upon the commencement of Hong Kong employment/assignment of the Optionee, the Optionee’s employer (the “Employer”) is obliged to file the
Commencement Notice (Form IR 56E) for reporting the term of employment and share options details to the IRD within 3 months from the date of commencement of employment. Annual Employer’s Return (Form IR 56B) is required to be filed to the IRD
by end of April to report the remuneration paid/accrued to the Optionee, including the share option gains, for each year ended 31 March. Further to the filing of the said Forms, the IRD will normally create

 
a tax file for the Optionee and issue the annual Individual Tax Return to the Optionee (usually in May) to ascertain their tax position. If there is no Individual Tax Return issued by the IRD to
the Optionee for reporting the share option gain in the year of exercise, the Optionee is obliged to voluntarily inform the IRD on this tax chargeability arising from the exercise as well as other Hong Kong taxable employment income within four
months after the end of the basis period during which the year of assessment is concerned (i.e. the informing deadline is 31 July given the fiscal year ends on 31 March). 

Leaving Hong Kong 
 If the share option is only exercised,
assigned or released after the Optionee permanently departs from Hong Kong, the Employer should report the share option gains by filing the Departure Notice (Form IR 56G) and provide a copy for the Optionee. The Optionee also needs to
discharge their voluntary informing chargeability obligation as mentioned above not later than 4 months after the end of the year of assessment in which the share option gains are derived. Even if the Employer fails to submit the Departure Notice to
report the taxable share option gain, the Optionee still needs to comply with their own reporting obligation. 
 In order to assist with finalizing the
salary-related tax liabilities prior to permanent departure, the Optionee is allowed, as a concession, to elect to have the tax liabilities finalized on the basis of a notional exercise of the share options. The notional gain is calculated on the
basis as if the options had been exercised on a day within 7 days before the date of submission of the Optionee’s tax return for the final year of assessment in which the Optionee departs. As a further concession, the IRD is prepared to accept
an election made within 3 months from the date of departure from Hong Kong if no election has been made before departure. In this case, the date of departure will be taken as the date of notional exercise for the purpose of calculating the gain.

 An election once made cannot be withdrawn before the actual exercise, assignment or release, except: 

 

	 	(i)	within the objection period of the assessment in which the gain of the notional exercise is included; or 

  

	 	(ii)	total forfeiture of the options with no replacement or compensation before the actual exercise. 

 If it
transpires that the gain in respect of the actual exercise, assignment or release is less than the amount assessed in respect of the notional exercise, the IRD has indicated in its Departmental Interpretation and Practice Note that they will
favorably consider any application for appropriate amendment and re-assessment. 
 Withholding 

The paragraphs below supplement Section 8 (Withholding) of Exhibit A to the Option Agreement. 

The Employer is not required to withhold the Optionee’s share option gains unless the Optionee permanently departs from Hong Kong. The Employer is
statutorily required to withhold money payment from the Optionee for a period of one month after the Departure Notification (Form IR 56G) was filed to the IRD, unless consent (by the issue of a Letter of Release to the employer with a copy to the
Optionee after they have settled all their tax liabilities) is given by the IRD. Hence, if the Optionee derives share option gains and there is money paid to them by the Employer, the Employer has the withholding obligation. 

 India 

Exchange Control Information 
 As per the foreign exchange
laws (“regulations”) in India, there are no restrictions on the amount of remittances that the Optionee can make for acquiring Options provided that the following conditions are fulfilled: 

 

	1.	The Company issuing the shares effectively, directly or indirectly, holds in the Indian company, whose employees / directors are being offered shares, not less than 51% of its equity, and 

 

	2.	The shares under the Plan are offered by the issuing company globally on a uniform basis (with the same terms and with the same rights). 

Ireland 
 Restriction on Types of Shares Issued
to Directors 
 If the Optionee is a director or shadow director of an Irish Subsidiary, the Optionee’s Options will be paid in newly issued shares
of Common Stock only. In no event will the Options be settled in treasury shares. 
 Director Notification Requirement 

If the Optionee is a director, shadow director or secretary of an Irish Subsidiary, the Optionee must notify the Irish Subsidiary in writing within five
business days of receiving or disposing of an interest in the Company (e.g., Options, shares of Common Stock, etc.), or within five business days of becoming aware of the event giving rise to the notification requirement, or within five
business days of becoming a director or secretary if such an interest exists at the time. This notification requirement also applies with respect to the interests of a spouse or minor children (whose interests will be attributed to the director,
shadow director or secretary). 
 Italy 
 This
information is correct as of August 2011. 
 Purpose 

The Plan is discretionary in nature and is offered only to individual employees and/or specific categories of employees. 

Nature of Plan 
 This provision supplements
Section 11 (Acknowledgement of Nature of Plan and Option) of Exhibit A to the Option Agreement: 
 The Optionee understands that the Company has
unilaterally, gratuitously and discretionally decided to grant Options under the Plan to individuals who may be employees of the Company or its Subsidiaries throughout the world. The decision is a limited decision that is entered into upon the
express assumption and condition that any grant will not bind the Company or any Related Company. Consequently, the Optionee understands that the Option is granted on the assumption and condition that the Option and any shares of Common Stock
acquired upon exercise of the Option are not a part of any employment contract (either with the Company or any Related Company) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other
right whatsoever. Further, the Optionee understands that the Optionee will not be entitled to continue vesting in any Option once the Optionee’s Service with the Company or any Related Company ceases. In addition, the Option understands that
this grant would not be made to the Optionee but for the assumptions and conditions referred to above; thus, the Optionee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be
met for any reason, then any grant of or right to the Option shall be null and void. 
 It is a condition of participation in the Plan that the Optionee
expressly agrees to the terms of the Plan, including the provisions in this Exhibit B. 

 Options Payable Only in Shares of Common Stock 

Notwithstanding any discretion in the Plan or anything contrary in the Option Agreement, if the Optionee is resident in Italy, the grant of Options does not
provide any right for the Optionee to receive a cash payment and the Options are payable in shares of Common Stock only. 
 Securities Reporting 

Individuals in Italy are required to report assets held abroad on their annual tax returns (Form RW) if the value of such assets exceeds 10,000 Euros at the
end of the calendar year. The Italian tax authorities have taken the position that vested Stock Options in a foreign company are considered ‘assets held abroad’. 

Employees must therefore also report vested Stock Options in their annual tax returns (Form Unico, Schedule RW) if the threshold is exceeded. 

In addition, employees must report in Section III of Form RW the transfer of money exceeding 10,000 Euros: 

 

	 	•	 	From Italy to another jurisdiction; 

  

	 	•	 	From another jurisdiction to Italy; 

  

	 	•	 	Between non-Italian jurisdictions, if the transfer relates to investments held overseas. 

This also applies to transfers to countries that have adopted the Euro. 

Japan 
 This information is correct as of August
2009. 
 Exchange Control Information 
 Although there
are no restrictions on the transfer of funds outside Japan, certain reporting obligations to the tax authorities or the Ministry of Finance may be required. 

Optionees must notify the Ministry of Finance of share purchases in excess of 30,000,000 Yen. An additional notification is required for purchase of shares
with a value in excess of 100,000,000 Yen. 
 Japanese banks including Japanese branches of foreign banks have to report transfers of funds of more than
1,000,000 Yen in and out of Japan to the government automatically. Sometimes the tax authorities check individual tax returns to these records. 

Netherlands 
 By participating in the Plan the
Optionee acknowledges that the Optionee’s Options can cease to vest on termination of employment under the terms of the Plan. It is a condition of participation in the Plan that the Optionee agrees to these terms. 

New Zealand 
 This information is correct as of
April 2017. 
 Disclosure required under the Financial Markets Conduct Act 2013 

If you are receiving this offer in New Zealand please read the following in addition to the other documents which are provided to you by Pegasystems Inc. 

 Warning 

This is an offer of Options. Upon the exercise of the Options, you will be granted Common Stock in Pegasystems Inc. Common Stock gives you a stake in the
ownership of Pegasystems Inc. You may receive a return if dividends are paid. 
 If Pegasystems Inc. runs into financial difficulties and is wound up, you
will be paid only after all creditors and holders of preferred shares have been paid. You may lose some or all of your investment. 
 New Zealand law
normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors to make an informed decision. 

The usual rules do not apply to this offer because it is made under an employee share purchase scheme. As a result, you may not be given all the information
usually required. You will also have fewer other legal protections for this investment. 
 Ask questions, read all documents carefully, and seek independent
financial advice before committing yourself. 
 Pegasystems Inc. intends to quote the stock on the NASDAQ Stock Market. This means you may be able to sell
them on the NASDAQ Stock Market if there are interested buyers. You may get less than you invested. The price will depend on the demand for the shares. 

Financial information 
 You have the right to receive from
Pegasystems Inc., free of charge, a copy of its latest annual report or similar document and relevant financial statements if you ask for the same. You may obtain an electronic copy of these documents by downloading them from
http://pega.ir.edgar-online.com. If you have any difficulties in accessing or downloading the same, please contact the Chief Financial Officer, Pegasystems Inc., One Rogers Street, Cambridge, Massachusetts 02142. Telephone: (617) 374-9600. 
 Withholding 

This provision supplements Section 8 Withholding. The Employer is required to report on the employee share scheme benefit in its Employer Monthly Schedule
as the benefit accrues to the Optionee. However, the Employer has the choice as to whether or not it deducts tax on the employee share scheme benefit – unless the Employer elects to do this, the obligation to return the tax on the benefit (and
file a return including the same) remains with the Optionee. Further, reforms to the tax rules applicable to employee shares schemes have been proposed, which may alter how the benefit is calculated and when the taxing point(s) arises. Going
forward, Optionees will need to monitor these developments. 
 Poland 

Securities reporting 
 If the Optionee holds more than
€10,000 of foreign securities (including following the grant of Options) the Optionee must declare details of the shares and options (whether or not the options have vested) to the National Bank of Poland. The form of declaration
must be submitted within 30 days of the end of the year. 

 Singapore 

Leaving Singapore 
 With effect from January 1, 2003,
Optionees who are foreign citizens or are Singapore Permanent residents leaving Singapore permanently are taxed on a “deemed exercise” basis for any options or units or shares granted or issued during Singapore employment. This would also
include any unvested or restricted options or units or shares granted whilst exercising employment in Singapore. 
 As per the deemed exercise rule, all
Options, units, or stock which have been granted during Singapore employment are deemed to have been exercised, irrespective whether the Options have vested or not. The taxable value is the difference between the fair market value (which would be
the fair market value one month prior to the date of departure) and the exercise price. 
 Director withholding 

Independent Directors who are Non Resident in Singapore and have received Options by virtue of their being on the Board of the Singapore Company will be
subject to tax in Singapore and liable for tax withholding. 
 Spain 

This provision supplements Section 15 (Acknowledgment of Nature of Plan and Option) of Exhibit A to the Option Agreement: 

In accepting the Options, the Optionee consents to participation in the Plan and acknowledges that the Optionee has received a copy of the Plan. 

The Optionee understands that the Company has unilaterally, gratuitously and discretionally decided to grant Options under the Plan to individuals who may be
employees of the Company or its Subsidiaries throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not bind the Company or any Related Company. Consequently, the
Optionee understands that the Options are granted on the assumption and condition that the Options and any shares of Common Stock acquired upon exercise of the Options are not a part of any employment contract (either with the Company or any Related
Company) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. Further, the Optionee understands that the Optionee will not be entitled to continue vesting in any
Options once the Optionee’s Service with the Company or any Related Company ceases. In addition, the Optionee understands that this grant would not be made to the Optionee but for the assumptions and conditions referred to above; thus, the
Optionee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of or right to the Options shall be null and void. 

Exchange Control Information 
 The Optionee must declare
the acquisition of shares of Common Stock to the Dirección General de Política Comercial e Inversiones Exteriores (the DGPCIE) of the Ministerio de Economía for statistical purposes. 

As the shares are listed on a stock exchange the acquisition will be filled in a form D-5B. The form will be declared
to the Registro de Inversiones of the Dirección General de Política Comercial e Inversiones Exteriores of the Ministerio de Industria, Turismo y Comercio. 

The Optionee must also declare ownership of any shares of Common Stock with the Directorate of Foreign Transactions each January whilst the shares of Common
Stock are owned in the following cases: 
  

	•	 	The shares of the company are listed on the stock exchange. 

	•	 	The shareholding in the company has to be at least 10% or more. 

  

	•	 	The investment is more than 1,502,530.26 Euros. 

 Foreign currency payments (i.e., dividends or sale proceeds)
have to be declared when the amount exceed 6,010.12 Euros on form B3. 
 The information provided to the financial institution is the following: 

 

	•	 	The Optionee’s name, address, and fiscal identification number 

  

	•	 	Non resident’s name, address and fiscal identification number. 

  

	•	 	The amount of the payment, payment method, currency of origin and value in euros. 

  

	•	 	The reasons for the payment. 

 A payment is made by bank transfer the following information should be provided
to the financial institution when the amount exceeds 50,000 euros: 
  

	•	 	Resident name, address and fiscal identification number. 

  

	•	 	Non resident name, address and fiscal identification number. 

  

	•	 	The amount, currency of origin and value of payment in euros. 

  

	•	 	The reason for the payment. 

 Switzerland 

This information is correct as of April 2017. 
 Acknowledgment
of Nature of Plan and Option 
 The paragraphs below are added to Section 16 (Acknowledgement of Nature of Plan and Option) of Exhibit A to the
Option Agreement: 
 The Optionee understands that the Company has unilaterally, and discretionally decided to grant Options under the Plan to individuals
who may be employees of the Company or its Subsidiaries throughout the world. 
 The Company has the absolute right to decide whether or not Options shall
be granted to an employee. Within its absolute discretion, the Company may in particular take into account (i) the financial results of the Company, of the department for which the Employee works as well as of the stand-alone financial results
of the Company, and (ii) the individual performance as well as the behavior of the Employee during the financial period. Even though Options have been granted to an Employee at several occasions, whether consecutive or not, the Employee may not
infer any entitlement to any future grant of Options. The grant of Options is conditional upon the employment agreement not having been unilaterally terminated. 

The grant of Options is entirely discretionary and does not create any obligation upon the Company to pay future bonus even though the Employee receives
Options at several consecutive occasions. No pro rate amount will be paid. 
 The Optionee acknowledges that the Options are given with his full agreement
instead of an extraordinary cash bonus and that he has no right to be granted further Options. 
 Withholding 

The paragraphs below replace Section 8 (Withholding) of Exhibit A to the Option Agreement: 

The Optionee shall be exclusively responsible for getting advice and obtaining any and all information about the tax consequences in connection with the Plan,
in particular with the promise to grant, the grant, the holding and the exercise of Options, as well as with the issuance and transfer of Shares. 

 Any social contributions levied at the promise to grant, at the grant or at exercise of the Options, and at the
delivery and transfer of shares shall be borne by the Company and the Optionee as provided by law. 
 The Optionee shall bear any and all the
Employee’s withholdings (including but not limited to tax and social security) related to the grant or the exercise of Options, and shall reimburse to the Company any such tax and social security which may have been paid by the Company.
However, the stamp duty on issuance of the Shares shall be borne by the Company. 
 As long as the Options are not tradable, the taxable benefit at the time
the Options are vested corresponds to the difference between the market value of the option and the strike price. 
 The Company may withhold from any
amounts due to the Optionee any sums which the Company is or will be required by applicable law to pay on behalf of the Optionee in respect of taxes or social security (including withholding taxes). The amounts that the Company is entitled to
withhold for that purpose from amounts due to the Optionee who is an Employee of the Company are subject to applicable mandatory employment law provisions. 

The Company is entitled to retain the Shares resulting from the exercise of the Options as long as, and to the extent, the Company has not been reimbursed (or
has not been provided with guarantees for such reimbursement) by the Participant for any amount the Company paid on behalf of the Optionee in respect of taxes or social security. 

Termination of Service 
 The paragraph below is added to
Section 3 (Termination of Service) of Exhibit A to the Option Agreement: 
 If the employment agreement between the Optionee and the Company is
terminated by the Company for just cause as referred to by article 337 CO so as to justify immediate termination of service, all Options held by the Participant exercisable or not, shall be automatically forfeited at the date of termination of
service. The Company shall have no further obligation as from that date with regard to the Optionee under the Long-Term Incentive Plan or the Option Agreement. 

Thailand 
 This information is correct as of April
2017. 
 Obligation to Request for Approval on Remittance of Subscription Price Abroad and Declaration of Dividends Received 

Foreign Exchange Control 
 Approval on Remittance of
Subscription Price Abroad: In principle, the Bank of Thailand (“BOT”) approval is not required unless the value of the shares subscribed by the employees exceeds US$1,000,000. 

For any foreign currency transaction effected with the authorized juristic person with a value of US$50,000 or equivalent, the foreign currency transaction
form must be submitted, referring to the reference number and the date stipulated in the BOT approval letter. However, in the case the subscription price to be remitted abroad is below US$1,000,000, the authorized juristic person (local bank) is
authorized by the BOT to approve such transaction itself. 
 Approval on Declaration of Dividends Received: Generally, once the dividend payment is
declared, the employees must immediately remit such dividend into Thailand, otherwise the BOT approval for this is required. Thus, should the dividend will be re-invested or used for other purpose according to
the plan, 

 
the approval from BOT must be obtained in advance. Local company may consider applying for BOT approval for both remittance of subscription price abroad and declaration of dividends received by
the same application for time-saving.  
 After prescribed period (lock-up period), unless otherwise provided
in the plan and subject to the BOT approval, the dividends and other compensations received under the plan must be remitted into Thailand immediately. 

Personal Income Tax 
 Tax on Dividends 

Dividends will also be subject to taxation when such dividends are actually received by employees. Similarly, dividends are subject to tax at progressive
income rates ranging from 5% to 35% depending on the amount of income taxable. 
 Tax on Capital Gains 

Capital gains (defined as the difference between the redemption proceeds and the subscription price/ value of share) are taxed at progressive income rates of
5% to 35%. No employee or employer social charges apply. 
 Employees must file a tax return by March 31 of the calendar year following the calendar
year in which the income was received. Applicable taxes are not withheld by the employer. 
 Turkey 

This information is correct as of April 2017. 
 Tax
Obligations of the Optionees 
 There are no specific rules are regulated under Turkish tax legislation regarding the stock options. Under the general
tax provisions, share options are taxable as employment income at the time of their exercise. Additionally, under certain circumstances, Optionees might be subject to stamp tax and some social security contributions. 

The gain arising on the sale of the shares must be declared on the Optionee’s annual income tax return and will be subject to income tax at the
Optionee’s applicable rate. There is an income tax exemption for a certain amount of gains in a calendar year but this exemption does not apply to the sale of marketable securities. 

The Income Tax Law describes employment income as benefits paid in cash, in-kind or other ways, represented by money
for services rendered, to persons employed by an employer and working at a certain workplace (Article 61). This definition includes all non-cash benefits provided and payments made (including allowance,
compensation, cash indemnity, funds, increase, advance, dues, attendance fee, premium, bonus and reimbursement or under any other names). Payment as a certain percentage of earnings (provided it is not related to an ownership of a company and
related to the employment of the concerned personnel) must also be included under this definition and considered as employment income. 
 The taxable event
for employment income is triggered once the Optionee legally and economically has the right to dispose of the benefit or payment. Income tax is imposed upon exercise on any “spread” on the shares, which is the excess of the fair market
value of the shares on the exercise date, over the aggregate exercise price paid. 
 The benefit (that is, the difference between the shares’ price at
grant and value at vesting) is subject to withholding tax and must be declared by the Turkish resident company in the withholding tax return (Article 94, Income Tax Law). The income tax rate is applied at progressive rates ranging between 15% and
35%. 

 Exchange Control Information 

Stock options are not are not subject to any foreign exchange restrictions. Importation of Turkish currency and instruments denominated in Turkish currency
shall be free, while their exportation is free under the following principles: 
  

	 	(i)	Residents in Turkey and non-residents shall be free to transfer Turkish currency abroad via banks. 

 

	 	(ii)	Travelers may freely take Turkish currency abroad on their person, up to the equivalent of USD 5.000. 

  

	 	(iii)	Exportation of instruments denominated in Turkish currency shall be free. 

 Non-residents may freely make payments, collect money and make deposits in Turkish currency in Turkey. 
 Banks shall
inform the authorities to be determined by the Ministry about Turkish Lira transfers abroad, excluding payments for exports, imports and invisible transactions that are above the equivalent of USD 50,000, within a 30
day-period starting from the date of transfer. 
 Residents in Turkey are also allowed to accept payment in foreign
currency from non-residents for the transactions that they conduct in Turkey in favor of such non-residents. 

United Kingdom 
 Withholding 

The paragraphs below replace Section 8 (Withholding) of Exhibit A to the Option Agreement: 

Regardless of any action the Company or the Optionee’s employer (the “Employer”) takes with respect to any or all income tax, primary and
secondary Class 1 National Insurance contributions, payroll tax or other tax-related withholding attributable to or payable in connection with or pursuant to the grant, vesting, exercise, release or
assignment of any Option (“Tax-Related Items”), the Optionee acknowledges that the ultimate liability for all Tax-Related Items legally due by the Optionee is
and remains the Optionee’s responsibility. Furthermore, the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with
any aspect of the Option, including the grant, vesting or exercise of the Options, the subsequent sale of any shares of Common Stock acquired at exercise and the receipt of any dividends; and (ii) do not commit to structure the terms of the
grant or any aspect of the Option to reduce or eliminate the Optionee’s liability for Tax-Related Items. 
 As
a condition of any Options becoming exercisable and the issuance of shares of Common Stock upon exercise of the Options, the Company and/or the Employer shall be entitled to withhold and the Optionee agrees to pay, or make adequate arrangements
satisfactory to the Company and/or the Employer to satisfy, all obligations of the Company and/or the Employer to account to HM Revenue & Customs (“HMRC”) for any Tax-Related Items by the
Due Date, which is 90 days, or such other period as required under U.K. law, after the event giving rise to the Tax-Related Items (the “Chargeable Event”). In this regard, except as provided in the
next sentence, such payment shall be made by means of the Company withholding and/or reacquiring a number of shares of Common Stock issued upon exercise of the Options having a Fair Market Value equal to the amount of
Tax-Related Items that the Company determines it or the Employer is required to account to HMRC under applicable tax laws with respect to the Options (with such obligation determined based on any applicable
minimum statutory withholding rates). In the event that the Company cannot (under applicable legal, regulatory, listing or other requirements, or otherwise) satisfy such obligation in such method, the Company may satisfy its entitlement to withhold
under this 

 
Option Agreement by either or a combination of the following methods: (i) by requiring the Optionee to pay such amount in cash or check; and/or (ii) by deducting such amount out of any
other compensation otherwise payable to the Optionee. For these purposes, the Fair Market Value of the shares of Common Stock to be withheld or repurchased, as applicable, shall be determined on the date that
Tax-Related Items are to be determined. 
 The Optionee shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to account to HMRC with respect to the Chargeable Event that cannot be satisfied by the means previously described. If payment or withholding is not
made by the Due Date, the Optionee agrees that the amount of any uncollected Tax-Related Items shall (assuming the Optionee is not a director or executive officer of the Company (within the meaning of Section
13(k) of the U.S. Securities and Exchange Act of 1934, as amended)), constitute a loan owed by the Optionee to the Employer, effective on the Due Date. The Optionee agrees that the loan will bear interest at the then-current HMRC Official Rate and
it will be immediately due and repayable, and the Company and/or the Employer may recover it at any time thereafter by any of the means referred to above. If any of the foregoing methods of collection are not allowed under Applicable Laws or if the
Optionee fails to comply with the Optionee’s obligations in connection with the Tax-Related Items as described in this section, the Company may refuse to deliver the shares of Common Stock acquired under
the Plan. 
 Joint Election 
 As a condition to
exercising the Options, the Optionee agrees to accept any liability for secondary Class 1 National Insurance contributions (the “Employer’s Liability”) which may be payable by the Company and/or the Employer in connection with
the Options and any event giving rise to Tax-Related Items. To accomplish the foregoing, the Optionee agrees to execute a joint election with the Company (the “Election”), the form of such Election
being formally approved by HMRC, and any other consent or elections required to accomplish the transfer of the Employer’s Liability to the Optionee. The Optionee further agrees to execute such other joint elections as may be required between
the Optionee and any successor to the Company and/or the Employer. If the Optionee does not enter into the Election when the Optionee accepts the Option Agreement or when otherwise requested by the Company and/or Employer, or if the Election is
revoked at any time by HMRC, the Optionee will not be entitled to exercise the Option unless the Optionee agree to pay an amount equal to the Employer’s Liability to the Company, the Employer and/or any Related Company. The Optionee further
agrees that the Company and/or the Employer may collect the Employer’s Liability by any of the means set forth in the Withholding section of the Option Agreement.}

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00270-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00270-of-00352.parquet"}]]