Document:

exv10w5

Exhibit 10.5

CLOVIS ONCOLOGY, INC.

2011 STOCK INCENTIVE PLAN

          1. Purpose.

          The purpose of the Plan is to assist the Company in attracting, retaining, motivating, and
rewarding certain key employees, officers, directors, and consultants of the Company and its
Affiliates and promoting the creation of long-term value for stockholders of the Company by closely
aligning the interests of such individuals with those of such stockholders. The Plan authorizes the
award of Stock-based incentives to Eligible Persons to encourage such persons to expend maximum
effort in the creation of stockholder value. The Plan shall become effective as of the Effective
Date, provided, however, that no grants of Awards shall be made under this Plan until the IPO
Effective Date. As of the IPO Effective Date, no further grants shall be made under the Prior
Plan.

          2. Definitions.

          For purposes of the Plan, the following terms shall be defined as set forth below:

          (a) “Affiliate” means, with respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with, such Person.

          (b) “Award” means any Option, Restricted Stock, Restricted Stock Unit, Stock
Appreciation Right, Performance Award, or other Stock-based award granted under the Plan.

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

          (d) “Change in Control” means:

          (i) a change in ownership or control of the Company effected through a transaction or
series of transactions (other than an offering of Stock to the general public through a
registration statement filed with the Securities and Exchange Commission or pursuant to a
Non-Control Transaction) whereby any “person” (as defined in Section 3(a)(9) of the Exchange
Act) or any two or more persons deemed to be one “person” (as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), other than the Company or any of its Affiliates, an employee
benefit plan (or its related trust) sponsored or maintained by the Company or any of its
Affiliates or any underwriter temporarily holding securities pursuant to an offering of such
securities, directly or indirectly acquire “beneficial ownership” (within the meaning of
Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than fifty
percent (50%) of the total combined voting power of the Company’s securities eligible to
vote in the election of the Board (the “Company Voting Securities”);

 

 

          (ii) the date, within any consecutive twenty-four (24) month period commencing on or
after the Effective Date, upon which individuals who constitute the Board as of the
Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a director subsequent
to the Effective Date whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least two thirds (2/3) of the directors then
constituting the Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for director, without
object to such nomination) shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest
(including but not limited to a consent solicitation) with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or consents by or
on behalf of a person other than the Board; or

          (iii) the consummation of a merger, consolidation, share exchange, or similar form of
corporate transaction involving the Company or any of its Affiliates that requires the
approval of the Company’s stockholders (whether for such transaction or the issuance of
securities in the transaction or otherwise) (a “Reorganization”), unless immediately
following such Reorganization (A) more than fifty percent (50%) of the total voting power of
(x) the corporation resulting from such Reorganization (the “Surviving Company”) or
(y) if applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of one hundred percent of the voting securities of the Surviving
Company (the “Parent Company”), is represented by Company Voting Securities that
were outstanding immediately prior to such Reorganization (or, if applicable, is represented
by shares into which such Company Voting Securities were converted pursuant to such
Reorganization), and such voting power among the holders thereof is in substantially the
same proportion as the voting power of such Company Voting Securities among holders thereof
immediately prior to the Reorganization; (B) no person (other than an employee benefit plan
(or its related trust) sponsored or maintained by the Surviving Company or the Parent
Company) is or becomes the beneficial owner, directly or indirectly, of fifty percent (50%)
or more of the total voting power of the outstanding voting securities eligible to elect
directors of the Parent Company (or, if there is no Parent Company, the Surviving Company);
and (C) at least a majority of the members of the board of directors of the Parent Company
(or, if there is no Parent Company, the Surviving Company) following the consummation of the
Reorganization were members of the Incumbent Board at the time of the Board’s approval of
the execution of the initial agreement providing for such Reorganization (any Reorganization
which satisfies all of the criteria specified in (A), (B), and (C) above shall be deemed to
be a “Non-Control Transaction”);

          (iv) the sale or disposition, in one or a series of related transactions, of fifty
percent (50%), by fair market value, of the assets of the Company to any “person”

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(as defined in Section 3(a)(9) of the Exchange Act) or to any two or more persons
deemed to be one “person” (as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
other than the Company’s Affiliates.

Notwithstanding the foregoing, (x) a Change in Control shall not be deemed to occur solely because
any person acquires beneficial ownership of fifty percent (50%) or more of the Company Voting
Securities as a result of an acquisition of Company Voting Securities by the Company that reduces
the number of Company Voting Securities outstanding; provided, that, if after such acquisition by
the Company such person becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially owned by such
person, a Change in Control shall then occur, and (y) with respect to the payment of any amount
that constitutes a deferral of compensation subject to Section 409A of the Code payable upon a
Change in Control, a Change in Control shall not be deemed to have occurred, unless the Change in
Control constitutes a change in the ownership or effective control of the Company or in the
ownership of a substantial portion of the assets of the Company under Section 409A(a)(2)(A)(v) of
the Code.

          (e) “Code” means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations thereto.

          (f) “Committee” means the Board or such other committee consisting of two or more
individuals appointed by the Board to administer the Plan and each other individual or committee of
individuals designated to exercise authority under the Plan.

          (g) “Company” means Clovis Oncology, Inc., a Delaware corporation.

          (h) “Company Voting Securities” shall have the meaning set forth in Section 2(d)(i)
above.

          (i) “Corporate Event” shall have the meaning set forth in Section 12(b) below.

          (j) “Disability” means, in the absence of an Award agreement or employment or other
service agreement between a Participant and the Service Recipient otherwise defining Disability,
the permanent and total disability of such Participant within the meaning of Section 22(e)(3) of
the Code. In the event that there is an Award agreement or employment or other service agreement
between a Participant and the Service Recipient defining Disability, “Disability” shall
have the meaning provided in such agreement.

          (k) “Disqualifying Disposition” means any disposition (including any sale) of Stock
acquired upon the exercise of an Incentive Stock Option made within the period that ends either (i)
two years after the date on which the Participant was granted the Incentive Stock Option or (ii)
one year after the date upon which the Participant acquired the Stock.

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          (l) “Effective Date” means the later of (i) the date on which the Board adopts the
Plan, and (ii) the date on which the Plan is approved by the Company’s shareholders.

          (m) “Eligible Person” means (i) each employee of the Company or of any of its
Affiliates, including each such employee who may also be a director of the Company or any of its
Affiliates; (ii) each non-employee director of the Company or any of its Affiliates; (iii) each
other natural person who provides substantial services to the Company or any of its Affiliates and
who is designated as eligible by the Committee; and (iv) any natural person who has been offered
employment or service by the Company or any of its Affiliates; provided that such prospective
service provider may not receive any payment or exercise any right relating to an Award until such
person has commenced employment or service with the Company or its Affiliates. An employee on an
approved leave of absence may be considered as still in the employ of the Company or its Affiliates
for purposes of eligibility for participation in the Plan.

          (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, including rules and regulations thereunder and successor provisions and rules and regulations
thereto.

          (o) “Expiration Date” means the date upon which the term of an Option or Stock
Appreciation Right expires, as determined under Section 5(b) or 8(b) hereof, as applicable.

          (p) “Fair Market Value” means, as of any date when the Stock is listed on one or more
national securities exchanges, the closing price reported on the principal national securities
exchange on which such Stock is listed and traded on the date of determination, or if the closing
price is not reported on such date of determination, the closing price on the most recent date on
which such closing price is reported. If the Stock is not listed on a national securities exchange,
the Fair Market Value shall mean the amount determined by the Board in good faith, and in a manner
consistent with Section 409A of the Code, to be the fair market value per share of Stock.

          (q) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.

          (r) “Incumbent Board” shall have the meaning set forth in Section 2(e)(ii) hereof.

          (s) “IPO” shall mean an initial underwritten public offering of the Company’s equity
securities pursuant to an effective Form S-1 registration statement filed under the Securities Act.

          (t) “IPO Effective Date” shall mean the effective date of an IPO.

          (u) “Misconduct” means, in the absence of an Award agreement or employment or other
service agreement between a Participant and the Service Recipient

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otherwise defining Misconduct, (i) a Participant has committed or engaged in negligent willful
conduct that is likely to be detrimental to the Company, (ii) a Participant has engaged in acts
which constitute theft, fraud, or other illegal or dishonest conduct, (iii) a Participant has
engaged in conduct which, in the good faith discretion of the Administrator, demonstrates the
Participant’s unfitness to serve as an employee, a non-employee director, or other service provider
of the Company or any of its Affiliates, (iv) a Participant makes public remarks that disparage the
Company, its Board, officers, directors, advisors, executives, Affiliates, or subsidiaries, (v) a
Participant violates such Participant’s fiduciary duty to the Company or duty of loyalty to the
Company, or (vi) a Participant breaches any term of this Plan, an Award agreement, or any other
agreement with the Company to which such Participant is a party. The determination that a
termination is for Misconduct shall be by the Administrator in its sole and exclusive judgment and
discretion. In the event that there is an Award agreement or employment or other service agreement
between a Participant and the Service Recipient defining Misconduct, “Misconduct” shall have the
meaning provided in such agreement, and a Termination by the Service Recipient for Misconduct
hereunder shall not be deemed to have occurred unless all applicable notice and cure periods in
such agreement are complied with.

          (v) “Non-Control Transaction” shall have the meaning set forth in Section 2(d)(iii)
above.

          (w) “Nonqualified Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

          (x) “Option” means a conditional right, granted to a Participant under Section 5
hereof, to purchase Stock at a specified price during specified time periods.

          (y) “Option Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of an individual Option grant.

          (z) “Parent Company” shall have the meaning set forth in Section 2(d)(iii) above.

          (aa) “Participant” means an Eligible Person who has been granted an Award under the
Plan, or if applicable, such other Person who holds an Award.

          (bb) “Performance Award” means an Award granted to a Participant under Section 8(f)(i)
hereof, which Award is subject to the achievement of Performance Objectives during a Performance
Period. A Performance Award shall be designated as a “Performance Share” or a
“Performance Unit” at the time of grant.

          (cc) “Performance Award Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of an individual Performance Award grant.

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          (dd) “Performance Objectives” means the performance objectives established pursuant to
this Plan for Participants who have received Performance Awards.

          (ee) “Performance Period” means the period designated for the achievement of
Performance Objectives.

          (ff) “Person” means any individual, corporation, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization, or other entity.

          (gg) “Plan” means this Clovis Oncology, Inc. 2011 Stock Incentive Plan.

          (hh) “Prior Plan” means the Clovis Oncology, Inc. 2009 Equity Incentive Plan.

          (ii) “Qualified Member” means a member of the Committee who is a “Non-Employee
Director” within the meaning of Rule 16b-3 under the Exchange Act and an “outside director” within
the meaning of Treasury Regulation 1.162-27(c) under Section 162(m) of the Code.

          (jj) “Qualifying Committee” shall have the meaning set forth in Section 3(b) hereof.

          (kk) “Reorganization” shall have the meaning set forth in Section 2(d)(iii) above.

          (ll) “Restricted Stock” means Stock granted to a Participant under Section 6 hereof
that is subject to certain restrictions and to a risk of forfeiture.

          (mm) “Restricted Stock Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of an individual Restricted Stock grant.

          (nn) “Restricted Stock Unit” means a notional unit representing the right to receive
one share of Stock (or the cash value of one share of Stock, if so determined by the Committee) on
a specified settlement date.

          (oo) “RSU Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of an individual grant of Restricted Stock Units.

          (pp) “SAR Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of an individual grant of Stock Appreciation Rights.

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          (qq) “Securities Act” means the Securities Act of 1933, as amended from time to time,
including rules and regulations thereunder and successor provisions and rules and regulations
thereto.

          (rr) “Service Recipient” means, with respect to a Participant holding a given Award,
either the Company or an Affiliate of the Company by which the original recipient of such Award is,
or following a Termination was most recently, principally employed or to which such original
recipient provides, or following a Termination was most recently providing, services, as
applicable.

          (ss) “Stock” means the Company’s common stock, par value $0.001 per share, and such
other securities as may be substituted for such stock pursuant to Section 12 hereof.

          (tt) “Stock Appreciation Right” means a conditional right to receive an amount equal
to the value of the appreciation in the Stock over a specified period. Except in the event of
extraordinary circumstances, as determined in the sole discretion of the Committee, or pursuant to
Section 12(b) below, Stock Appreciation Rights shall be settled in Stock.

          (uu) “Surviving Company” shall have the meaning set forth in Section 2(d)(iii) above.

          (vv) “Termination” means the termination of a Participant’s employment or service, as
applicable, with the Service Recipient; provided, however, that, if so determined by the Committee
at the time of any change in status in relation to the Service Recipient (e.g., a Participant
ceases to be an employee and begins providing services as a consultant, or vice versa), such change
in status will not be deemed a Termination hereunder. Unless otherwise determined by the Committee,
in the event that any Service Recipient ceases to be an Affiliate of the Company (by reason of
sale, divestiture, spin-off, or other similar transaction), unless a Participant’s employment or
service is transferred to another entity that would constitute a Service Recipient immediately
following such transaction, such Participant shall be deemed to have suffered a Termination
hereunder as of the date of the consummation of such transaction. Notwithstanding anything herein
to the contrary, a Participant’s change in status in relation to the Service Recipient shall not be
deemed a Termination hereunder with respect to any Awards constituting nonqualified deferred
compensation subject to Section 409A of the Code that are payable upon a Termination unless such
change in status constitutes a “separation from service” within the meaning of Section 409A of the
Code. Any payments in respect of an Award constituting nonqualified deferred compensation subject
to Section 409A of the Code that is payable upon a Termination shall be delayed for such period as
may be necessary to meet the requirements of Section 409A(a)(2)(B)(i) of the Code. On the first
business day following the expiration of such period, the Participant shall be paid, in a single
lump sum without interest, an amount equal to the aggregate amount of all payments delayed pursuant
to the preceding sentence, and any remaining payments not so delayed shall continue to be paid
pursuant to the payment schedule applicable to such Award.

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          3. Administration.

          (a) Authority of the Committee. Except as otherwise provided below, the Plan shall be
administered by the Committee. The Committee shall have full and final authority, in each case
subject to and consistent with the provisions of the Plan, to (i) select Eligible Persons to become
Participants; (ii) grant Awards; (iii) determine the type, number of shares of Stock subject to,
other terms and conditions of, and all other matters relating to, Awards; (iv) prescribe Award
agreements (which need not be identical for each Participant) and rules and regulations for the
administration of the Plan; (v) construe and interpret the Plan and Award agreements and correct
defects, supply omissions, and reconcile inconsistencies therein; (vi) suspend the right to
exercise Awards during any period that the Committee deems appropriate to comply with applicable
securities laws, and thereafter extend the exercise period of an Award by an equivalent period of
time; and (vii) make all other decisions and determinations as the Committee may deem necessary or
advisable for the administration of the Plan. Any action of the Committee shall be final,
conclusive, and binding upon all persons, including, without limitation, the Company, its
Affiliates, Eligible Persons, Participants, and beneficiaries of Participants.

          (b) Manner of Exercise of Committee Authority. At any time that a member of the
Committee is not a Qualified Member, any action of the Committee relating to an Award intended by
the Committee to qualify as “performance-based compensation” within the meaning of Section 162(m)
of the Code, or relating to an Award granted or to be granted to a Participant who is then subject
to Section 16 of the Exchange Act in respect of the Company, must be taken by a subcommittee,
designated by the Committee or the Board, composed solely of two or more Qualified Members (a
“Qualifying Committee”). Any action authorized by such a Qualifying Committee shall be
deemed the action of the Committee for purposes of the Plan. The express grant of any specific
power to the Committee, and the taking of any action by the Committee, shall not be construed as
limiting any power or authority of the Committee.

          (c) Delegation. To the extent permitted by applicable law, the Committee may delegate
to officers or employees of the Company or any of its Affiliates, or committees thereof, the
authority, subject to such terms as the Committee shall determine, to perform such functions under
the Plan, including, but not limited to, administrative functions, as the Committee may determine
appropriate. The Committee may appoint agents to assist it in administering the Plan.
Notwithstanding the foregoing or any other provision of the Plan to the contrary, any Award granted
under the Plan to any Eligible Person who is not an employee of the Company or any of its
Affiliates (including any non-employee director of the Company or any Affiliate) or to any Eligible
Person who is subject to Section 16 of the Exchange Act must be expressly approved by the Committee
or Qualifying Committee in accordance with subsection (b) above.

          (d) Section 409A. The Committee shall take into account compliance with Section 409A
of the Code in connection with any grant of an Award under the Plan, to the extent applicable.

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          4. Shares Available Under the Plan.

          (a) Number of Shares Available for Delivery. Subject to adjustment as provided in
Section 12 hereof, the number of shares of Stock reserved and available for delivery in connection
with Awards under the Plan shall equal the sum of (i) 1,250,000, as the same may, at the discretion
of the Board, be increased annually on the date of each annual meeting of the Company’s
stockholders by an amount of shares equal to the lowest of (A) the number of shares representing
four percent (4%) of the Company’s outstanding shares of Stock on such date, (B) 2,758,621 shares,
and (C) such lesser number of shares as determined by the Board, plus (ii) the number of shares of
Stock authorized for issuance or transfer under the Prior Plan that are not subject to awards
outstanding or previously exercised or settled as of the IPO Effective Date, and (iii) to the
extent that an award outstanding under the Prior Plan as of the IPO Effective Date expires or is
canceled, forfeited, settled in cash, or otherwise terminated without a delivery to the grantee of
the full number of shares to which the award related, the number of shares that are undelivered.
Shares of Stock delivered under the Plan shall consist of authorized and unissued shares or
previously issued shares of Stock reacquired by the Company on the open market or by private
purchase. Notwithstanding the foregoing, the number of shares of Stock available for issuance
hereunder shall not be reduced by shares issued in connection with a merger or acquisition as
contemplated by, as applicable, NASDAQ Listing Rule 5635(c) and IM-5635-1, NYSE Listed Company
Manual Section 303A.08, AMEX Company Guide Section 711, or other applicable stock exchange rules,
and their respective successor rules and listing exchange promulgations.

          (b) Share Counting Rules. The Committee may adopt reasonable counting procedures to
ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or
substitute awards) and make adjustments if the number of shares of Stock actually delivered differs
from the number of shares previously counted in connection with an Award. To the extent that an
Award expires or is canceled, forfeited, settled in cash, or otherwise terminated without a
delivery to the Participant of the full number of shares to which the Award related, the
undelivered shares will again be available for grant. Shares withheld in payment of the exercise
price or taxes relating to an Award and shares equal to the number surrendered in payment of any
exercise price or taxes relating to an Award shall be deemed to constitute shares not delivered to
the Participant and shall be deemed to again be available for Awards under the Plan; provided,
however, that such shares shall not become available for issuance hereunder if either (i) the
applicable shares are withheld or surrendered following the termination of the Plan or (ii) at the
time the applicable shares are withheld or surrendered, it would constitute a material revision of
the Plan subject to stockholder approval under any then-applicable rules of the national securities
exchange on which the Stock is listed.

          (c) 162(m) Limitation; Incentive Stock Options. Notwithstanding anything to the
contrary herein, during any time that the Company is subject to Section 162(m) of the Code, the
maximum number of shares of Stock with respect to which Options, Stock Appreciation Rights, and
Performance Awards (to the extent granted as an Award under the Plan) may be

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granted to any individual in any one calendar year shall not exceed the maximum number of
shares of Stock available for issue hereunder, as such number may change from time to time. All
shares of Stock reserved for issuance hereunder may be issued or transferred upon exercise or
settlement of Incentive Stock Options.

          5. Options.

          (a) General. Certain Options granted under the Plan are intended to qualify as
Incentive Stock Options. Options may be granted to Eligible Persons in such form and having such
terms and conditions as the Committee shall deem appropriate; provided, however, that Incentive
Stock Options may be granted only to Eligible Persons who are employees of the Company or an
Affiliate of the Company. The provisions of separate Options shall be set forth in separate Option
Agreements, which agreements need not be identical.

          (b) Term. The term of each Option shall be set by the Committee at the time of grant;
provided, however, that no Option granted hereunder shall be exercisable after the expiration of
ten (10) years from the date it was granted.

          (c) Exercise Price. The exercise price per share of Stock for each Option shall be set
by the Committee at the time of grant; provided, however, that if an Option is intended to qualify
as either (i) a “stock right” that does not provide for a “deferral of compensation” within the
meaning of Section 409A of the Code, (ii) “performance-based compensation” within the meaning of
Section 162(m) of the Code, or (iii) an Incentive Stock Option, then in each case the applicable
exercise price shall not be less than the Fair Market Value on the date of grant, subject to
subsection (g) below in the case of any Incentive Stock Option.

          (d) Payment for Stock. Payment for shares of Stock acquired pursuant to Options
granted hereunder shall be made in full upon exercise of an Option (i) in immediately available
funds in United States dollars, or by certified or bank cashier’s check; (ii) by delivery of shares
of Stock having a value equal to the exercise price; (iii) by a broker-assisted cashless exercise
in accordance with procedures approved by the Committee, whereby payment of the Option exercise
price or tax withholding obligations may be satisfied, in whole or in part, with shares of Stock
subject to the Option by delivery of an irrevocable direction to a securities broker (on a form
prescribed by the Committee) to sell shares of Stock and to deliver all or part of the sale
proceeds to the Company in payment of the aggregate exercise price and, if applicable, the amount
necessary to satisfy the Company’s withholding obligations; or (iv) by any other means approved by
the Committee (including, by delivery of a notice of “net exercise” to the Company, pursuant to
which the Participant shall receive the number of shares of Stock underlying the Option so
exercised reduced by the number of shares of Stock equal to the aggregate exercise price of the
Option divided by the Fair Market Value on the date of exercise). Anything herein to the contrary
notwithstanding, if the Committee determines that any form of payment available hereunder would be
in violation of Section 402 of the Sarbanes-Oxley Act of 2002, such form of payment shall not be
available.

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          (e) Vesting. Options shall vest and become exercisable in such manner, on such date or
dates, or upon the achievement of performance or other conditions, in each case as may be
determined by the Committee and set forth in an Option Agreement; provided, however, that
notwithstanding any such vesting dates, but in all cases subject to Section 11 below, the Committee
may in its sole discretion accelerate the vesting of any Option at any time and for any reason.
Unless otherwise specifically determined by the Committee, the vesting of an Option shall occur
only while the Participant is employed by or rendering services to the Service Recipient, and all
vesting shall cease upon a Participant’s Termination for any reason. If an Option is exercisable in
installments, such installments or portions thereof that become exercisable shall remain
exercisable until the Option expires.

          (f) Termination of Employment or Service. Except as provided by the Committee in an
Option Agreement or otherwise:

          (i) In the event of a Participant’s Termination prior to the Expiration Date for any
reason other than (A) by the Service Recipient for Misconduct, or (B) by reason of the
Participant’s death or Disability, (1) all vesting with respect to such Participant’s
Options shall cease, (2) all of such Participant’s unvested Options shall expire as of the
date of such Termination, and (3) all of such Participant’s vested Options shall remain
exercisable until the earlier of the Expiration Date and the date that is ninety (90) days
after the date of such Termination.

          (ii) In the event of a Participant’s Termination prior to the Expiration Date by reason
of such Participant’s death or Disability, (A) all vesting with respect to such
Participant’s Options shall cease, (B) all of such Participant’s unvested Options shall
expire as of the date of such Termination, and (C) all of such Participant’s vested Options
shall expire on the earlier of the Expiration Date and the date that is twelve (12) months
after the date of such Termination. In the event of a Participant’s death, such
Participant’s Options shall remain exercisable by the person or persons to whom a
Participant’s rights under the Options pass by will or the applicable laws of descent and
distribution until their expiration, but only to the extent that the Options were vested by
such Participant at the time of such Termination.

          (iii) In the event of a Participant’s Termination prior to the Expiration Date by the
Service Recipient for Misconduct, all of such Participant’s Options (whether or not vested)
shall immediately expire as of the date of such Termination.

          (g) Special Provisions Applicable to Incentive Stock Options.

          (i) No Incentive Stock Option may be granted to any Eligible Person who, at the time
the Option is granted, owns directly, or indirectly within the meaning of Section 424(d) of
the Code, stock possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or of any parent or subsidiary thereof, unless such
Incentive Stock Option (A) has an exercise price of at

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least one hundred ten percent (110%) of the Fair Market Value on the date of the grant
of such Option and (B) cannot be exercised more than five (5) years after the date it is
granted.

          (ii) To the extent that the aggregate Fair Market Value (determined as of the date of
grant) of Stock for which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all plans of the Company and its Affiliates)
exceeds $100,000, such excess Incentive Stock Options shall be treated as Nonqualified Stock
Options.

          (iii) Each Participant who receives an Incentive Stock Option must agree to notify the
Company in writing immediately after the Participant makes a Disqualifying Disposition of
any Stock acquired pursuant to the exercise of an Incentive Stock Option.

          6. Restricted Stock.

          (a) General. Restricted Stock may be granted to Eligible Persons in such form and
having such terms and conditions as the Committee shall deem appropriate. The provisions of
separate Awards of Restricted Stock shall be set forth in separate Restricted Stock Agreements,
which agreements need not be identical. Subject to the restrictions set forth in Section 6(b), and
except as otherwise set forth in the applicable Restricted Stock Agreement, the Participant shall
generally have the rights and privileges of a stockholder as to such Restricted Stock, including
the right to vote such Restricted Stock. Unless otherwise set forth in a Participant’s Restricted
Stock Agreement, cash dividends and stock dividends, if any, with respect to the Restricted Stock
shall be withheld by the Company for the Participant’s account, and shall be subject to forfeiture
to the same degree as the shares of Restricted Stock to which such dividends relate. Except as
otherwise determined by the Committee, no interest will accrue or be paid on the amount of any cash
dividends withheld.

          (b) Vesting and Restrictions on Transfer. Restricted Stock shall vest in such manner,
on such date or dates, or upon the achievement of performance or other conditions, in each case as
may be determined by the Committee and set forth in a Restricted Stock Agreement; provided,
however, that notwithstanding any such vesting dates, but in all cases subject to Section 11 below,
the Committee may in its sole discretion accelerate the vesting of any Award of Restricted Stock at
any time and for any reason. Unless otherwise specifically determined by the Committee, the vesting
of an Award of Restricted Stock shall occur only while the Participant is employed by or rendering
services to the Service Recipient, and all vesting shall cease upon a Participant’s Termination for
any reason. In addition to any other restrictions set forth in a Participant’s Restricted Stock
Agreement, until such time as the Restricted Stock has vested pursuant to the terms of the
Restricted Stock Agreement, the Participant shall not be permitted to sell, transfer, pledge, or
otherwise encumber the Restricted Stock.

- 12 -

 

          (c) Termination of Employment or Service. Except as provided by the Committee in a
Restricted Stock Agreement or otherwise, in the event of a Participant’s Termination for any reason
prior to the time that such Participant’s Restricted Stock has vested, (i) all vesting with respect
to such Participant’s Restricted Stock shall cease, and (ii) as soon as practicable following such
Termination, the Company shall repurchase from the Participant, and the Participant shall sell, all
of such Participant’s unvested shares of Restricted Stock at a purchase price equal to the original
purchase price paid for the Restricted Stock, or if the original purchase price is equal to $0,
such unvested shares of Restricted Stock shall be forfeited to the Company by the Participant for
no consideration as of the date of such Termination.

          7. Restricted Stock Units.

          (a) General. Restricted Stock Units may be granted to Eligible Persons in such form
and having such terms and conditions as the Committee shall deem appropriate. The provisions of
separate Restricted Stock Units shall be set forth in separate RSU Agreements, which agreements
need not be identical.

          (b) Vesting. Restricted Stock Units shall vest in such manner, on such date or dates,
or upon the achievement of performance or other conditions, in each case as may be determined by
the Committee and set forth in an RSU Agreement; provided, however, that notwithstanding any such
vesting dates, but in all cases subject to Section 11 below, the Committee may in its sole
discretion accelerate the vesting of any Restricted Stock Unit at any time and for any reason.
Unless otherwise specifically determined by the Committee, the vesting of a Restricted Stock Unit
shall occur only while the Participant is employed by or rendering services to the Service
Recipient, and all vesting shall cease upon a Participant’s Termination for any reason.

          (c) Delivery of Stock. Restricted Stock Units shall be subject to a deferral period as
set forth in the applicable RSU Agreement, which may or may not coincide with the vesting period,
as determined by the Committee in its discretion. Delivery of Stock, cash, or property, as
determined by the Committee, will occur upon a specified delivery date or dates upon the expiration
of the deferral period specified for the Restricted Stock Units in the RSU Agreement. Unless
otherwise set forth in a Participant’s RSU Agreement, a Participant shall not be entitled to
dividends, if any, with respect to Restricted Stock Units prior to the actual delivery of shares of
Stock.

          (d) Termination of Employment or Service. Except as provided by the Committee in an
RSU Agreement or otherwise, in the event of a Participant’s Termination for any reason prior to the
time that such Participant’s Restricted Stock Units have been settled, (i) all vesting with respect
to such Participant’s Restricted Stock Units shall cease, and (ii) any shares remaining undelivered
with respect to vested Restricted Stock Units then held by such Participant shall be delivered on
the delivery date or dates specified in the RSU Agreement.

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          8. Stock Appreciation Rights.

          (a) General. Stock Appreciation Rights may be granted to Eligible Persons in such form
and having such terms and conditions as the Committee shall deem appropriate. The provisions of
separate Stock Appreciation Rights shall be set forth in separate SAR Agreements, which agreements
need not be identical.

          (b) Term. The term of each Stock Appreciation Right shall be set by the Committee at
the time of grant; provided, however, that no Stock Appreciation Right granted hereunder shall be
exercisable after the expiration of ten (10) years from the date it was granted.

          (c) Base Price. The base price per share of Stock for each Stock Appreciation Right
shall be set by the Committee at the time of grant; provided, however, that if a Stock Appreciation
Right is intended to qualify as either (i) a “stock right” that does not provide for a “deferral of
compensation” within the meaning of Section 409A of the Code or (ii) “performance-based
compensation” within the meaning of Section 162(m) of the Code, then in each case the applicable
base price shall not be less than the Fair Market Value on the date of grant.

          (d) Vesting. Stock Appreciation Rights shall vest and become exercisable in such
manner, on such date or dates, or upon the achievement of performance or other conditions, in each
case as may be determined by the Committee and set forth in a SAR Agreement; provided, however,
that notwithstanding any such vesting dates, but in all cases subject to Section 11 below, the
Committee may in its sole discretion accelerate the vesting of any Stock Appreciation Right at any
time and for any reason. Unless otherwise specifically determined by the Committee, the vesting of
a Stock Appreciation Right shall occur only while the Participant is employed by or rendering
services to the Service Recipient, and all vesting shall cease upon a Participant’s Termination for
any reason. If a Stock Appreciation Right is exercisable in installments, such installments or
portions thereof that become exercisable shall remain exercisable until the Stock Appreciation
Right expires.

          (e) Payment upon Exercise. Payment upon exercise of a Stock Appreciation Right may be
made in cash, Stock, or property as specified in the SAR Agreement or determined by the Committee,
in each case having a value in respect of each share of Stock underlying the portion of the Stock
Appreciation Right so exercised, equal to the difference between the base price of such Stock
Appreciation Right and the Fair Market Value of one (1) share of Stock on the exercise date. For
purposes of clarity, each share of Stock to be issued in settlement of a Stock Appreciation Right
is deemed to have a value equal to the Fair Market Value of one (1) share of Stock on the exercise
date. In no event shall fractional shares be issuable upon the exercise of a Stock Appreciation
Right, and in the event that fractional shares would otherwise be issuable, the number of shares
issuable will be rounded down to the next lower whole number of shares, and the Participant will be
entitled to receive a cash payment equal to the value of such fractional share.

- 14 -

 

          (f) Termination of Employment or Service. Except as provided by the Committee in a SAR
Agreement or otherwise:

          (i) In the event of a Participant’s Termination prior to the Expiration Date for any
reason other than (A) by the Service Recipient for Misconduct, or (B) by reason of the
Participant’s death or Disability, (1) all vesting with respect to such Participant’s Stock
Appreciation Rights shall cease, (2) all of such Participant’s unvested Stock Appreciation
Rights shall expire as of the date of such Termination, and (3) all of such Participant’s
vested Stock Appreciation Rights shall remain exercisable until the earlier of the
Expiration Date and the date that is ninety (90) days after the date of such Termination.

          (ii) In the event of a Participant’s Termination prior to the Expiration Date by reason
of such Participant’s death or Disability, (A) all vesting with respect to such
Participant’s Stock Appreciation Rights shall cease, (B) all of such Participant’s unvested
Stock Appreciation Rights shall expire as of the date of such Termination, and (C) all of
such Participant’s vested Stock Appreciation Rights shall expire on the earlier of the
Expiration Date and the date that is twelve (12) months after the date of such Termination.
In the event of a Participant’s death, such Participant’s Stock Appreciation Rights shall
remain exercisable by the person or persons to whom a Participant’s rights under the Stock
Appreciation Rights pass by will or the applicable laws of descent and distribution until
their expiration, but only to the extent that the Stock Appreciation Rights were vested by
such Participant at the time of such Termination.

          (iii) In the event of a Participant’s Termination prior to the Expiration Date by the
Service Recipient for Misconduct, all of such Participant’s Stock Appreciation Rights
(whether or not vested) shall immediately expire as of the date of such Termination.

          9. Performance Awards.

          (a) General. Performance Awards may be granted to Eligible Persons in such form and
having such terms and conditions as the Committee shall deem appropriate. The provisions of
separate Performance Awards, including the determination of the Committee with respect to the form
of payout of Performance Awards, shall be set forth in separate Performance Award Agreements, which
agreements need not be identical.

          (b) Value of Performance Units and Performance Shares. Each Performance Unit shall
have an initial value that is established by the Committee at the time of grant. Each Performance
Share shall have an initial value equal to the Fair Market Value of the Stock on the date of grant.
In addition to any other non-performance terms included in the Performance Award Agreement, the
Committee shall set the applicable Performance Objectives in its discretion, which objectives,
depending on the extent to which they are met, will determine the

- 15 -

 

value and/or number of Performance Units or Performance Shares, as the case may be, that will
be paid out to the Participant.

          (c) Earning of Performance Units and Performance Shares. Upon the expiration of the
applicable Performance Period or other non-performance-based vesting period, if longer, the holder
of Performance Units or Performance Shares, as the case may be, shall be entitled to receive payout
on the value and number of the applicable Performance Units or Performance Shares earned by the
Participant over the Performance Period, to be determined as a function of the extent to which the
corresponding Performance Objectives have been achieved and any other non-performance-based terms
met. Notwithstanding anything herein to the contrary, under no circumstances shall any amounts
payable pursuant to a Performance Unit payable to any single Participant for any annual Performance
Period exceed $10,000,000.

          (d) Form and Timing of Payment of Performance Units and Performance Shares. Payment of
earned Performance Units and Performance Shares shall be as determined by the Committee and as
evidenced in the Performance Award Agreement. Subject to the terms of the Plan, the Committee, in
its sole discretion, may pay earned Performance Units and Performance Shares in the form of cash,
Stock, or other Awards (or in a combination thereof) equal to the value of the earned Performance
Units or Performance Shares, as the case may be, at the close of the applicable Performance Period,
or as soon as practicable after the end of the Performance Period. Any cash, Stock, or other Awards
issued in connection with a Performance Award may be issued subject to any restrictions deemed
appropriate by the Committee.

          (e) Termination of Employment or Service. Except as provided by the Committee in a
Performance Award Agreement or otherwise, if, prior to the time that the applicable Performance
Period has expired, a Participant undergoes a Termination for any reason, all of such Participant’s
Performance Awards shall be forfeited by the Participant to the Company for no consideration.

          (f) Performance Objectives.

          (i) Each Performance Award shall specify the Performance Objectives that must be
achieved before such Award shall become earned. The Company may also specify a minimum
acceptable level of achievement below which no payment will be made and may set forth a
formula for determining the amount of any payment to be made if performance is at or above
such minimum acceptable level but falls short of the maximum achievement of the specified
Performance Objectives.

          (ii) Performance Objectives may be described in terms of Company-wide objectives or
objectives that are related to the performance of an individual Participant, the specific
Service Recipient, or a division, department, or function within the Company or the Service
Recipient. Performance Objectives may be measured on an absolute or relative basis. Relative
performance may be measured by comparison to a group of peer companies or to a financial
market index. Performance Objectives shall be

- 16 -

 

limited to specified levels of or increases in one or more of the following: return on
equity; diluted earnings per share; net earnings; total earnings; earnings growth; return on
capital; working capital turnover; return on assets; earnings before interest and taxes;
earnings before interest, taxes, depreciation, and amortization; sales; sales growth; gross
margin; return on investment; increase in the fair market value per share of the Stock or
other Company securities; share price (including, but not limited to, growth measures and
total stockholder return); operating profit; cash flow (including, but not limited to,
operating cash flow and free cash flow); cash flow return on investment (which equals net
cash flow divided by total capital); inventory turns; financial return ratios; total return
to stockholders; market share; earnings measures/ratios; economic value added; balance sheet
measurements (including, but not limited to, receivable turnover); internal rate of return;
and expense targets.

          (iii) The Committee shall adjust Performance Objectives and the related minimum
acceptable level of achievement if, in the sole judgment of the Committee, events or
transactions have occurred after the applicable date of grant of a Performance Award that
are unrelated to the performance of the Company or Participant and result in a distortion of
the Performance Objectives or the related minimum acceptable level of achievement. Potential
transactions or events giving rise to adjustment include, but are not limited to, (1)
restructurings, discontinued operations, extraordinary items or events, and other unusual or
nonrecurring charges; (2) an event either not directly related to the operations of the
Company or not within the reasonable control of the Company’s management; and (3) a change
in tax law or accounting standards required by generally accepted accounting principles.

          10. Other Stock-Based Awards.

          The Committee is authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based upon or related to Stock, as deemed by the Committee to be
consistent with the purposes of the Plan. The Committee may also grant Stock as a bonus (whether or
not subject to any vesting requirements or other restrictions on transfer), and may grant other
awards in lieu of obligations of the Company or an Affiliate to pay cash or deliver other property
under this Plan or under other plans or compensatory arrangements, subject to such terms as shall
be determined by the Committee. The terms and conditions applicable to such Awards shall be
determined by the Committee and evidenced by Award agreements, which agreements need not be
identical.

          11. Minimum Vesting Conditions.

          Notwithstanding anything herein to the contrary, except (i) in extraordinary circumstances, as
determined by the Committee, (ii) in connection with or following a Corporate Event or a
Termination, (iii) upon prior approval by the Company’s shareholders, or (iv) with

- 17 -

 

respect to shares of unrestricted Stock issued to a Participant as a bonus pursuant to Section
10 above, all Awards granted hereunder shall be subject to a minimum vesting schedule of three (3)
years, with no more than 331/3% of any given Award granted to a Participant vesting in each year,
commencing on the date of grant.

          12. Adjustment for Recapitalization, Merger, etc.

          (a) Capitalization Adjustments. The aggregate number of shares of Stock that may be
granted or purchased pursuant to Awards (as set forth in Section 4 hereof), the number of shares of
Stock covered by each outstanding Award, and the price per share of Stock in each such Award shall
be equitably and proportionally adjusted or substituted, as determined by the Committee, as to the
number, price, or kind of a share of Stock or other consideration subject to such Awards (i) in the
event of changes in the outstanding Stock or in the capital structure of the Company by reason of
stock dividends, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in capitalization occurring
after the date of grant of any such Award (including any Corporate Event, as defined below); or
(ii) in the event of any change in applicable laws or circumstances that results in or could result
in, in either case, as determined by the Committee in its sole discretion, any substantial dilution
or enlargement of the rights intended to be granted to, or available for, Participants in the Plan.

          (b) Corporate Events. Notwithstanding the foregoing, except as provided by the
Committee in an Award agreement or otherwise, in connection with (i) a merger or consolidation
involving the Company in which the Company is not the surviving corporation; (ii) a merger or
consolidation involving the Company in which the Company is the surviving corporation but the
holders of shares of Stock receive securities of another corporation and/or other property or cash;
(iii) a Change in Control; or (iv) the reorganization or liquidation of the Company (each, a
“Corporate Event”), the Committee may, in its discretion, provide for any one or more of
the following:

          (i) The assumption or substitution of any or all Awards in connection with such
Corporate Event, in which case the Awards shall be subject to the adjustment set forth in
subsection (a) above, and to the extent that such Awards are Performance Awards or other
Awards that vest subject to the achievement of Performance Objectives or similar performance
criteria, such Performance Objectives or similar performance criteria shall be adjusted
appropriately to reflect the Corporate Event;

          (ii) The acceleration of vesting of any or all Awards, subject to the consummation of
such Corporate Event;

          (iii) The cancellation of any or all Awards (whether vested or unvested) as of the
consummation of such Corporate Event, together with the payment to the Participants holding
vested Awards (including any Awards that would vest upon the Corporate Event but for such
cancellation) so canceled of an amount in respect of

- 18 -

 

cancellation based upon the per-share consideration being paid for the Stock in
connection with such Corporate Event, less, in the case of Options, Stock Appreciation
Rights, and other Awards subject to exercise, the applicable exercise or base price;
provided, however, that holders of Options, Stock Appreciation Rights, and other Awards
subject to exercise shall be entitled to consideration in respect of cancellation of such
Awards only if the per-share consideration less the applicable exercise or base price is
greater than zero (and to the extent that the per-share consideration is less than or equal
to the applicable exercise or base price, such Awards shall be canceled for no
consideration); and

          (iv) The replacement of any or all Awards (other than Awards that are “stock rights”
that are not intended to provide for a “deferral of compensation” within the meaning of
Section 409A of the Code) with a cash incentive program that preserves the value of the
Awards so replaced (determined as of the consummation of the Corporate Event), with
subsequent payment of cash incentives subject to the same vesting conditions as applicable
to the Awards so replaced and payment to be made within thirty (30) days of the applicable
vesting date.

Payments to holders pursuant to clause (3) above shall be made in cash or, in the sole discretion
of the Committee, in the form of such other consideration necessary for a Participant to receive
property, cash, or securities (or combination thereof) as such Participant would have been entitled
to receive upon the occurrence of the transaction if the Participant had been, immediately prior to
such transaction, the holder of the number of shares of Stock covered by the Award at such time
(less any applicable exercise or base price). In addition, in connection with any Corporate Event,
prior to any payment or adjustment contemplated under this subsection (b), the Committee may
require a Participant to (A) represent and warrant as to the unencumbered title to his Awards, (B)
bear such Participant’s pro rata share of any post-closing indemnity obligations, and be subject to
the same post-closing purchase price adjustments, escrow terms, offset rights, holdback terms, and
similar conditions as the other holders of Stock, and (C) deliver customary transfer documentation
as reasonably determined by the Committee.

          (c) Fractional Shares. Any adjustment provided under this Section 12 may, in the
Committee’s discretion, provide for the elimination of any fractional share that might otherwise
become subject to an Award.

          13. Use of Proceeds.

          The proceeds received from the sale of Stock pursuant to the Plan shall be used for general
corporate purposes.

- 19 -

 

          14. Rights and Privileges as a Stockholder.

          Except as otherwise specifically provided in the Plan, no person shall be entitled to the
rights and privileges of Stock ownership in respect of shares of Stock that are subject to Awards
hereunder until such shares have been issued to that person.

          15. Transferability of Awards.

          Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution, and to the extent
subject to exercise, may not be exercised during the lifetime of the grantee other than by the
grantee. Notwithstanding the foregoing, except with respect to Incentive Stock Options, Awards and
a Participant’s rights under the Plan shall be transferable to the extent provided in an Award
agreement or otherwise determined at any time by the Committee.

          16. Employment or Service Rights.

          No individual shall have any claim or right to be granted an Award under the Plan or, having
been selected for the grant of an Award, to be selected for the grant of any other Award. Neither
the Plan nor any action taken hereunder shall be construed as giving any individual any right to be
retained in the employ or service of the Company or an Affiliate of the Company.

          17. Compliance with Laws.

          The obligation of the Company to deliver Stock upon vesting or exercise of any Award shall be
subject to all applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary,
the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from
offering to sell or selling, any shares of Stock pursuant to an Award unless such shares have been
properly registered for sale with the Securities and Exchange Commission pursuant to the Securities
Act or unless the Company has received an opinion of counsel, satisfactory to the Company, that
such shares may be offered or sold without such registration pursuant to an available exemption
therefrom and the terms and conditions of such exemption have been fully complied with. The Company
shall be under no obligation to register for sale or resale under the Securities Act any of the
shares of Stock to be offered or sold under the Plan or any shares of Stock to be issued upon
exercise or settlement of Awards. If the shares of Stock offered for sale or sold under the Plan
are offered or sold pursuant to an exemption from registration under the Securities Act, the
Company may restrict the transfer of such shares and may legend the Stock certificates representing
such shares in such manner as it deems advisable to ensure the availability of any such exemption.

- 20 -

 

          18. Withholding Obligations.

          As a condition to the vesting or exercise of any Award, the Committee may require that a
Participant satisfy, through deduction or withholding from any payment of any kind otherwise due to
the Participant, or through such other arrangements as are satisfactory to the Committee, the
minimum amount of all federal, state, and local income and other taxes of any kind required or
permitted to be withheld in connection with such vesting or exercise. The Committee, in its
discretion, may permit shares of Stock to be used to satisfy tax withholding requirements, and such
shares shall be valued at their Fair Market Value as of the settlement date of the Award; provided,
however, that the aggregate Fair Market Value of the number of shares of Stock that may be used to
satisfy tax withholding requirements may not exceed the minimum statutorily required withholding
amount with respect to such Award.

          19. Amendment of the Plan or Awards.

          (a) Amendment of Plan. The Board may amend the Plan at any time and from time to time.

          (b) Amendment of Awards. The Board or the Committee may amend the terms of any one or
more Awards at any time and from time to time.

          (c) Stockholder Approval; No Impairment. Notwithstanding anything herein to the
contrary, no amendment to the Plan or any Award under the Plan shall be effective without
stockholder approval to the extent that such approval is required pursuant to applicable law or the
applicable rules of each national securities exchange on which the Stock is listed. Additionally,
no amendment to the Plan or any Award under the Plan shall materially impair a Participant’s rights
under any Award unless the Participant consents in writing (it being understood that no action
taken by the Board or the Committee that is expressly permitted under the Plan, including, without
limitation, any actions described in Section 12 hereof, shall constitute an amendment to the Plan
or an Award under the Plan for such purpose). Notwithstanding the foregoing, subject to the
limitations of applicable law, if any, and without an affected Participant’s consent, the Board or
the Committee may amend the terms of the Plan or any one or more Awards under the Plan from time to
time as necessary to bring such Awards into compliance with Section 409A of the Code.

          (d) No Repricing of Awards Without Stockholder Approval. Notwithstanding subsection
(a) or (b) above, or any other provision of the Plan, the repricing of Awards shall not be
permitted without stockholder approval. For this purpose, a “repricing” means any of the following
(or any other action that has the same effect as any of the following): (i) changing the terms of
an Award to lower its exercise or base price (other than on account of capital adjustments
resulting from share splits, etc., as described in Section 12(a)); (ii) any other action that is
treated as a repricing under generally accepted accounting principles; and (iii) repurchasing for
cash or canceling an Award in exchange for another Award at a time when its

- 21 -

 

exercise or base price is greater than the Fair Market Value of the underlying Stock, unless
the cancellation and exchange occurs in connection with an event set forth in Section 12(b).

          20. Termination or Suspension of the Plan.

          The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan
shall terminate on the day before the tenth (10th) anniversary of the date the Plan is
adopted by the Board. No Awards may be granted under the Plan while the Plan is suspended or after
it is terminated; provided, however, that following any suspension or termination of the Plan, the
Plan shall remain in effect for the purpose of governing all Awards then outstanding hereunder
until such time as all Awards under the Plan have been terminated, forfeited, or otherwise
canceled, or earned, exercised, settled, or otherwise paid out, in accordance with their terms.

          21. Effective Date of the Plan.

          The Plan is effective as of the Effective Date.

          22. Miscellaneous.

          (a) Certificates. Stock acquired pursuant to Awards granted under the Plan may be
evidenced in such a manner as the Committee shall determine. If certificates representing Stock are
registered in the name of the Participant, the Committee may require that (i) such certificates
bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such
Stock, (ii) the Company retain physical possession of the certificates, and (iii) the Participant
deliver a stock power to the Company, endorsed in blank, relating to the Stock. Notwithstanding the
foregoing, the Committee may determine, in its sole discretion, that the Stock shall be held in
book-entry form rather than delivered to the Participant pending the release of any applicable
restrictions.

          (b) Clawback/Recoupment Policy. Notwithstanding anything contained herein to the
contrary, all Awards granted under the Plan shall be and remain subject to any incentive
compensation clawback or recoupment policy currently in effect or as may be adopted by the Board
and, in each case, as may be amended from time to time. No such policy adoption or amendment shall
in any event require the prior consent of any Participant.

          (c) Participants Outside of the United States. The Committee may modify the terms of
any Award under the Plan made to or held by a Participant who is then a resident, or primarily
employed or providing services, outside of the United States in any manner deemed by the Committee
to be necessary or appropriate in order that such Award shall conform to laws, regulations, and
customs of the country in which the Participant is then a resident or primarily employed or
providing services, or so that the value and other benefits of the Award to the Participant, as
affected by foreign tax laws and other restrictions applicable as a result of the Participant’s
residence, employment, or providing services abroad, shall be comparable to the

- 22 -

 

value of such Award to a Participant who is a resident, or primarily employed or providing
services, in the United States. An Award may be modified under this Section 22(c) in a manner that
is inconsistent with the express terms of the Plan, so long as such modifications will not
contravene any applicable law or regulation or result in actual liability under Section 16(b) of
the Exchange Act for the Participant whose Award is modified. Additionally, the Committee may adopt
such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan
by Eligible Persons who are foreign nationals or employed or providing services outside the United
States.

          (d) No Liability of Committee Members. No member of the Committee shall be liable
personally by reason of any contract or other instrument executed by such member or on his behalf
in his capacity as a member of the Committee or for any mistake of judgment made in good faith, and
the Company shall indemnify and hold harmless each member of the Committee and each other employee,
officer, or director of the Company to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against all costs and expenses (including
counsel fees) and liabilities (including sums paid in settlement of a claim) arising out of any act
or omission to act in connection with the Plan, unless arising out of such person’s own fraud or
willful misconduct; provided, however, that approval of the Board shall be required for the payment
of any amount in settlement of a claim against any such person. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company’s certificate or articles of incorporation or bylaws, each as may
be amended from time to time, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.

          (e) Payments Following Accidents or Illness. If the Committee shall find that any
person to whom any amount is payable under the Plan is unable to care for his affairs because of
illness or accident, or is a minor, or has died, then any payment due to such person or his estate
(unless a prior claim therefor has been made by a duly appointed legal representative) may, if the
Committee so directs the Company, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the Committee to be a
proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be
a complete discharge of the liability of the Committee and the Company therefor.

          (f) Governing Law. The Plan shall be governed by and construed in accordance with the
internal laws of the State of Colorado without reference to the principles of conflicts of laws
thereof.

          (g) Funding. No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or
other entity to which contributions are made or otherwise to segregate any assets, nor shall the
Company be required to maintain separate bank accounts, books, records, or other

- 23 -

 

evidence of the existence of a segregated or separately maintained or administered fund for
such purposes. Participants shall have no rights under the Plan other than as unsecured general
creditors of the Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same rights as other
employees and service providers under general law.

          (h) Reliance on Reports. Each member of the Committee and each member of the Board
shall be fully justified in relying, acting, or failing to act, and shall not be liable for having
so relied, acted, or failed to act in good faith, upon any report made by the independent public
accountant of the Company and its Affiliates and upon any other information furnished in connection
with the Plan by any Person or Persons other than such member.

          (i) Titles and Headings. The titles and headings of the sections in the Plan are for
convenience of reference only, and in the event of any conflict, the text of the Plan, rather than
such titles or headings, shall control.

* * *

- 24 -exv10w7

Exhibit 10.7

OPTION GRANT NOTICE AND AGREEMENT

     Clovis Oncology, Inc. (the “Company”), pursuant to its 2011 Stock Incentive Plan (the
“Plan”), hereby grants to the Holder the number of Options set forth below, each Option
representing the right to purchase one share of Stock at the applicable Exercise Price (set forth
below). The Options are subject to all of the terms and conditions set forth in this Option Grant
Notice and Agreement (this “Agreement”) as well as all of the terms and conditions of the
Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise
defined herein shall have the same meaning as set forth in the Plan.

	 	 	 

	Holder:

	 	______________
	 
	 	 
	Date of Grant:

	 	______________
	 
	 	 
	Vesting Commencement Date

	 	______________
	 
	 	 
	Number of Options:

	 	______________
	 
	 	 
	Exercise Price:

	 	$_____________
	 
	 	 
	Expiration Date:

	 	______________
	 
	 	 
	Type of Option:

	 	[Nonqualified Stock Option] [Incentive Stock Option]
	 
	 	 
	Vesting Schedule:

	 	[Insert vesting schedule]
	 

	 	Notwithstanding the foregoing, in the event that the Holder’s
employment or service with the Service Recipient is terminated by the
Service Recipient without Misconduct [or resigns for Good Reason (as
defined in that certain Employment Agreement by and between the
Holder and the Company, dated as of [•], 20[•])] within twelve (12)
months following a Change in Control of the Company, all of the
Holder’s unvested Options shall vest in full upon such Termination.
	 
	 	 
	Exercise of Options:

	 	To exercise a vested Option, the Holder (or his or her authorized
representative) must give written notice to the Company, using the form of Option Exercise
Notice attached hereto as Exhibit A, stating the number of Options which he or she
intends to exercise. The Company will issue the shares of Stock with respect to which the
Options are exercised upon payment of the shares of Stock acquired in accordance with Section
5(d) of the Plan, which Section 5(d) is incorporated herein by reference and made a part
hereof; provided, however, that if the Holder wishes to use any
method of exercise other than in immediately available funds in

 

 

	 	 	 

	 

	 	United States dollars, or by certified or bank cashier’s check, the
Holder shall have received the prior written approval of the
Committee or its designee approving such method of exercise.
	 
	 	 
	 

	 	Upon exercise of Options, the Holder will be required to satisfy
applicable withholding tax obligations as provided in Section 18 of
the Plan.
	 
	 	 
	Termination:

	 	Section 5(f) of the Plan regarding treatment of Options upon Termination is incorporated herein by reference
and made a part hereof.
	 
	 	 
	Additional Terms:

	 	Options shall be subject to the following additional terms:

	 	•	 	Options shall be exercisable in whole shares of Stock only.
	 
	 	•	 	Each Option shall cease to be exercisable as to any share of
Stock when the Holder purchases the share of Stock or when the
Option otherwise expires or is forfeited.
	 
	 	•	 	Any certificates representing the Stock delivered to the
Holder shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which such shares
are listed, and any applicable federal or state laws, and the
Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions
as the Committee deems appropriate.
	 
	 	•	 	This Option Agreement does not confer upon the Holder any
right to continue as an employee or service provider of the
Employer or any other member of the Company Group.
	 
	 	•	 	This Option Agreement shall be construed and interpreted in
accordance with the laws of the State of Colorado, without
regard to the principles of conflicts of law thereof.
	 
	 	•	 	The Holder agrees that the Company may deliver by email all
documents relating to the Plan or these Options (including,
without limitation, a copy of the Plan) and all other documents
that the Company is required to deliver to its security holders
(including, without limitation, disclosures that may be required
by the Securities and Exchange Commission). The Holder also
agrees that the
Company may deliver these documents by posting them on a
website maintained by the Company or by a third party under
contract with the Company. If the Company posts 

-2-

 

	 	 	 	these documents on a website, it shall notify the Holder by email
or such other reasonable manner as then determined by the
Company.

* * *

THE UNDERSIGNED HOLDER ACKNOWLEDGES RECEIPT OF THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT
OF OPTIONS UNDER THIS AGREEMENT, AGREES TO BE BOUND BY THE TERMS OF BOTH THE AGREEMENT AND THE
PLAN.

	 	 	 	 	 	 	 	 	 

	CLOVIS ONCOLOGY, INC.	 	 	 	HOLDER
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Signature
	 	 	 	 	 	Signature
	Title:

	 	 	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

-3-

 

__________ __, 20__

Clovis Oncology, Inc.

[Address]

Attn: [____________]

Re: Notice of Exercise

	1.	 	By delivery of this Notice of Exercise, I am irrevocably electing to exercise options to
purchase shares of Common Stock, par value $___ per share (“Shares”) of Clovis Oncology, Inc.
(the “Company”) granted to me under the Company’s Stock Incentive Plan (the “Plan”).

	2.	 	The number of Shares I wish to purchase by exercising my options is ________.

	3.	 	The applicable purchase price (or exercise price) is $____ per Share, resulting in an
aggregate purchase price of $________ (the “Aggregate Purchase Price”).

	4.	 	I am satisfying my obligation to pay the Aggregate Purchase Price by:

	 	o	 	Delivering to the Company, with this Notice of Exercise, an amount equal to the
Aggregate Purchase Price in immediately available United States dollars, or by certified or
bank cashier’s check.
	 
	 	o	 	Authorizing the Company, through this Notice of Exercise, to effectuate a “net
exercise,” pursuant to which I will receive the number of Shares exercised (as set forth in
paragraph 2 above), reduced by the number of Shares equal to the Aggregate Purchase Price
divided by the fair market value per Share on the date of exercise. I have
attached to this Notice of Exercise the written communication confirming the consent of the
Committee to my use of the net exercise procedure described herein.

	5.	 	To satisfy the applicable withholding taxes:

	 	o	 	I have enclosed an amount equal to the applicable withholding taxes in immediately
available United States dollars, or by certified or bank cashier’s check.
	 
	 	o	 	I elect to have such amount satisfied by the use of Shares such that the number of
Shares I receive upon exercise will be reduced (or further reduced if net exercise was
chosen above) by a number of Shares with an aggregate fair market value on the date of
exercise equal to any federal, state or local income or other taxes required by law to be
withheld by the Company. I have attached to this Notice of Exercise the written
communication confirming the consent of the Committee to my use of the withholding tax
procedure described herein.

	6.	 	I hereby agree to be bound by all of the terms and conditions set forth in the Plan and any
award agreement to which the options were granted under. If I am not the person to whom

- 1 -

 

	 	 	the options were granted by the Company, proof of my right to purchase the Shares of the Company
is enclosed.

	7.	 	I have been advised to consult with any legal, tax or financial advisors I have chosen in
connection with the purchase of the Shares.

	 	 	 	 	 	 	 

	Dated: _______________
	 
	 	 	 	 	 	 
	*
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	(Optionee’s signature)	 	 	 	(Additional signature, if necessary)
	 
	 	 	 	 	 	 
	 	 	 	 	 
	(Print name)	 	 	 	(Print name)
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	(Full address)	 	 	 	(Full address)

 

			
	*	 	Each person in whose name Shares are to be registered must sign this Notice of Exercise. (If
more than one name is listed, specify whether the owners will hold the Shares as community property
or as joint tenants with the right of survivorship).

- 2 -

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