Document:

EX-4.1

 Exhibit 4.1 

AFLAC INCORPORATED, 
 AS
ISSUER 
 AND 

THE BANK OF NEW YORK MELLON 

TRUST COMPANY, N.A., 
 AS
TRUSTEE 
 FOURTEENTH SUPPLEMENTAL INDENTURE 

Dated as of January 25, 2017 
  

 

¥60,000,000,000 

0.932% Senior Notes due 2027 

 TABLE OF CONTENTS 

 

							
	 	 	 	  	Page	 
	
	ARTICLE I	  
	
	0.932% SENIOR NOTES DUE 2027	  
			
	 Section 1.01
	 	 Establishment
	  	 	1	  
	 Section 1.02
	 	 Definitions
	  	 	2	  
	 Section 1.03
	 	 Payment of Principal and Interest
	  	 	2	  
	 Section 1.04
	 	 Denominations
	  	 	3	  
	 Section 1.05
	 	 Global Securities
	  	 	3	  
	 Section 1.06
	 	 Transfer
	  	 	3	  
	 Section 1.07
	 	 Defeasance
	  	 	3	  
	 Section 1.08
	 	 Additional Amounts
	  	 	3	  
	 Section 1.09
	 	 Tax Redemption
	  	 	5	  
	 Section 1.10
	 	 Further Issues
	  	 	6	  
	
	ARTICLE II	  
	
	MISCELLANEOUS PROVISIONS	  
			
	 Section 2.01
	 	 Recitals by the Company
	  	 	7	  
	 Section 2.02
	 	 Ratification and Incorporation of Original Indenture
	  	 	7	  
	 Section 2.03
	 	 Executed in Counterparts
	  	 	7	  
	 Section 2.04
	 	 New York Law to Govern
	  	 	7	  
			
	 EXHIBIT A
	 	 Form of Global Note
	  	 	A-1	  
	 EXHIBIT B
	 	 Form of Certificate of Authentication
	  	 	B-1	  

  
 i 

 THIS FOURTEENTH SUPPLEMENTAL INDENTURE (this “Fourteenth Supplemental Indenture”) is
made as of the 25th day of January, 2017, by and between AFLAC INCORPORATED, a Georgia corporation, as issuer (the “Company”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a
national banking association, as trustee (the “Trustee”): 
 WHEREAS, the Company has heretofore entered into a Senior Indenture,
dated as of May 21, 2009 (the “Original Indenture”), with the Trustee; 
 WHEREAS, the Original Indenture is incorporated
herein by reference, and the Original Indenture, as supplemented by this Fourteenth Supplemental Indenture, is herein called the “Indenture”; 

WHEREAS, under the Original Indenture, a new series of senior notes may at any time be established by the Board of Directors of the Company in
accordance with the provisions of the Original Indenture and the terms of such series may be described by a supplemental indenture executed by the Company and the Trustee; 

WHEREAS, the Company proposes to create under the Indenture a new series of senior notes; 

WHEREAS, additional senior notes of other series hereafter established, except as may be limited in the Original Indenture as at the time
supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified, and all senior notes issued by the Company of any one series need not be issued at the same time and, unless otherwise so
provided, may be reopened for issuances of additional senior notes of such series; and 
 WHEREAS, all things necessary to authorize the
execution and delivery of this Fourteenth Supplemental Indenture and make it a valid and binding agreement of the Company, in accordance with its terms, have been done. 

NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 
 ARTICLE I 

0.932% SENIOR NOTES DUE 2027 

Section 1.01 Establishment. There is hereby established a new series of senior notes to be issued under the Indenture, to be
designated as the Company’s 0.932% Senior Notes due 2027 (the “Senior Notes”). 
 There are to be authenticated and delivered
Senior Notes, initially limited in aggregate principal amount to ¥60,000,000,000 and no further Senior Notes shall be authenticated and delivered except as provided by Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Original Indenture and the
terms of this Fourteenth Supplemental Indenture; provided, however, that the Company may re-open this series of Senior Notes and the aggregate principal amount of the Senior Notes may be increased in the
future, without the consent of the holders of the Senior Notes, with the same ranking, interest rate, maturity date and other terms and with the same CUSIP and ISIN numbers as the Senior Notes other than with respect to: (i) the date of
issuance, (ii) the issue price and (iii) the date from which interest shall accrue and the amount of interest payable on the first Interest Payment Date following the issuance of any such additional Senior Notes (which terms shall be set
forth in a Board Resolution accompanying the Order pursuant to which any such additional Senior Notes are authenticated). Any such additional Senior Notes and the Senior 

 
Notes established pursuant hereto shall be considered collectively as a single class for all purposes of the Indenture; provided that such additional Senior Notes are fungible for U.S. federal
income tax purposes with any then-existing Senior Notes. The Senior Notes shall be issued in fully registered form. 
 The Senior Notes
shall be issued in the form of one or more Global Securities (as defined below) in substantially the form set out in Exhibit A hereto. 

The form of the Trustee’s Certificate of Authentication for the Senior Notes shall be substantially in the form set forth in
Exhibit B hereto. 
 Each Senior Note shall be dated the date of authentication thereof and shall bear interest from the date of
original issuance thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for. 

Section 1.02 Definitions. The following defined terms used herein shall, unless the context otherwise requires, have the meanings
specified below. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture. 

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day in which banking institutions in the
City of New York, Tokyo, or London are authorized and obligated by law, regulation or executive order to close. 
 “Global
Security” means, with respect to any series of securities, a security authenticated and delivered under the Original Indenture executed by the Company and held by the Trustee as custodian for the Depositary, all in accordance with the Original
Indenture, which shall be registered in the name of the Depositary or its nominee. 
 “Interest Payment Date” means
January 25 and July 25 of each year, commencing on July 25, 2017. 
 “Non-U.S.
Holder” means a beneficial owner of a Senior Note (other than a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not a U.S. holder. 

“Regular Record Date” means, with respect to each Interest Payment Date, the close of business on January 10 or July 10
immediately preceding such Interest Payment Date. 
 “Stated Maturity” means January 25, 2027. 

Section 1.03 Payment of Principal and Interest. The principal of the Senior Notes shall be due at Stated Maturity. The unpaid and
outstanding principal amount of the Senior Notes, and any overdue installment of interest thereon to the extent permitted by law, shall bear interest at the rate of 0.932% per year until paid or made available for payment, such interest to accrue
from the most recent Interest Payment Date on which interest has been paid or duly provided for or, if no interest has been paid, from January 25, 2017. Interest shall be paid semi-annually in arrears on each Interest Payment Date, commencing
on July 25, 2017, to the Person in whose name the Senior Notes are registered on the Regular Record Date for such Interest Payment Date, provided that interest payable at the Stated Maturity or on a redemption date as provided herein, will be
paid to the Person to whom principal is payable. Any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the holders on such Regular Record Date and may be paid as provided in Section 2.7 of
the Original Indenture. 

  
 2 

 Payments of interest on the Senior Notes will include interest accrued to but excluding the
respective Interest Payment Dates. Interest payments for the Senior Notes shall be computed and paid on the basis of a 360-day year consisting of twelve 30-day months.
In the event that any date on which interest is payable on the Senior Notes is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such next succeeding Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if
made on the date the payment was originally payable. 
 Payment of the principal, premium, if any, and interest due at the Stated Maturity
of, or on a redemption date for, the Senior Notes shall be made upon surrender of the Senior Notes at the Corporate Trust Office of the Trustee. The principal of and interest on the Senior Notes shall be paid in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of public and private debts. Payments of interest (including interest on any Interest Payment Date) will be made, subject to such surrender where applicable, at the option of
the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security register or (ii) by wire transfer at such place and to such account at a banking institution in the United States
as may be designated in writing to the Trustee at least 15 days prior to the date for payment by the Person entitled thereto. 

Section 1.04 Denominations. The Senior Notes will be issued only in denominations of ¥100,000,000 and integral multiples of
¥10,000,000 in excess thereof. 
 Section 1.05 Global Securities. The Senior Notes will initially be represented by one or
more fully registered global notes. Each such Senior Note will be deposited with, or on behalf of, a common depositary, and registered in the name of the nominee of the common depositary for the accounts of Clearstream Banking,
société anonyme (“Clearstream”) and Euroclear Bank S.A./N.V. (“Euroclear”). The Senior Notes may be held through Clearstream or Euroclear, either as a participant in such systems or indirectly through
organizations which are participants in such systems. Clearstream and Euroclear will hold interests in the Senior Notes on behalf of their respective participating organizations or customers through customers’ securities accounts in
Clearstream’s or Euroclear’s names on the books of their respective depositaries. Book-entry interests in the Senior Notes and all transfers relating to the Senior Notes will be reflected in the book-entry records of Clearstream and
Euroclear. 
 Owners of beneficial interests in such Global Securities will not be entitled to have the Senior Notes registered in their
names, will not receive or be entitled to receive physical delivery of the Senior Notes in definitive form and will not be considered the owners or holders of the notes under the Indenture, including for purposes of receiving any reports delivered
by the Company or the Trustee pursuant to the Indenture. Accordingly, each person owning a beneficial interest in a Senior Note must rely on the procedures of the depositary and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, in order to exercise any rights of a holder of the Senior Notes. 

Section 1.06 Transfer. No service charge will be made for any registration of transfer or exchange of Senior Notes, but payment
will be required of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. 

Section 1.07 Defeasance. The provisions of Sections 10.4 and 10.5 of the Original Indenture will apply to the Senior Notes. 

Section 1.08 Additional Amounts. All payments of principal and interest in respect of the Senior Notes will be made free and clear
of, and without deduction or withholding for or on account of 

  
 3 

 
any present or future taxes, duties, assessments or other governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed by the United States or any political
subdivision or taxing authority of or in the United States (collectively, “Taxes”), unless such withholding or deduction is required by law. 

In the event such withholding or deduction of Taxes is required by law, subject to the limitations described below, the Company will pay to
any Non-U.S. Holder such additional amounts (“Additional Amounts”) as may be necessary in order that every net payment by the Company or any paying agent of principal of or interest on the Senior
Notes (including upon redemption), after deduction or withholding for or on account of such Taxes, will not be less than the amount provided for in such Senior Notes to be then due and payable before deduction or withholding for or on account of
such Taxes. 
 However, the Company’s obligation to pay Additional Amounts shall not apply to: 

(a) any Taxes which would not have been so imposed, withheld or deducted but for: 

(1) the existence of any present or former connection between such holder or beneficial owner (or between a fiduciary, settlor, beneficiary,
member or shareholder or other equity owner of, or a person having a power over, such holder or beneficial owner, if such holder or beneficial owner is an estate, a trust, a limited liability company, a partnership, a corporation or other entity)
and the United States, including, without limitation, such holder or beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder or other equity owner or person having such a power) being or having been a citizen or resident or
treated as a resident of the United States or being or having been engaged in a trade or business in the United States or being or having been present in the United States or having or having had a permanent establishment in the United States; 

(2) the failure of such holder or beneficial owner to comply with any applicable certification, information, documentation or other reporting
requirement concerning the nationality, residence, identity or connection with the United States of such holder or beneficial owner or otherwise to establish entitlement to a partial or complete exemption from such Taxes (including, but not limited
to, the requirement to provide Internal Revenue Service Form W-8BEN, Form W-8BEN-E, Form
W-8ECI, or any subsequent versions thereof or successor thereto, and including, without limitation, any documentation requirement under an applicable income tax treaty); or 

(3) such holder’s or beneficial owner’s present or former status as a personal holding company, foreign personal holding company,
controlled foreign corporation, passive foreign investment company or foreign tax exempt organization with respect to the United States or as a corporation that accumulates earnings to avoid United States federal income tax; 

(b) any Taxes imposed, withheld or deducted by reason of the holder or beneficial owner: 

(1) owning or having owned, directly or indirectly, actually or constructively, 10% or more of the total combined voting power of all classes
of the Company’s stock, 
 (2) being a bank receiving interest described in section 881(c)(3)(A) of the Internal Revenue Code (as
defined in “Taxation—United States Federal Tax Considerations” below), or 
 (3) being a controlled foreign corporation with
respect to the United States that is related to the Company by stock ownership; 
 (c) any Taxes which would not have been so imposed,
withheld or deducted but for the presentation by the holder or beneficial owner of Senior Note for payment on a date more than 10 days after the date on which such payment became due and payable or the date on which payment of the Senior

  
 4 

 
Note is duly provided for and notice is given to holders, whichever occurs later, except to the extent that the holder or beneficial owner would have been entitled to such additional amounts on
presenting such Senior Note on any date during such 10-day period; 
 (d) any estate, inheritance,
gift, sales, transfer, capital gains, personal property, excise, wealth, interest equalization or similar Taxes; 
 (e) any Taxes which are
payable otherwise than by withholding from any payment of principal of or interest on such Senior Note; 
 (f) any Taxes which are payable
by a holder that is not the beneficial owner of the Senior Note, or a portion of the Senior Note, or that is a fiduciary, partnership, limited liability company or other similar entity, but only to the extent that a beneficial owner, a beneficiary
or settlor with respect to such fiduciary or member of such partnership, limited liability company or similar entity would not have been entitled to the payment of an additional amount had such beneficial owner, settlor, beneficiary or member
received directly its beneficial or distributive share of the payment; 
 (g) any Taxes required to be withheld by any paying agent from any
payment of principal of or interest on any Senior Note, if such payment can be made without such withholding by any other paying agent; 

(h) any Taxes that would not have been imposed, withheld or deducted but for a change in any law, treaty, regulation, or administrative or
judicial interpretation that becomes effective after the applicable payment becomes due or is duly provided for, whichever occurs later, to the extent such change in law, treaty, regulation or administrative interpretation would apply retroactively
to such payment; 
 (i) any Taxes imposed, withheld or deducted under Sections 1471 through 1474 of the Internal Revenue Code (or any
amended or successor provisions that are substantively comparable) and any current or future regulations or official interpretations thereof (“FATCA”), any agreement (including any intergovernmental agreement) entered into in connection
therewith, or any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA or an intergovernmental agreement in respect of FATCA; or 

(j) any combination of items (a), (b), (c), (d), (e), (f), (g), (h) and (i). 

For purposes of this section, the acquisition, ownership, enforcement or holding of or the receipt of any payment with respect to a Senior
Note will not constitute a connection (1) between the holder or beneficial owner and the United States or (2) between a fiduciary, settlor, beneficiary, member or shareholder or other equity owner of, or a person having a power over, such
holder or beneficial owner if such holder or beneficial owner is an estate, a trust, a limited liability company, a partnership, a corporation or other entity and the United States. 

Any reference in the Indenture or in the Senior Notes to principal or interest shall be deemed to refer also to Additional Amounts which may
be payable under the provisions of this section. 
 Except as specifically provided in the Senior Notes, the Company will not be required to
make any payment with respect to any tax, duty, assessment or other governmental charge imposed by any government or any political subdivision or taxing authority of or in any government or political subdivision. 

Section 1.09 Tax Redemption. Except as provided below, the Senior Notes may not be redeemed prior to the Stated Maturity. Unless
previously redeemed or repurchased and canceled, the 

  
 5 

 
Senior Notes will be repayable at par, including Additional Amounts, if any, on January 25, 2027, or such earlier date on which the same shall be due and payable in accordance with the terms
and conditions of the notes. However, if the Stated Maturity is not a business day, the Senior Notes will be payable on the next succeeding business day and no interest shall accrue for the period from the Stated Maturity to such payment date. 

The Senior Notes may be redeemed at the option of the Company, in whole but not in part, at a redemption price equal to 100% of the principal
amount of the Senior Notes to be redeemed, together with interest accrued and unpaid on the Senior Notes to be redeemed to, but excluding, the date fixed for redemption, at any time, on giving not less than 30 nor more than 60 days’ notice if:

 (a) the Company has or will become obligated to pay Additional Amounts as a result of any change in or amendment to the laws, regulations
or rulings of the United States or any political subdivision or any taxing authority of or in the United States affecting taxation, or any change in or amendment to an official application, interpretation, administration or enforcement of such laws,
regulations or rulings, which change or amendment is announced or becomes effective on or after January 18, 2017, or 
 (b) any action
shall have been taken by a taxing authority, or any action has been brought in a court of competent jurisdiction, in the United States or any political subdivision or taxing authority of or in the United States, including any of those actions
specified in (a) above, whether or not such action was taken or brought with respect to the Company, or any change, clarification, amendment, application or interpretation of such laws, regulations or rulings shall be officially proposed, in
any such case on or after January 18, 2017, which results in a substantial likelihood that the Company will be required to pay Additional Amounts on the next interest payment date. 

However, no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be, in the
case of a redemption for the reasons specified in (a) above, or there would be a substantial likelihood that the Company would be, in the case of a redemption for the reasons specified in (b) above, obligated to pay such Additional Amounts
if a payment in respect of the notes were then due and at the time such notification of redemption is given such circumstance remains in effect. 

Prior to the mailing of any notice of redemption pursuant to this section, the Company will deliver to the Trustee: 

(1) a certificate signed by one of its duly authorized officers stating that the Company is entitled to effect such redemption and setting
forth a statement of facts showing that the conditions precedent to the Company’s right so to redeem have occurred, and 
 (2) a
written opinion of independent legal counsel of recognized standing to the effect that the Company has or will become obligated to pay such Additional Amounts as a result of such change or amendment or that there is a substantial likelihood that the
Company will be required to pay such Additional Amounts as a result of such action or proposed change, clarification, amendment, application or interpretation, as the case may be. 

Such notice, once delivered by the Company to the Trustee, will be irrevocable. 

Section 1.10 Further Issues. The Company may from time to time, without notice to or the consent of the registered holders of
Senior Notes, create and issue further notes ranking equally with the Senior Notes in all respects. Such further notes may be consolidated and form a single series with the Senior Notes and have the same terms as to status, redemption or otherwise
as the notes (other than the 

  
 6 

 
issue date of such further notes and first payment of interest following the issue date of such further Senior Notes); provided that such additional Senior Notes are fungible for U.S. Federal
income tax purposes with any then-existing Senior Notes. 
 ARTICLE II 

MISCELLANEOUS PROVISIONS 

Section 2.01 Recitals by the Company. The recitals in this Fourteenth Supplemental Indenture are made by the Company only and not
by the Trustee, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Fourteenth Supplemental Indenture or of the Senior Notes. The Trustee shall not be
accountable for the use or application by the Company of the Senior Notes or the proceeds thereof. All of the provisions contained in the Original Indenture in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be
applicable in respect of the Senior Notes and of this Fourteenth Supplemental Indenture as fully and with like effect as if set forth herein in full. 

Section 2.02 Ratification and Incorporation of Original Indenture. As supplemented hereby, the Original Indenture is in all
respects ratified and confirmed, and the Original Indenture and this Fourteenth Supplemental Indenture shall be read, taken and construed as one and the same instrument. 

Section 2.03 Executed in Counterparts. This Fourteenth Supplemental Indenture may be simultaneously executed in several
counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument. 

Section 2.04 New York Law to Govern. This Fourteenth Supplemental Indenture and each Senior Note shall be deemed to be a contract
under the laws of the state of New York, and for all purposes shall be construed in accordance with the laws of such state, except as may be required by mandatory provisions of law. 

  
 7 

 IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and
behalf by its duly authorized officers, all as of the day and year first above written. 
  

					
	 AFLAC INCORPORATED,
 as
Issuer

		
	By:	 	 /s/ Frederick J. Crawford

		 	Name:	 	Frederick J. Crawford
		 	Title:	 	 Executive Vice President and

Chief Financial Officer

 [Signature Page to Fourteenth Supplemental Indenture] 

 IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and
behalf by its duly authorized officers, all as of the day and year first above written. 
  

			
	 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Trustee

		
	By:	 	 /s/ Valere Boyd

	Name:	 	Valere Boyd
	Title:	 	Vice President

 [Signature Page to Fourteenth Supplemental Indenture] 

 EXHIBIT A 

0.932% Senior Note due 2027 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE FOURTEENTH SUPPLEMENTAL INDENTURE TO THE ORIGINAL INDENTURE HEREINAFTER REFERRED TO.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF EUROCLEAR BANK, S.A./N.V., AS OPERATOR OF THE EUROCLEAR SYSTEM (“EUROCLEAR”) AND CLEARSTREAM BANKING, SOCIÉTÉ ANONYME (“CLEARSTREAM” AND,
TOGETHER WITH EUROCLEAR, “EUROCLEAR/CLEARSTREAM”), TO AFLAC INCORPORATED OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF THE BANK OF NEW YORK DEPOSITORY (NOMINEES)
LIMITED OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF EUROCLEAR/CLEARSTREAM (AND ANY PAYMENT IS MADE TO THE BANK OF NEW YORK DEPOSITORY (NOMINEES) LIMITED OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF EUROCLEAR/CLEARSTREAM), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, THE BANK OF NEW YORK DEPOSITORY (NOMINEES) LIMITED, HAS AN INTEREST
HEREIN. 
 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO THE NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. 

  
 A-1 

 No. 1 

CUSIP No. 001055 AS1 
 ISIN No.
XS1556040936 
 AFLAC INCORPORATED 

0.932% Senior Notes due 2027 
  

			
	Principal Amount:	  	¥60,000,000,000
		
	Regular Record Date:	  	with respect to each Interest Payment Date, the close of business on January 25 or July 25 immediately preceding such Interest Payment Date
		
	Original Issue Date:	  	January 25, 2017
		
	Stated Maturity:	  	January 25, 2027
		
	Interest Payment Dates:	  	January 25 and July 25, commencing on July 25, 2017
		
	Interest Rate:	  	0.932% per year
		
	Authorized Denomination:	  	¥100,000,000 and integral multiples of ¥10,000,000 in excess thereof

 Aflac Incorporated, a Georgia corporation (the “Company,” which term includes any successor
corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to The Bank of New York Depository (Nominees) Limited, the registered holder hereof, as nominee of The Bank of New York Mellon, London
Branch, as common depositary for Euroclear/Clearstream, or registered assigns, the principal sum of SIXTY BILLION JAPANESE YEN (¥60,000,000,000) on the Stated Maturity shown above, and to pay interest thereon, and on any overdue installment of
interest thereon to the extent permitted by law, from the most recent Interest Payment Date to which interest has been paid or duly provided for or, if no interest has been paid, from the Original Issue Date shown above, semi-annually in arrears on
each Interest Payment Date as specified above, commencing on July 25, 2017, and on the Stated Maturity at the rate per year shown above until the principal hereof or such overdue installment is paid or made available for payment. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment Date (other than an Interest Payment Date that is the Stated Maturity) will, as provided in the Indenture, be paid to the Person in whose name this Note (as defined on the
reverse hereof) is registered at the close of business on the Regular Record Date as specified above next preceding such Interest Payment Date, provided that any interest payable at Stated Maturity or a redemption date will be paid to the Person to
whom principal is payable. Except as otherwise provided in the Indenture, any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the holders on such Regular Record Date and may be paid as provided
in Section 2.7 of the Original Indenture. 
 Payments of interest on this Note (as defined on the reverse hereof) will include interest accrued to but
excluding the respective Interest Payment Dates. Interest payments for this Note shall be computed and paid on the basis of a 360-day year consisting of twelve 30-day
months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such next succeeding Business Day is in the next succeeding calendar year, payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable. For the purposes of this Note, “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day in which banking institutions in the City of New York, Tokyo, or
London are authorized and obligated by law, regulation or executive order to close. 

  
 A-2 

 Payment of the principal of and interest due at the Stated Maturity of, or on a redemption date
for, this Note shall be made upon surrender of this Note at the Corporate Trust Office of the Trustee. The principal of and interest on this Note shall be paid in Japanese yen. Payment of interest (including interest on an Interest Payment Date)
will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security register or (ii) by wire transfer at
such place and to such account at a banking institution as may be designated in writing to the Trustee at least 15 days prior to the date for payment by the Person entitled thereto. 

The Senior Notes (as defined on the reverse hereof) will be unsecured obligations of the Company and will rank equally in right of payment
with all the other unsecured, unsubordinated indebtedness of the Company from time to time outstanding. The Senior Notes will rank senior to any subordinated indebtedness of the Company. 

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. 
 Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

  
 A-3 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. 

 

			
	 AFLAC INCORPORATED,
 as
Issuer

		
	By:	 	  

	Name:	 	
	Title:	 	

  

	
	Attest:
	
	  

	Name:
	Title:

 CERTIFICATE OF AUTHENTICATION 

This is one of the 0.932% Senior Notes due 2027 referred to in the within-mentioned Indenture. 

 

							
		 		 	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
		 		 	as Trustee
				
	Dated: January 25, 2017	 		 	By:	 	  

		 		 	Authorized Signatory

  
 A-4 

 (Reverse Side of Note) 

This note (the “Note”) represents one of a duly authorized issue of senior notes of the Company issued and issuable in one or more
series under a Senior Indenture dated as of May 21, 2009 (the “Original Indenture”), as supplemented by the Fourteenth Supplemental Indenture dated as of January 25, 2017 (the “Fourteenth Supplemental Indenture” and,
together with the Original Indenture, the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee,” which term includes any successor trustee under the Indenture), to which
Indenture and all indentures incidental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the holders of the Senior Notes (as defined
below) issued thereunder and of the terms upon which said Senior Notes are, and are to be, authenticated and delivered. The Securities represented by this Note are one of the series designated on the face hereof as 0.932% Senior Notes due 2027 (the
“Senior Notes”), initially limited in aggregate principal amount to ¥60,000,000,000; provided, however, that the aggregate principal amount of the Senior Notes may be increased in the future, without the consent of the holders of the
Senior Notes, as provided in the Fourteenth Supplemental Indenture. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture. 

This Note is exchangeable in whole or from time to time in part for Senior Notes of this series in definitive registered form only as provided
in the Indenture. 
 If an Event of Default with respect to the Senior Notes shall occur and be continuing, the principal of the Senior
Notes may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. 
 The
Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the holders of the Senior Notes under the Indenture at any time by the Company
and the Trustee with the consent of the holders of not less than a majority in aggregate principal amount of the Senior Notes at the time Outstanding. The Indenture also contains provisions permitting the holders of specified percentages in
principal amount of the Senior Notes at the time Outstanding, on behalf of the holders of all Senior Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the holder of this Note shall be conclusive and binding upon such holder and upon all future holders of this Note and of any Senior Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. 
 The Indenture contains provisions for
defeasance at any time of (i) the entire indebtedness of the Company pursuant to this Note and (ii) restrictive covenants and the related Events of Default, upon compliance by the Company with certain conditions set forth therein, which
provisions apply to this Note. 
 All payments of principal and interest in respect of the Senior Notes will be made free and clear of, and without
deduction or withholding for or on account of any present or future taxes, duties, assessments or other governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed by the United States or any political subdivision or
taxing authority of or in the United States (collectively, “Taxes”), unless such withholding or deduction is required by law. 

In the event such withholding or deduction of Taxes is required by law, subject to the limitations described below, the Company will pay to
any Non-U.S. Holder such additional amounts (“Additional Amounts”) as may be necessary in order that every net payment by the Company or any paying agent of principal of or interest on the Senior
Notes (including upon redemption), after deduction or withholding for or on account of such Taxes, will not be less than the amount provided for in such Senior Notes to be then due and payable before deduction or withholding for or on account of
such Taxes. 

  
 A-5 

 However, the Company’s obligation to pay Additional Amounts shall not apply to: 

(a) any Taxes which would not have been so imposed, withheld or deducted but for: 

(1) the existence of any present or former connection between such holder or beneficial owner (or between a fiduciary, settlor, beneficiary,
member or shareholder or other equity owner of, or a person having a power over, such holder or beneficial owner, if such holder or beneficial owner is an estate, a trust, a limited liability company, a partnership, a corporation or other entity)
and the United States, including, without limitation, such holder or beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder or other equity owner or person having such a power) being or having been a citizen or resident or
treated as a resident of the United States or being or having been engaged in a trade or business in the United States or being or having been present in the United States or having or having had a permanent establishment in the United States; 

(2) the failure of such holder or beneficial owner to comply with any applicable certification, information, documentation or other reporting
requirement concerning the nationality, residence, identity or connection with the United States of such holder or beneficial owner or otherwise to establish entitlement to a partial or complete exemption from such Taxes (including, but not limited
to, the requirement to provide Internal Revenue Service Form W-8BEN, Form W-8BEN-E, Form
W-8ECI, or any subsequent versions thereof or successor thereto, and including, without limitation, any documentation requirement under an applicable income tax treaty); or 

(3) such holder’s or beneficial owner’s present or former status as a personal holding company, foreign personal holding company,
controlled foreign corporation, passive foreign investment company or foreign tax exempt organization with respect to the United States or as a corporation that accumulates earnings to avoid United States federal income tax; 

(b) any Taxes imposed, withheld or deducted by reason of the holder or beneficial owner: 

(1) owning or having owned, directly or indirectly, actually or constructively, 10% or more of the total combined voting power of all classes
of the Company’s stock, 
 (2) being a bank receiving interest described in section 881(c)(3)(A) of the Internal Revenue Code (as
defined in “Taxation—United States Federal Tax Considerations” below), or 
 (3) being a controlled foreign corporation with
respect to the United States that is related to the Company by stock ownership; 
 (c) any Taxes which would not have been so imposed,
withheld or deducted but for the presentation by the holder or beneficial owner of Senior Note for payment on a date more than 10 days after the date on which such payment became due and payable or the date on which payment of the Senior Note is
duly provided for and notice is given to holders, whichever occurs later, except to the extent that the holder or beneficial owner would have been entitled to such additional amounts on presenting such Senior Note on any date during such 10-day period; 
 (d) any estate, inheritance, gift, sales, transfer, capital gains, personal property,
excise, wealth, interest equalization or similar Taxes; 
 (e) any Taxes which are payable otherwise than by withholding from any payment of
principal of or interest on such Senior Note; 

  
 A-6 

 (f) any Taxes which are payable by a holder that is not the beneficial owner of the Senior Note,
or a portion of the Senior Note, or that is a fiduciary, partnership, limited liability company or other similar entity, but only to the extent that a beneficial owner, a beneficiary or settlor with respect to such fiduciary or member of such
partnership, limited liability company or similar entity would not have been entitled to the payment of an additional amount had such beneficial owner, settlor, beneficiary or member received directly its beneficial or distributive share of the
payment; 
 (g) any Taxes required to be withheld by any paying agent from any payment of principal of or interest on any Senior Note, if
such payment can be made without such withholding by any other paying agent; 
 (h) any Taxes that would not have been imposed, withheld or
deducted but for a change in any law, treaty, regulation, or administrative or judicial interpretation that becomes effective after the applicable payment becomes due or is duly provided for, whichever occurs later, to the extent such change in law,
treaty, regulation or administrative interpretation would apply retroactively to such payment; 
 (i) any Taxes imposed, withheld or
deducted under Sections 1471 through 1474 of the Internal Revenue Code (or any amended or successor provisions that are substantively comparable) and any current or future regulations or official interpretations thereof (“FATCA”), any
agreement (including any intergovernmental agreement) entered into in connection therewith, or any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA or an intergovernmental agreement in respect of FATCA; or

 (j) any combination of items (a), (b), (c), (d), (e), (f), (g), (h) and (i). 

For purposes of this section, the acquisition, ownership, enforcement or holding of or the receipt of any payment with respect to a Senior
Note will not constitute a connection (1) between the holder or beneficial owner and the United States or (2) between a fiduciary, settlor, beneficiary, member or shareholder or other equity owner of, or a person having a power over, such
holder or beneficial owner if such holder or beneficial owner is an estate, a trust, a limited liability company, a partnership, a corporation or other entity and the United States. 

Any reference in the Indenture or in the Senior Notes to principal or interest shall be deemed to refer also to Additional Amounts which may
be payable under the provisions of this section. 
 Except as specifically provided in the Senior Notes, the Company will not be required to
make any payment with respect to any tax, duty, assessment or other governmental charge imposed by any government or any political subdivision or taxing authority of or in any government or political subdivision. 

Except as provided below, the Senior Notes may not be redeemed prior to the Stated Maturity. Unless previously redeemed or repurchased and
canceled, the Senior Notes will be repayable at par, including Additional Amounts, if any, on January 25, 2017, or such earlier date on which the same shall be due and payable in accordance with the terms and conditions of the notes. However,
if the Stated Maturity is not a business day, the Senior Notes will be payable on the next succeeding business day and no interest shall accrue for the period from the Stated Maturity to such payment date. 

  
 A-7 

 The Senior Notes may be redeemed at the option of the Company, in whole but not in part, at a
redemption price equal to 100% of the principal amount of the Senior Notes to be redeemed, together with interest accrued and unpaid on the Senior Notes to be redeemed to, but excluding, the date fixed for redemption, at any time, on giving not less
than 30 nor more than 60 days’ notice if: 
 (a) the Company has or will become obligated to pay Additional Amounts as a result of any
change in or amendment to the laws, regulations or rulings of the United States or any political subdivision or any taxing authority of or in the United States affecting taxation, or any change in or amendment to an official application,
interpretation, administration or enforcement of such laws, regulations or rulings, which change or amendment is announced or becomes effective on or after January 18, 2017, or 

(b) any action shall have been taken by a taxing authority, or any action has been brought in a court of competent jurisdiction, in the United
States or any political subdivision or taxing authority of or in the United States, including any of those actions specified in (a) above, whether or not such action was taken or brought with respect to the Company, or any change,
clarification, amendment, application or interpretation of such laws, regulations or rulings shall be officially proposed, in any such case on or after January 18, 2017, which results in a substantial likelihood that the Company will be
required to pay Additional Amounts on the next interest payment date. However, no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be, in the case of a redemption for the reasons
specified in (a) above, or there would be a substantial likelihood that the Company would be, in the case of a redemption for the reasons specified in (b) above, obligated to pay such Additional Amounts if a payment in respect of the notes
were then due and at the time such notification of redemption is given such circumstance remains in effect. 
 Prior to the mailing of any
notice of redemption pursuant to this section, the Company will deliver to the Trustee: 
 (1) a certificate signed by one of its duly
authorized officers stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the Company’s right so to redeem have occurred, and 

(2) a written opinion of independent legal counsel of recognized standing to the effect that the Company has or will become obligated to pay
such Additional Amounts as a result of such change or amendment or that there is a substantial likelihood that the Company will be required to pay such Additional Amounts as a result of such action or proposed change, clarification, amendment,
application or interpretation, as the case may be. 
 Such notice, once delivered by the Company to the Trustee, will be irrevocable. 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on this Note at the time, place and rate, and in the coin or currency, herein prescribed. 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security
register, upon surrender of this Note for registration of transfer at the office or agency of the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company or the Security
registrar and duly executed by, the holder hereof or his attorney duly authorized in writing, and thereupon one or more new Senior Notes, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to
the designated transferee or transferees. No service charge shall be made for any such exchange or registration of transfer, but the Company will require payment of a sum sufficient to cover any tax or other governmental charge payable in connection
therewith. 
 Prior to due presentment of this Note for registration of transfer, the Company, the Trustee, any Person authorized by the
Company to pay the principal of or any premium or interest on any Senior Note on behalf of the Company (a “Paying Agent”) and the Security registrar may deem and treat the Person in 

  
 A-8 

 
whose name this Note is registered as the absolute owner hereof for all purposes, whether or not this Note be overdue and notwithstanding any notice of ownership or writing thereon made by anyone
other than the Security registrar, and neither the Company nor the Trustee nor any Paying Agent nor the Security registrar shall be affected by notice to the contrary. 

The Senior Notes are issuable only in registered form without coupons in denominations of ¥100,000,000 and integral multiples of
¥10,000,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Senior Notes are exchangeable for a like aggregate principal amount of Senior Notes of a different authorized denomination, as
requested by the holder surrendering the same upon surrender of the Senior Note or Senior Notes to be exchanged at the office or agency of the Company. 

No recourse shall be had for payment of the principal of or interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture, against any incorporator, as such or against any past, present or future shareholder, officer or director, as such, of the Company or of any successor, either directly or through the Company or any
successor, under any rule, law statute or constitutional provision, or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released, by the acceptance hereof and as
part of the consideration for the issuance hereof. 
 Unless the certificate of authentication hereon has been executed by the Trustee by
manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 
 This Note
shall be governed by, and construed in accordance with, the internal laws of the state of New York. 

  
 A-9 

 ABBREVIATIONS 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations: 
  

					
	TEN COM – as tenants in common	 		 	UNIF GIFT MIN ACT – Custodian under Uniform
		 		 	Gift to Minors Act
			
		 		 	  

		 		 	(State)
			
	TEN ENT – as tenants by the entireties	 		 	
			
	JT TEN – as joint tenants with rights of	 		 	CUST – Custodian
	survivorship and not as tenants in common	 		 	

 Additional abbreviations may also be used 

though not on the above list. 
 FOR VALUE
RECEIVED, the undersigned hereby sell(s) and transfer(s) unto 
 PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE 

 
  
  

 
 (please insert Social Security or other identifying
number of assignee) 
 the within Note and all rights thereunder, hereby irrevocably constituting and appointing 

 
  
  

 
  

 
 agent to transfer said Note on the books of the
Company, with full power of substitution in the premises. 
  

					
	Dated:	 		 	  

		 		 	  

		 		 	NOTICE: The signature to this assignment must
		 		 	correspond with the name as written upon the face of the
		 		 	within instrument in every particular without alteration
		 		 	or enlargement, or any change whatever.

  
 A-10 

 EXHIBIT B 

CERTIFICATE OF AUTHENTICATION 

This is one of the 0.932% Senior Notes due 2027 referred to in the within-mentioned Indenture. 

 

							
		 		 	THE BANK OF NEW YORK MELLON
		 		 	TRUST COMPANY, N.A.,
		 		 	as Trustee
				
	Dated:	 		 	By:	 	  

		 		 	Authorized Signatory

  
 B-1Exhibit 10.1

 

LEAP THERAPEUTICS, INC.

 

AMENDED AND RESTATED 2012 EQUITY INCENTIVE PLAN

 

 

TABLE OF CONTENTS

 

	
1.
    	
Purpose
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
3.
    	
Term of the Plan
    	
5
    
	
 
    	
 
    	
 
    
	
4.
    	
Stock Subject to the   Plan
    	
5
    
	
 
    	
 
    	
 
    
	
5.
    	
Administration
    	
6
    
	
 
    	
 
    	
 
    
	
6.
    	
Authorization of Grants
    	
7
    
	
 
    	
 
    	
 
    
	
7.
    	
Specific Terms of   Awards
    	
8
    
	
 
    	
 
    	
 
    
	
8.
    	
Adjustment Provisions
    	
15
    
	
 
    	
 
    	
 
    
	
9.
    	
Change of Control
    	
18
    
	
 
    	
 
    	
 
    
	
10.
    	
Settlement of Awards
    	
19
    
	
 
    	
 
    	
 
    
	
11.
    	
Reservation of Stock
    	
22
    
	
 
    	
 
    	
 
    
	
12.
    	
Limitation of Rights in   Stock; No Special Service Rights
    	
22
    
	
 
    	
 
    	
 
    
	
13.
    	
Unfunded Status of Plan
    	
22
    
	
 
    	
 
    	
 
    
	
14.
    	
Nonexclusivity of the   Plan
    	
22
    
	
 
    	
 
    	
 
    
	
15.
    	
Termination and   Amendment of the Plan
    	
23
    
	
 
    	
 
    	
 
    
	
16.
    	
Notices and Other   Communications
    	
24
    
	
 
    	
 
    	
 
    
	
17.
    	
Governing Law
    	
24
    

 

 

LEAP THERAPEUTICS, INC.

 

AMENDED AND RESTATED 2012 EQUITY INCENTIVE PLAN

 

1.                                      Purpose

 

This Plan is intended to provide incentives that will attract, retain and motive highly competent officers, directors, employees, consultants and advisors to promote the success of the Company’s business and align employees’ interests with stockholders’ interests.  The Plan is intended to be an Incentive Option plan within the meaning of Section 422 of the Code, but not all Awards are required to be Incentive Options.

 

2.                                      Definitions

 

As used in this Plan, the following terms shall have the respective meanings set out below, unless the context clearly requires otherwise:

 

2.1.                            “Accelerate”, “Accelerated”, and “Acceleration”, means: (a) when used with respect to an Option or Stock Appreciation Right, that as of the time of reference such Option or Stock Appreciation Right will become exercisable with respect to some or all of the shares of Stock for which it was not then otherwise exercisable by its terms; (b) when used with respect to Restricted Stock or Restricted Stock Units, that the Risk of Forfeiture otherwise applicable to such Restricted Stock or Restricted Stock Units shall expire with respect to some or all of such shares of Restricted Stock or such Restricted Stock Units then still otherwise subject to the Risk of Forfeiture; and (c) when used with respect to Performance Units, that the applicable Performance Goals or other business objectives shall be deemed to have been met as to some or all of such Performance Units.

 

2.2.                            “Affiliate” means any corporation, partnership, limited liability company, business trust, or other entity controlling, controlled by or under common control with the Company.

 

2.3.                            “Award” means any grant or sale pursuant to the Plan of Options, Stock Appreciation Rights, Performance Units, Restricted Stock, Restricted Stock Units, Stock Grants or any of the foregoing intended to constitute Qualified Performance-Based Awards, regardless of whether such grant or sale occurred prior to, on or after the Plan Amendment Effective Time.

 

2.4.                            “Award Agreement” means an agreement between the Company and the recipient of an Award, or other notice of grant of an Award, setting forth the terms and conditions of the Award.

 

2.5.                            “Board” means the Company’s Board of Directors.

 

2.6.                            “Change of Control” shall have the meaning assigned to such term in the Award Agreement for the particular Award or in any other agreement incorporated by reference into the Award Agreement for purposes of defining such term.  In the absence of any other Change of Control definition in the Award Agreement (or in any other agreement incorporated by reference into the Award Agreement), Change of Control means the occurrence of any of the following at any time after the Effective Time of the Merger:

 

 

(a) a Transaction (as defined in Section 8.4), unless securities possessing more than 50% of the total combined voting power of the survivor’s or acquiror’s outstanding securities (or the securities of any parent thereof) are held by a person or persons who held securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities immediately prior to that Transaction, or

 

(b) any person or group of persons (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended and in effect from time to time) that, directly or indirectly, acquires, including but not limited to by means of a merger or consolidation, beneficial ownership (determined pursuant to Securities and Exchange Commission Rule 13d-3 promulgated under the said Exchange Act) of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities unless pursuant to a tender or exchange offer made directly to the Company’s stockholders that the Board recommends such stockholders accept, other than (i) the Company or any of its Affiliates, (ii) an employee benefit plan of the Company or any of its Affiliates, (iii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, or (iv) an underwriter temporarily holding securities pursuant to an offering of such securities, or

 

(c) over a period of thirty-six (36) consecutive months or less, there is a change in the composition of the Board such that a majority of the Board members (rounded up to the next whole number, if a fraction) ceases, by reason of one or more proxy contests for the election of Board members, to be composed of individuals who either (i) have been Board members continuously since the beginning of that period, or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in the preceding clause (i) who were still in office at the time that election or nomination was approved by the Board.

 

2.7.                            “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto, and any regulations issued from time to time thereunder.

 

2.8.                            “Committee” means the Compensation Committee of the Board, which in general is responsible for the administration of the Plan, as provided in Section 5 of this Plan.  For any period during which no such committee is in existence “Committee” shall mean the Board and all authority and responsibility assigned to the Committee under the Plan shall be exercised, if at all, by the Board.  Notwithstanding the foregoing, the term Committee, as used throughout this Plan, shall mean (1) any committee of the Board (other than the Compensation Committee of the Board) appointed by the Board to exercise the rights and powers of the Committee under this Plan with respect to any particular Award or Awards or any particular types of Awards or (2) any two or more members of the Board appointed by the Board to exercise the rights and powers of the Committee under this Plan with respect to any particular Award or Awards or any particular types of Awards. With respect to Awards that are intended to be “qualified performance-based compensation” under Section 162(m) of the Code, the Committee appointed or empowered by the Board to grant, and to exercise all of the rights and powers of the Committee under this Plan with respect to, such Awards shall consist of two or more persons appointed by the Board, all of whom shall be “outside directors” as defined under section 162(m) of the Code.

 

2.9.                            “Company” means Leap Therapeutics, Inc., a corporation organized under the laws of the State of Delaware.

 

2.10.                     “Effective Time” has the meaning set forth in the Merger Agreement.

 

2

 

2.11.                     “Forfeiture,” “forfeit,” and derivations thereof, when used in respect of Restricted Stock purchased by a Participant, includes the Company’s repurchase of such Restricted Stock at less than its then Market Value as a means intended to effect a forfeiture of value.

 

2.12.                     “Grant Date” means the date as of which an Option is granted, as determined under Section 7.1(a).

 

2.13.                     “Incentive  Option” means an Option that by its terms is to be treated as an “incentive stock option” within the meaning of Section 422 of the Code.

 

2.14.                     “Leap Charter” means the Third Amended and Restated Charter of the Company.

 

2.15.                     “Market  Value” means the value of a share of Stock on a particular date determined by such methods or procedures as may be established by the Committee.  Unless otherwise determined by the Committee, the Market Value of Stock as of any date is the closing price for the Stock as reported on the New York Stock Exchange (or on any other national securities exchange on which the Stock is then listed) for that date or, if no closing price is reported for that date, the closing price on the first following date for which a closing price is reported.  For purposes of Awards effective as of the effective date of the Company’s initial public offering, Market Value of Stock shall be the price at which the Company’s Stock is offered to the public in its initial public offering.

 

2.16.                     “M-CO” means Macrocure Ltd., a company formed under the laws of the State of Israel and registered under No. 514083765 with the Israeli Registrar of Companies.

 

2.17.                     “Merger” has the meaning set forth in the Merger Agreement.

 

2.18.                     “Merger Agreement” means that certain Agreement and Plan of Merger, dated as of August 29, 2016, by and among the Company, M-CO Merger Sub Ltd, a company formed under the laws of the State of Israel and registered under No. 515506855 with the Israeli Registrar of Companies, and M-CO, as amended and in effect from time to time.

 

2.19.                     “Nonstatutory  Option” means any Option that is not an Incentive Option.

 

2.20.                     “Option” means an option to purchase shares of Stock.

 

2.21.                     “Optionee” means an eligible individual to whom an Option shall have been granted under the Plan, regardless of whether such grant occurred prior to, on or after the Plan Amendment Effective Time.

 

2.22.                     “Participant” means any holder of an outstanding Award under the Plan, regardless of whether such outstanding Award was granted prior to, on or after the Plan Amendment Effective Time.

 

2.23.                     “Performance Criteria” and “Performance Goals” have the meanings given such terms in Section 7.7(f).

 

2.24.                     “Performance Period” means the one or more periods of time, which may be of varying and overlapping durations, selected by the Committee, over which the attainment of one

 

3

 

or more Performance Goals or other business objectives will be measured for purposes of determining a Participant’s right to, and the payment of, an Award.

 

2.25.                     “Performance Unit” means a right granted to a Participant under Section 7.5, to receive cash, Stock or other Awards, the payment of which is contingent on achieving Performance Goals or other business objectives established by the Committee.

 

2.26.                     “Plan” means this Amended and Restated 2012 Equity Incentive Plan, as amended from time to time, and including any attachments or addenda hereto.  Notwithstanding the foregoing, whenever the term “Plan” is used in this Amended and Restated 2012 Equity Incentive Plan, as amended, and the context of such use is with respect to, or includes, any period of time prior to the Plan Amendment Effective Time, then any such use of the term “Plan” means the Prior Plan with respect to such period of time prior to the Plan Amendment Effective Time.

 

2.27.                     “Plan  Amendment  Effective  Time” means the time immediately after the filing of the Leap Charter with the Secretary of State of the State of Delaware pursuant to, and in accordance with, the Merger Agreement on the date of the closing of the Merger.  For clarity, such time shall be prior to the Effective Time of the Merger pursuant to, and in accordance with, the Merger Agreement.

 

2.28.                     “Prior Plan” means the 2012 Equity Incentive Plan of the Company, as amended and in effect immediately prior to the Plan Amendment Effective Time.

 

2.29.                     “Qualified Performance-Based Awards” means Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

 

2.30.                     “Restricted Stock” means a grant or sale of shares of Stock to a Participant subject to a Risk of Forfeiture.

 

2.31.                     “Restricted Stock Units” means rights to receive shares of Stock at the close of a Restriction Period, subject to a Risk of Forfeiture.

 

2.32.                     “Restriction Period” means the period of time, established by the Committee in connection with an Award of Restricted Stock or Restricted Stock Units, during which the shares of Restricted Stock or Restricted Stock Units are subject to a Risk of Forfeiture described in the applicable Award Agreement.

 

2.33.                     “Risk of Forfeiture” means a limitation on the right of the Participant to retain Restricted Stock, Restricted Stock Units or any other Award, including a right of the Company to reacquire shares of Restricted Stock at less than their then Market Value, arising because of the occurrence or non-occurrence of specified events or conditions.

 

2.34.                     “Section 16 Insider” means an officer or director of the Company subject to the short-swing profit liabilities of Section 16 of the Securities Exchange Act of 1934, as amended.

 

2.35.                     “Stock” means common stock, par value $0.001 per share, of the Company, and such other securities as may be substituted for such common stock pursuant to Section 8.

 

4

 

2.36.                     “Stock Appreciation Right” means a right to receive any excess in the Market Value of shares of Stock (except as otherwise provided in Section 7.2(c)) over a specified exercise price.

 

2.37.                     “Stock Grant” means the grant of shares of Stock not subject to restrictions or other forfeiture conditions.

 

2.38.                     “Stockholders’  Agreement” means any agreement by and among the holders of at least a majority of the outstanding voting securities of the Company and setting forth, among other provisions, restrictions upon the transfer of shares of Stock or on the exercise of rights appurtenant thereto (including but not limited to voting rights).

 

2.39.                     “Ten  Percent  Owner” means a person who owns, or is deemed within the meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (or any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code).  Whether a person is a Ten Percent Owner shall be determined with respect to an Option based on the facts existing immediately prior to the Grant Date of the Option.

 

3.                                      Term of the Plan

 

The term of the Plan commenced on September 6, 2012, the date that the Board first adopted the Prior Plan, and shall end immediately prior to the tenth anniversary of the earlier of such date or September 6, 2012, the date that the Company’s stockholders first approved the Prior Plan.  Unless the Plan shall have been earlier terminated by the Board, Awards may be granted under the Plan at any time and from time to time until the end of the term of the Plan.  Awards granted prior to the expiration or earlier termination of the Plan shall not expire or terminate solely by reason of the expiration or earlier termination of the Plan.

 

4.                                      Stock Subject to the Plan

 

4.1.                            Plan Share Limitations.

 

(a)                                 Limitation.  At no time shall the number of shares of Stock issued pursuant to or subject to outstanding Awards granted under the Plan (including, without limitation, pursuant to Incentive Options) exceed 1,387,204 shares of Stock.

 

(b)                                 Application.  For purposes of applying the foregoing limitation of Section 4.1(a), (i) if any Option or Stock Appreciation Right expires, terminates, or is cancelled for any reason without having been exercised in full, or if any other Award is forfeited, the shares of Stock not purchased by or issued to the holder or which are forfeited, as the case may be, shall again be available for Awards to be granted under the Plan, (ii) if any Option is exercised by delivering previously owned shares of Stock or withholding of a portion of shares of Stock otherwise issuable in payment of the exercise price therefor, only the net number of shares issued, that is, the number of shares of Stock for which such Option is exercised net of  the number received or withheld by the Company in payment of the exercise price, shall be considered to have been issued pursuant to such Option, (iii) if any Stock Appreciation Right is exercised, the number of shares available for issuance under the Plan shall be reduced by only the net number of shares of Stock actually issued upon such exercise and (iv) any shares of Stock either delivered to or withheld by the Company in satisfaction of tax withholding obligations of the Company or an

 

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Affiliate with respect to an Award shall again be available for Awards to be granted under the Plan.  In addition, settlement of any Award shall not count against the foregoing limitations except to the extent settled in the form of Stock.  Shares of Stock issued pursuant to the Plan may be either authorized but unissued shares or shares held by the Company in its treasury.

 

4.2.                            Per Person Limitations.  The maximum number of shares of Stock that may be subject to Options or Stock Appreciation Rights or any combination thereof granted to any one Participant during any single calendar year shall be 1,387,204.  The maximum number of shares of Stock that may be subject to all other Awards or any combination thereof granted to any one Participant during any single calendar year that are intended to be Qualified Performance-Based Awards shall be 1,387,204.  The maximum value of Awards denominated in cash granted to any one person during any single calendar year and that are intended to be Qualified Performance-Based Awards shall be $5,000,000.  Each of the foregoing limitations shall be doubled with respect to awards granted to an individual during the first calendar year in which he or she commences employment.  The per Participant limits described in this Section 4.2 shall be construed and applied consistent with Section 162(m) of the Code.

 

4.3.                            Director Grant Limitations.  The maximum grant date value of shares of Stock subject to Awards made to any non-employee member of the Board during any calendar year, taken together with any cash fees earned by such non-employee Board member for services rendered during the calendar year, shall not exceed $2,000,000 in total value, with the value of such Awards calculated based on the grant date fair value of such Awards for financial reporting purposes.

 

4.4.                            Adjustment of Limitations.  Each of the share limitations of this Section 4 shall be subject to adjustment pursuant to Section 8 of the Plan, but in the case of the limitations of Section 4.2, only if and to the extent consistent with Section 162(m) of the Code.

 

5.                                      Administration

 

The Plan shall be administered by the Committee; provided, however, that at any time and on any one or more occasions the Board may itself exercise any of the powers and responsibilities assigned the Committee under the Plan with respect to Participants, other than Section 16 Insiders whereby only a majority of non-employee Directors of the Board may exercise the powers and responsibilities of the Committee, and when so acting shall have the benefit of all of the provisions of the Plan pertaining to the Committee’s exercise of its authorities hereunder; and provided further, however, that the Committee may delegate to an executive officer or officers the authority to grant Awards hereunder to employees who are not officers, and to consultants, up to such maximum number and in accordance with such other guidelines as the Committee shall specify by resolution at any time or from time to time.  To the extent required by applicable law, any such delegation may not include the authority to grant Restricted Stock, unless the delegate meets the requirements of applicable law.  Subject to the provisions of the Plan, the Committee shall have complete authority, in its discretion, to make or to select the manner of making all determinations with respect to each Award to be granted by the Company under the Plan including the officer, employee, consultant, advisor or director to receive the Award and the form of Award.  In making such determinations, the Committee may take into account the nature of the services rendered by the respective officers, employees, consultants, advisors and directors, their present and potential contributions to the success of the Company and its Affiliates, and such other factors as the Committee in its discretion shall deem relevant.  Subject to the provisions of the Plan, the Committee shall also have complete authority to

 

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interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of the respective Award Agreements (which need not be identical), and to make all other determinations necessary or advisable for the administration of the Plan.  The Committee’s determinations made in good faith on matters referred to in the Plan shall be final, binding and conclusive on all participants, beneficiaries, heirs, assigns or other persons having or claiming any interest under the Plan or an Award made pursuant hereto.

 

6.                                      Authorization of Grants

 

6.1.                            Eligibility.  The Committee may grant from time to time and at any time prior to the termination of the Plan one or more Awards, either alone or in combination with any other Awards, to any officer or employee of or consultant or advisor to one or more of the Company and its Affiliates or to any non-employee member of the Board or of any board of directors (or similar governing authority) of any Affiliate. However, only employees of the Company, and of any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code, shall be eligible for the grant of an Incentive Option.

 

6.2.                            General Terms of Awards.  Each grant of an Award shall be subject to all applicable terms and conditions of the Plan (including but not limited to any specific terms and conditions applicable to that type of Award set out in the following Section), and such other terms and conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe.  No prospective Participant shall have any rights with respect to an Award, unless and until such Participant shall have complied with the applicable terms and conditions of such Award (including if applicable delivering a fully executed copy of any agreement evidencing an Award to the Company).

 

6.3.                            Effect of Termination of Employment, Etc. Unless the Committee shall provide otherwise with respect to any Award (including, but not limited to, in a Participant’s Award Agreement), if the Participant’s employment or other association with the Company and its Affiliates ends for any reason, including because of the Participant’s employer ceasing to be an Affiliate, (a) any outstanding Option or Stock Appreciation Right of the Participant shall cease to be exercisable in any respect not later than three months following that event (or, in the case of Incentive Options granted prior to the Plan Amendment Effective Time, not later than 90 days following that event) and, for the period it remains exercisable following that event, shall be exercisable only to the extent exercisable at the date of that event (unless otherwise determined by the Committee in its sole discretion) , and (b) any other outstanding Award of the Participant to the extent that it is then still subject to Risk of Forfeiture shall be forfeited or otherwise subject to return to or repurchase by the Company on the terms specified in the applicable Award Agreement.  Cessation of the performance of services in one capacity, for example, as an employee, shall not result in termination of an Award while the Participant continues to perform services in another capacity, for example as a director.  Military or sick leave or other bona fide leave approved by the Company shall not be deemed a termination of employment or other association, provided that should such leave exceed three (3) months, then for purposes of determining the period within which an Incentive Option may be exercised as such under the federal tax laws, the Participant’s employment shall be deemed to cease on the first day immediately following the expiration of such three (3)-month period, unless the Participant is provided with the right to return to employment following such leave either by statute or by written contract.  Except to the extent otherwise required by law or expressly authorized by the Committee or by the Company’s written policy on leaves of absence, no service credit shall be given for vesting purposes for any period the Participant is on a leave of absence.

 

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6.4.                            Non-Transferability of Awards.  Except as otherwise provided in this Section 6.4, Awards shall not be transferable, and no Award or interest therein may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.  The provisions of the immediately preceding sentence shall not be applicable to Stock Grants.  Additionally, Restricted Stock shall not be subject to transfer restrictions under this Section 6.4 once the Restricted Stock is no longer subject to a Risk of Forfeiture.  All of a Participant’s rights in any Award may be exercised during the life of the Participant only by the Participant or the Participant’s legal representative.  However, the Committee may, at or after the grant of an Award of a Nonstatutory Option, or shares of Restricted Stock, provide that such Award may be transferred by the recipient to a family member; provided, however, that any such transfer is without payment of any consideration whatsoever and that no transfer shall be valid unless first approved by the Committee, acting in its sole discretion.  For this purpose, “family member” means any child, stepchild, grandchild, parent, grandparent, stepparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the employee’s household (other than a tenant or employee), a trust in which the foregoing persons have more than fifty (50) percent of the beneficial interests, a foundation in which the foregoing persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty (50) percent of the voting interests.

 

7.                                      Specific Terms of Awards

 

7.1.                            Options.

 

(a)                                 Date of Grant.  The granting of an Option shall take place at the time specified in the Award Agreement.

 

(b)                                 Exercise Price.  The price at which shares of Stock may be acquired under an Option shall be not less than 100% of the Market Value of Stock on the Grant Date, or not less than 110% of the Market Value of Stock on the Grant Date for an Incentive Option if the Optionee is a Ten Percent Owner.

 

(c)                                  Option Period.  No Incentive Option may be exercised on or after the tenth anniversary of the Grant Date, or on or after the fifth anniversary of the Grant Date if the Optionee is a Ten Percent Owner.  The Option period under each Nonstatutory Option shall not be so limited solely by reason of this Section.

 

(d)                                 Exercisability.  An Option may be immediately exercisable or become exercisable in such installments, cumulative or non-cumulative, as the Committee may determine.  In the case of an Option not otherwise immediately exercisable in full, the Committee may Accelerate such Option in whole or in part at any time; provided, however, that in the case of an Incentive Option, any such Acceleration of the Option would not cause the Option to fail to comply with the provisions of Section 422 of the Code or the Optionee consents to the Acceleration.

 

(e)                                  Method of Exercise.  An Option may be exercised by the Optionee giving written notice, in the manner provided in Section 17, specifying the number of shares of Stock with respect to which the Option is then being exercised.  The notice shall be accompanied by payment in the form of cash or check payable to the order of the Company in an amount equal

 

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to the exercise price of the shares of Stock to be purchased or, subject in each instance to the Committee’s approval, acting in its sole discretion, and to such conditions, if any, as the Committee may deem necessary to avoid adverse accounting effects to the Company,

 

(i) by delivery to the Company of shares of Stock having a Market Value equal to the exercise price of the shares of Stock to be purchased, or

 

(ii) by the Company withholding from the shares of Stock otherwise being purchased upon exercise of  the Option, shares of Stock having an aggregate Market Value equal to the aggregate exercise price of the shares to be purchased; provided, however, that the foregoing provisions of this Section 7.1(e)(ii) shall not be applicable with respect to any Incentive Option granted prior to the Plan Amendment Effective Time.

 

If the Stock is traded on an established market, payment of any exercise price may also be made through and under the terms and conditions of any formal cashless exercise program authorized by the Company entailing the sale of the Stock subject to an Option in a brokered transaction (other than to the Company).  Receipt by the Company of such notice and payment in any authorized or combination of authorized means shall constitute the exercise of the Option.  Within thirty (30) days thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or cause to be delivered to the Optionee or his agent a certificate or certificates or shall cause the Stock to be held in book-entry position through the direct registration system of the Company’s transfer agent for the number of shares then being purchased.  Such shares of Stock shall be fully paid and nonassessable.

 

(f)                                   Limit on Incentive Option Characterization.  An Incentive Option shall be considered to be an Incentive Option only to the extent that the number of shares of Stock for which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value (as of the date of the grant of the Option) in excess of the “current limit”.  The current limit for any Optionee for any calendar year shall be $100,000 minus the aggregate Market Value at the date of grant of the number of shares of Stock available for purchase for the first time in the same year under each other Incentive Option previously granted to the Optionee under the Plan (regardless whether any such other Incentive Option was granted at any time prior to, on or after the Plan Amendment Effective Time), and under each other Incentive Option previously granted to the Optionee under any other Incentive Option plan of the Company and its Affiliates, after December 31, 1986.  Any shares of Stock which would cause the foregoing limit to be violated shall be deemed to have been granted under a separate Nonstatutory Option, otherwise identical in its terms to those of the Incentive Option.

 

(g)                                  Notification of Disposition.  Each person exercising any Incentive Option granted under the Plan at any time prior to, on or after the Plan Amendment Effective Time shall be deemed to have covenanted with the Company to report to the Company any disposition of the shares of Stock issued upon such exercise prior to the expiration of the holding periods specified by Section 422(a)(1) of the Code and, if and to the extent that the realization of income in such a disposition imposes upon the Company federal, state, local or other withholding tax requirements, or any such withholding is required to secure for the Company an otherwise available tax deduction, to remit to the Company an amount in cash sufficient to satisfy those requirements.

 

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(h)                                 Special Override Provision.  Notwithstanding anything express or implied in the Plan to the contrary, no provisions of the Plan as in effect from and after the Plan Amendment Effective Time that are different from the provisions of the Prior Plan shall be implemented with respect to any Incentive Option granted prior to the Plan Amendment Effective Time to the extent it causes such Incentive Option to cease to be treated as an incentive stock option pursuant to the requirements of Section 422 of the Code and the regulations issued thereunder.

 

7.2.                            Stock Appreciation Rights.

 

(a)                                 Tandem or Stand-Alone.  Stock Appreciation Rights may be granted in tandem with an Option (at or, in the case of a Nonstatutory Option, after, the award of the Option), or alone and unrelated to an Option.  Stock Appreciation Rights in tandem with an Option shall terminate to the extent that the related Option is exercised, and the related Option shall terminate to the extent that the tandem Stock Appreciation Rights are exercised.

 

(b)                                 Exercise Price.  Stock Appreciation Rights shall have an exercise price of not less than one hundred percent (100%) of the Market Value of the Stock on the date of award, or in the case of Stock Appreciation Rights in tandem with Options, the exercise price of the related Option.

 

(c)                                  Other Terms.  Except as the Committee may deem inappropriate or inapplicable in the circumstances, Stock Appreciation Rights shall be subject to terms and conditions substantially similar to those applicable to a Nonstatutory Option.  In addition, a Stock Appreciation Right related to an Option which can only be exercised during limited periods following a Change of Control may entitle the Participant to receive an amount based upon the highest price paid or offered for Stock in any transaction relating to the Change of Control or paid during the thirty (30) day period immediately preceding the occurrence of the Change of Control in any transaction reported in the stock market in which the Stock is normally traded.

 

7.3.                            Restricted Stock.

 

(a)                                 Purchase Price.  Shares of Restricted Stock shall be issued under the Plan for such consideration, if any, in cash, other property or services, or any combination thereof, as is determined by the Committee.

 

(b)                                 Issuance of Stock.  Each Participant receiving a Restricted Stock Award, subject to subsection (c) below, shall be issued a stock certificate in respect of such shares of Restricted Stock or the shares shall be held in book-entry position through the direct registration system of the Company’s transfer agent.  If a certificate is issued, such certificate shall be registered in the name of such Participant, and, if applicable, shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award substantially in the following form:

 

The shares evidenced by this certificate are subject to the terms and conditions of Leap Therapeutics, Inc.’s Amended and Restated 2012 Equity Incentive Plan and an Award Agreement entered into by the registered owner and Leap Therapeutics, Inc., copies of which will be furnished by the Company to the holder of the shares evidenced by this certificate upon written request and without charge.

 

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If the Stock is in book-entry position through the direct registration system of the Company’s transfer agent, the restrictions will be appropriately noted.

 

(c)                                  Escrow of Shares.  The Committee may require that any stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Participant deliver a stock power, endorsed in blank, relating to the Stock covered by such Award.

 

(d)                                 Restrictions and Restriction Period.  During the Restriction Period applicable to shares of Restricted Stock, such shares shall be subject to limitations on transferability and a Risk of Forfeiture arising on the basis of such conditions related to the performance of services, Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement.  Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.

 

(e)                                  Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award.  Except as otherwise provided in the Plan or the applicable Award Agreement, the Participant shall have all of the rights of a stockholder of the Company with respect to any outstanding shares of Restricted Stock, including the right to vote, and the right to receive any dividends with respect to, the shares of Restricted Stock (but any dividends or other distributions payable in shares of Stock or other securities of the Company shall constitute additional Restricted Stock, subject to the same Risk of Forfeiture as the shares of Restricted Stock in respect of which such shares of Stock or other securities are paid).  The Committee, as determined at the time of Award, may permit or require the payment of cash dividends to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock to the extent shares of Stock are available under Section 4.

 

(f)                                   Lapse of Restrictions.  If and when the Restriction Period expires without a prior forfeiture, any certificates for such shares shall be delivered to the Participant promptly if not theretofore so delivered.

 

7.4.                            Restricted Stock Units.

 

(a)                                 Character.  Each Restricted Stock Unit shall entitle the recipient to a share of Stock, cash, or a combination of the two, as determined by the Committee, at a close of such Restriction Period as the Committee may establish and subject to a Risk of Forfeiture arising on the basis of such conditions relating to the performance of services, Company or Affiliate performance or otherwise as the Committee may determine or as may be provided for in the applicable Award Agreement.  Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.

 

(b)                              Form and Timing of Payment.  Payment of earned Restricted Stock Units shall be made promptly following the close of the applicable Restriction Period.  At the discretion of the Committee, Participants may be entitled to receive payments equivalent to any dividends declared with respect to Stock referenced in grants of Restricted Stock Units but only following the close of the applicable Restriction Period and then only if the underlying Stock shall have been earned.  Unless the Committee shall provide otherwise, any such dividend equivalents shall be paid, if at all, without interest or other earnings.

 

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7.5.                            Performance Units.

 

(a)                                 Character. Each Performance Unit shall entitle the recipient to the value of a specified number of shares of Stock, over the initial value for such number of shares, if any, established by the Committee at the time of grant, at the close of a specified Performance Period to the extent specified business objectives, including but not limited to Performance Goals, shall have been achieved.

 

(b)                                 Earning of Performance Units. The Committee shall set Performance Goals or other business objectives in its discretion which, depending on the extent to which they are met within the applicable Performance Period, will determine the number and value of Performance Units that will be paid out to the Participant.  After the applicable Performance Period has ended, the holder of Performance Units shall be entitled to receive payout on the number and value of Performance Units earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals or other business objectives have been achieved.

 

(c)                                  Form and Timing of Payment.  Payment of earned Performance Units shall be made in a single lump sum following the close of the applicable Performance Period, in cash or shares of Stock as the Committee may determine in its sole discretion or as may be specified in the applicable Award Agreement.  At the discretion of the Committee, Participants may be entitled to receive any dividends declared with respect to Stock which have been earned in connection with grants of Performance Units which have been earned, but not yet distributed to Participants.  The Committee may permit or, if it so provides at grant require, a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Stock that would otherwise be due to such Participant by virtue of the satisfaction of any requirements or goals with respect to Performance Units.  If any such deferral election is required or permitted, the Committee shall establish rules and procedures for such payment deferrals.

 

7.6.                            Stock Grants. Stock Grants shall be awarded solely in recognition of significant prior or expected contributions to the success of the Company or its Affiliates, as an inducement to employment, in lieu of compensation otherwise already due or in such other limited circumstances as the Committee deems appropriate.  Stock Grants shall be made without forfeiture conditions of any kind.

 

7.7.                            Qualified Performance-Based Awards.

 

(a)                                 Purpose.  The purpose of this Section 7.7 is to provide the Committee the ability to qualify Awards as “performance-based compensation” under Section 162(m) of the Code.  If the Committee, in its discretion, decides to grant an Award as a Qualified Performance-Based Award, the provisions of this Section 7.7 will control over any contrary provision contained in the Plan.  In the course of granting any Award, the Committee may specifically designate the Award as intended to qualify as a Qualified Performance-Based Award.  However, no Award shall be considered to have failed to qualify as a Qualified Performance-Based Award solely because the Award is not expressly designated as a Qualified Performance-Based Award, if the Award otherwise satisfies the provisions of this Section 7.7 and the requirements of Section 162(m) of the Code applicable to “performance-based compensation.”

 

(b)                                 Authority.  All grants of Awards intended to qualify as Qualified Performance-Based Awards and the determination of the terms applicable thereto shall be made

 

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by the Committee.  If not all of the members thereof qualify as “outside directors” within the meaning of Section 162 of the Code, however, all grants of Awards intended to qualify as Qualified Performance-Based Awards and the determination of the terms applicable thereto shall be made by a subcommittee of the Committee consisting of such of the members of the Committee as do so qualify.  Any reference in this Section 7.7 to the Committee shall mean any such subcommittee if required under the preceding sentence, and any action by such a subcommittee shall be considered the action of the Committee for purposes of the Plan.

 

(c)                                  Discretion of Committee with Respect to Qualified Performance-Based Awards.  Any form of Award permitted under the Plan, other than a Stock Grant, may be granted as a Qualified Performance-Based Award.  Options and Stock Appreciation Rights may be granted as Qualified Performance-Based Awards in accordance with Section 7.1 and 7.2, respectively, except that the exercise price of any Option or Stock Appreciation Right intended to qualify as a Qualified Performance-Based Award shall in no event be less that the Market Value of the Stock on the date of grant, and may become exercisable based on continued service, on satisfaction of Performance Goals or other business objectives, or on a combination thereof.  Each other Award intended to qualify as a Qualified Performance-Based Award, such as Restricted Stock, Restricted Stock Units, or Performance Units, shall be subject to satisfaction of one or more Performance Goals except as otherwise provided in this Section 7.7.  The Committee will have full discretion to select the length of any applicable Restriction Period or Performance Period, the kind and/or level of the applicable Performance Goal, and whether the Performance Goal is to apply to the Company, a subsidiary of the Company or any division or business unit or to the individual.  Any Performance Goal or Goals applicable to Qualified Performance-Based Awards shall be objective, shall be established not later than the earlier of ninety (90) days after the beginning of any applicable Performance Period or the date on which 25% of the Performance Period has been completed (or at such other date as may be required or permitted for “performance-based compensation” under Section 162(m) of the Code) and shall otherwise meet the requirements of Section 162(m) of the Code, including the requirement that the outcome of the Performance Goal or Goals be substantially uncertain (as defined for purposes of Section 162(m) of the Code) at the time established.

 

(d)                                 Payment of Qualified Performance-Based Awards.  A Participant will be eligible to receive payment under a Qualified Performance-Based Award which is subject to achievement of a Performance Goal or Goals only if the applicable Performance Goal or Goals are achieved within the applicable Performance Period, as determined by the Committee, provided, that a Qualified Performance-Based Award may be deemed earned as a result of death, becoming disabled, or in connection with a change of control (within the meaning of Section 162(m) of the Code) if otherwise provided in the Plan or the applicable Award Agreement even if the Award would not constitute “performance-based compensation” under Section 162(m) of the Code following the occurrence of such an event.  In determining the actual size of an individual Qualified Performance-Based Award, the Committee may reduce or eliminate the amount of the Qualified Performance-Based Award earned for the Performance Period, if in its sole and absolute discretion, such reduction or elimination is appropriate.

 

(e)                                  Limitation on Adjustments for Certain Events.  No adjustment of any Qualified Performance-Based Award pursuant to Section 8 shall be made except on such basis, if any, as will not cause such Award to provide other than “performance-based compensation” within the meaning of Section 162(m) of the Code.

 

(f)                                   Definitions.  For purposes of the Plan:

 

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(i)                                     Performance Criteria means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.  The Performance Criteria used to establish Performance Goals are limited to:  (i) net earnings (either before or after one or more of (A) interest, (B) taxes, (C) depreciation and (D) amortization), (ii) gross or net sales or revenue, (iii) net income (either before or after taxes), (iv) adjusted net income, (v) operating earnings or profit, (vi) cash flow (including, but not limited to, operating cash flow and free cash flow, (vii) return on assets, (viii) return on capital, (ix) return on stockholders’ equity, (x) total stockholder return, (xi) return on sales, (xii) gross or net profit or operating margin, (xiii) costs, (xiv) expenses, (xv) working capital, (xvi) earnings per share, (xvii) adjusted earnings per share, (xviii) price per share, (xix) regulatory body approval for commercialization of a product, (xx) implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; (xxi) market share, (xxii) economic value, (xxiii) revenue, (xxiv) revenue growth and (xxv) operational and organizational metrics.

 

(ii)                                  Performance Goals means, for a Performance Period, the written goal or goals established by the Committee for the Performance Period based upon one or more of the Performance Criteria.  The Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, subsidiary, or an individual, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Affiliate, either individually, alternatively or in any combination, and measured either quarterly, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee. The Committee will objectively define the manner of calculating the Performance Goal or Goals it selects to use for such Performance Period for such Participant, including whether or to what extent there shall not be taken into account any of the following events that occurs during a Performance Period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary, unusual, non-recurring or non-comparable items (A) as described in Accounting Standard Codification Section 225-20, (B) as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s Annual Report to stockholders for the applicable year, or (C) publicly announced by the Company in a press release or conference call relating to the Company’s results of operations or financial condition for a completed quarterly or annual fiscal period.

 

7.8.                            Awards to Participants Outside the United States.  The Committee may modify the terms of any Award under the Plan granted to a Participant who is, at the time of grant or during the term of the Award, resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that the Award shall conform to laws, regulations, procedures, and customs of the country in which the Participant is

 

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then resident or primarily employed.  The Committee may establish supplements or sub-plans to, or amendments, restatements, or alternative versions of, the Plan for the purpose of granting and administrating any such modified Award.  No such modification, supplement, sub-plan, amendment, restatement or alternative version may increase the share limit of Section 4.

 

7.9.                            Clawbacks.  Subject to the requirements of applicable law, the Committee may provide in any Award Agreement that, if a Participant breaches any restrictive covenant agreement between the Participant and the Company or any Affiliate (which may be set forth in any Award Agreement) or otherwise engages in activities that constitute cause either while employed by, or providing service to, the Company or any Affiliate or within a specified period of time thereafter, all Awards held by the Participant shall terminate, and the Company may rescind any exercise of an Option or Stock Appreciation Right and the vesting of any other Award and delivery of shares upon such exercise or vesting (including pursuant to dividends and dividend equivalents), as applicable on such terms as the Committee shall determine, including the right to require that in the event of any such rescission (i) the Participant shall return to the Company the shares received upon the exercise of any Option or Stock Appreciation Right and/or the vesting and payment of any other Award (including pursuant to dividends and dividend equivalents) or (ii) if the Participant no longer owns the shares, the Participant shall pay to the Company the amount of any gain realized or payment received as a result of any sale or other disposition of the shares  (or, in the event the Participant transfers the shares by gift or otherwise without consideration, the Market Value of the shares on the date of the breach of the restrictive covenant agreement (including a Participant’s Award Agreement containing restrictive covenants) or activity constituting cause), net of the price originally paid by the Participant for the shares.  Payment by the Participant shall be made in such manner and on such terms and conditions as may be required by the Committee.  The Participant’s employer shall be entitled to set off against the amount of any such payment any amounts otherwise owed to the Participant by the employer.

 

8.                                      Adjustment Provisions

 

8.1.                            Adjustment for Corporate Actions. If, at any time after the Effective Time of the Merger, the outstanding shares of Stock are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to shares of Stock, as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar distribution with respect to such shares of Stock, an appropriate and equitable adjustment will be made in (i) the maximum numbers and kinds of shares provided in Section 4, (ii) the numbers and kinds of shares or other securities subject to the then outstanding Awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding Options and Stock Appreciation Rights (without change in the aggregate purchase price as to which such Options or Stock Appreciation Rights remain exercisable), and (iv) the repurchase price of each share of Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase right.

 

8.2.                            Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. In the event of any corporate action not specifically covered by the preceding Section 8.1, including but not limited to an extraordinary cash distribution on Stock, a corporate separation or other reorganization or liquidation, that occurs or becomes effective after the Effective Time of the Merger, the Committee may make such adjustment of outstanding Awards and their terms, if any, as it, in its sole discretion, may deem equitable and appropriate in the circumstances.  The Committee may make adjustments in the terms and conditions of, and the criteria included in,

 

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Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in this Section 8.2) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

 

8.3.                            Related Matters.  Any adjustment in Awards made pursuant to Section 8.1 or 8.2 shall be determined and made, if at all, by the Committee, acting in its sole discretion, and shall include any correlative modification of terms, including of Option exercise prices, rates of vesting or exercisability, Risks of Forfeiture, applicable repurchase prices for Restricted Stock, and Performance Goals and other business objectives which the Committee may deem necessary or appropriate so as to ensure the rights of the Participants in their respective Awards are not substantially diminished nor enlarged as a result of the adjustment and corporate action other than as expressly contemplated in this Section 8.  The Committee, in its discretion, may determine that no fraction of a share of Stock shall be purchasable or deliverable upon exercise, and in that event if any adjustment hereunder of the number of shares of Stock covered by an Award would cause such number to include a fraction of a share of Stock, such number of shares of Stock shall be adjusted to the nearest smaller whole number of shares.  No adjustment of an Option exercise price per share pursuant to Sections 8.1 or 8.2 shall result in an exercise price which is less than the par value of the Stock.

 

8.4.                            Transactions.

 

(a)                                 Definition of Transaction. In this Section 8.4, “Transaction” means (1) any merger or consolidation of the Company with or into another entity as a result of which the Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (2) any sale or exchange of all or substantially all of the outstanding Stock of the Company for cash, securities or other property, (3) any sale, transfer, or other disposition of all or substantially all of the Company’s assets to one or more other persons in a single transaction or series of related transactions or (4) any liquidation or dissolution of the Company.

 

(b)                                 Treatment of Awards. In a Transaction, the Committee may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards, subject to the provisions of Section 9 and Section 8.4(e) of this Plan.

 

(1)                                 Provide that any Awards shall be assumed, or substantially equivalent rights shall be provided in substitution therefor, by the acquiring or succeeding entity (or an affiliate thereof).

 

(2)                                 Upon written notice to the holders, provide that all or any of the holders’ unexercised outstanding Options and Stock Appreciation Rights (collectively, “Rights”) will terminate immediately prior to the consummation of such Transaction unless exercised within a specified period following the date of such notice.

 

(3)                                 Provide that all or any Awards that are subject to Risk of Forfeiture will terminate or be forfeited or cancelled immediately prior to the consummation of such Transaction.  In the case of Restricted Stock, any such termination, forfeiture or cancellation can be accomplished by, among other

 

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things, a purchase or other acquisition by the Company of such Restricted Stock for no consideration.

 

(4)                                 Provide that all or any outstanding Rights shall Accelerate so as to become exercisable prior to or upon such Transaction with respect to some or all of the shares of Stock for which any such Rights would not then otherwise be exercisable by their terms.

 

(5)                                 Provide that all or any outstanding Awards that are subject to Risk of Forfeiture shall Accelerate so that the Risk of Forfeiture otherwise applicable to such Awards shall expire prior to or upon such Transaction with respect to part or all of any such Awards that would then still otherwise be subject to the Risk of Forfeiture.

 

(6)                                 Provide for cash payments, net of applicable tax withholdings, to be made to holders equal to the excess, if any, of (A) the acquisition price times the number of shares of Stock subject to an Option or Stock Appreciation Right (to the extent the exercise price does not exceed the acquisition price) over (B) the aggregate exercise price for all such shares of Stock subject to the Option, in exchange for the termination of such Option; provided, that if the acquisition price does not exceed the exercise price of any such Option, the Committee may cancel that Option without the payment of any consideration therefore prior to or upon the Transaction.  For purposes of this paragraph 6 and paragraph 7 below, “acquisition price” means the amount of cash, and market value of any other consideration, received in payment for a share of Stock surrendered in a Transaction but need not take into account any deferred consideration unless and until received.

 

(7)                                 Provide for cash payments, net of applicable tax withholdings, to be made to holder or holders of all or any Awards (other than Options) equal to the acquisition price times the number of shares of Stock subject to any such Awards, in exchange for the termination of any such Awards; provided, that the Committee may terminate, cancel or cause the forfeiture of, pursuant to paragraph 3 above in this Section 8.4(b), any such Award that is subject to a Risk of Forfeiture at the time of the consummation of such Transaction without the payment of any consideration therefor  prior to or upon the Transaction.

 

(8)                              Provide that, in connection with a liquidation or dissolution of the Company, all or any Awards (other than Restricted Stock or Stock Grants) shall convert into the right to receive liquidation proceeds net of the exercise price thereof and any applicable tax withholdings.

 

(9)                                 Any combination of the foregoing.

 

In the event that the Committee determines in its discretion to take the actions contemplated under paragraph (1) above of this Section 8.4(b) with respect to all or any Awards, the Committee shall ensure that, upon consummation of the Transaction, any such Awards are assumed and/or exchanged or replaced with another similar award issued by the acquiring or succeeding entity (or an affiliate thereof) and that, as a result of such assumption and/or exchange or replacement, the

 

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holder of such assumed Award and/or such exchanged or replaced similar award has the right to purchase or receive the value of, for each share of Stock subject to such Award immediately prior to the consummation of the Transaction, the consideration (whether cash, securities or other property) received as a result of the Transaction by holders of Stock for each share of Stock held immediately prior to the consummation of the Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if such consideration received as a result of the Transaction is not solely common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate thereof), the Committee may, with the consent of the acquiring or succeeding entity (or an affiliate thereof), provide for the consideration to be received with respect to such assumed Award and/or such exchanged or replaced similar award to consist of or be based solely on common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate thereof) equivalent in value to the per share consideration received by holders of outstanding shares of Stock as a result of the Transaction; and provided, further, that if  such Award is an Option, the holder of such Option must exercise the Option and make payment of the applicable exercise price in connection therewith in order to receive such consideration.

 

(c)                                  Treatment of Other Awards. Upon the occurrence of a Transaction other than a liquidation or dissolution of the Company which is not part of another form of Transaction, then, subject to the provisions of Section 9 below, with respect to all outstanding Awards (other than Options and Share Appreciation Rights) that are not terminated prior to or upon such Transaction, the repurchase and other rights of the Company under each such Award shall inure to the benefit of the Company’s successor and shall, unless the Committee determines otherwise, apply to the cash, securities or other property which the Stock was converted into or exchanged for pursuant to such Transaction in the same manner and to the same extent as they applied to the Award.

 

(d)                                 Related Matters. In taking any of the actions permitted under this Section 8.4, the Committee shall not be obligated to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically. Any determinations required to carry out the foregoing provisions of this Section 8.4, including but not limited to the market value of other consideration received by holders of Stock in a Transaction and whether substantially equivalent Rights have been substituted, shall be made by the Committee acting in its sole discretion.  In connection with any action or actions taken by the Committee in respect of Awards and in connection with a Transaction, the Committee may require such acknowledgements of satisfaction and releases from Participants as it may determine.

 

(e)                                  No Application to Incentive Options Granted Prior to Plan Amendment Effective Time.  Notwithstanding anything express or implied in the foregoing provisions of this Section 8.4 or elsewhere in this Plan to the contrary, to the extent an Incentive Option was granted prior to the Plan Amendment Effective Time, this Section 8.4 shall not apply to such Incentive Option and the provisions of Section 8 (other than Section 8.1) of the Prior Plan shall apply to such Incentive Option.

 

9.                                      Change of Control

 

Subject to the provisions set forth below in this Section 9, in the event of a Change of Control, all outstanding Awards (including Awards that are assumed or replaced pursuant to Section 8 above) that are not vested or exercisable in full immediately prior to the time of such Change of Control or that are subject to a Risk of Forfeiture immediately prior to the

 

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time of such Change of Control shall be Accelerated, effective at the time of such Change of Control, such that all of such outstanding Awards (including Awards that are assumed or replaced pursuant to Section 8 above) shall become vested or exercisable in full, and shall no longer be subject to Risk of Forfeiture, at the time of such Change of Control.  The provisions of the immediately preceding sentence shall not be applicable to any Award if the applicable Award Agreement or any other agreement between the Company and the holder of such Award expressly provides or contemplates that a Change of Control will not cause or result in the Acceleration of such Award.  Subject to the provisions of this Section 9 and Section 8.4(e) hereof, the Committee may take one or more of the actions outlined in Section 8.4(b) relating to the Treatment of Awards following a Change of Control. All such Awards of Performance Units and Restricted Stock Units shall be paid to the extent earned to Participants in accordance with their terms within thirty (30) days following the effective date of the Change of Control.

 

10.                               Settlement of Awards

 

10.1.                     In General.  Options and Restricted Stock shall be settled in accordance with their terms.  All other Awards may be settled in cash, Stock, or other Awards, or a combination thereof, as determined by the Committee at or after grant and subject to any contrary Award Agreement.  The Committee may not require settlement of any Award in Stock pursuant to the immediately preceding sentence to the extent issuance of such Stock would be prohibited or unreasonably delayed by reason of any other provision of the Plan.

 

10.2.                     Violation of Law.  Notwithstanding any other provision of the Plan or the relevant Award Agreement, if, at any time, in the reasonable opinion of the Company, the issuance of shares of Stock covered by an Award may constitute a violation of law, then the Company may delay such issuance until (i) approval shall have been obtained from such governmental agencies, other than the Securities and Exchange Commission, as may be required under any applicable law, rule, or regulation and (ii) in the case where such issuance would constitute a violation of a law administered by or a regulation of the Securities and Exchange Commission, one of the following conditions shall have been satisfied:

 

(a)                                 the shares of Stock are at the time of the issue of such shares effectively registered under the Securities Act of 1933, as amended; or

 

(b)                                 the Company shall have determined, on such basis as it deems appropriate (including an opinion of counsel in form and substance satisfactory to the Company) that the sale, transfer, assignment, pledge, encumbrance or other disposition of such shares does not require registration under the Securities Act of 1933, as amended, or any applicable State securities laws.

 

Furthermore, the inability of the Company to obtain or maintain, or the impracticability of it obtaining or maintaining, authority from any governmental agency having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance of any Stock hereunder, shall relieve the Company of any liability in respect of the failure to issue such Stock as to which such requisite authority shall not have been obtained, and shall constitute circumstances in which the Committee may determine to amend or cancel Awards pertaining to such Stock, with or without consideration to the affected Participants.

 

10.3.                     Corporate Restrictions on Rights in Stock. Any Stock to be issued pursuant to Awards shall be subject to all restrictions upon the transfer thereof which may be now or

 

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hereafter imposed by the charter, certificate or articles, and by-laws, of the Company.  Whenever Stock is to be issued pursuant to an Award, if the Committee so directs at or after grant, the Company shall be under no obligation to issue such shares until such time, if ever, as the recipient of the Award (and any person who exercises any Option, in whole or in part), shall have become a party to and bound by any and all Stockholders’ Agreements, if any.

 

10.4.                     Investment Representations.  The Company shall be under no obligation to issue any shares of Stock covered by any Award unless the shares to be issued pursuant to such Award have been effectively registered under the Securities Act of 1933, as amended, or the Participant shall have made such written representations to the Company (upon which the Company believes it may reasonably rely) as the Company may deem necessary or appropriate for purposes of confirming that the issuance of such shares will be exempt from the registration requirements of that Act and any applicable state securities laws and otherwise in compliance with all applicable laws, rules and regulations of any jurisdiction in which Participants may reside or primarily work, including but not limited to that the Participant is acquiring the shares for his or her own account for the purpose of investment and not with a view to, or for sale in connection with, the distribution of any such shares.

 

10.5.                     Registration.  If the Company shall deem it necessary or desirable to register under the Securities Act of 1933, as amended, or other applicable statutes any shares of Stock issued or to be issued pursuant to Awards, or to qualify any such shares of Stock for exemption from the Securities Act of 1933, as amended or other applicable statutes, then the Company shall take such action at its own expense.  The Company may require from each recipient of an Award, or each holder of shares of Stock acquired pursuant to the Plan prior to, on or after the Plan Amendment Effective Time, such information in writing for use in any registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for that purpose and may require reasonable indemnity to the Company and its officers and directors from that holder against all losses, claims, damage and liabilities arising from use of the information so furnished and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made.  In addition, the Company may require of any such person that he or she agree that, without the prior written consent of the Company or the managing underwriter in any public offering of shares of Stock, he or she will not, at any time during the 180 day period commencing on the effective date of the registration statement relating to the underwritten public offering of securities (or during such shorter or longer period of time as the Committee shall determine in its sole discretion, which period of time shall commence from and after such effective date of such registration statement), (a) sell, make any short sale of, loan, grant any option, right or warrant for the purchase of, pledge or otherwise encumber, otherwise transfer or dispose of, directly or indirectly, any shares of Stock (or offer to do any of the foregoing), or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Stock, whether any such transaction described in the foregoing clause (a) or clause (b) is to be settled by delivery of Stock or other securities, in cash or otherwise.  Without limiting the generality of the foregoing provisions of this Section 10.5, if in connection with any underwritten public offering of securities of the Company the managing underwriter of such offering requires that the Company’s directors and officers enter into a lock-up agreement (including, without limitation, a lock-up agreement containing provisions that are more restrictive than the provisions set forth above in this Section 10.5), then (a) each holder of shares of Stock acquired pursuant to the Plan prior to, on or after the Plan Amendment Effective Time (regardless of whether such person has complied or complies with the provisions of clause (b) below) shall be bound by, and

 

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shall be deemed to have agreed to, the same lock-up terms as those to which the Company’s directors and officers are required to adhere; and (b) at the request of the Company or such managing underwriter, each such person shall execute and deliver a lock-up agreement in form and substance equivalent to that which is required to be executed by the Company’s directors and officers.

 

10.6.                     Placement of Legends; Stop Orders; etc.  Each share of Stock to be issued pursuant to Awards may bear a reference to the investment representations made in accordance with Section 10.4 in addition to any other applicable restrictions under the Plan, and the terms of the Award and under the Stockholders’ Agreement and, if applicable, to the fact that no registration statement has been filed with the Securities and Exchange Commission in respect to such shares of Stock.  All shares of Stock or other securities issued under the Plan prior to, on or after the Plan Amendment Effective Time 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 any stock exchange upon which the Stock is then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions, or, if the Stock will be held in book-entry position through the direct registration system of the Company’s transfer agent, the restrictions will be appropriately noted.

 

10.7.                     Tax Withholding. Whenever shares of Stock are issued or to be issued pursuant to Awards, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy federal, state, local, foreign or other withholding tax requirements if, when, and to the extent required by law (whether so required to secure for the Company an otherwise available tax deduction or otherwise) prior to the issuance of such shares of Stock.  The obligations of the Company under the Plan (including, without limitation, the obligation to issue any shares, deliver any certificate or certificates therefor or reflect the ownership of such shares in book-entry form) shall be conditional on satisfaction of all such withholding obligations and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to a Participant or to utilize any other withholding method prescribed by the Committee from time to time.  However, in such cases Participants may elect, subject to the approval of the Committee, acting in its sole discretion, to satisfy an applicable withholding requirement, in whole or in part, by having the Company withhold shares of Stock to satisfy their tax obligations.  All elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee deems appropriate.  If shares of Stock are withheld to satisfy an applicable withholding requirement, the shares of Stock withheld shall have a Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction unless the Committee determines otherwise.

 

10.8.                     Company Charter and By-Laws; Other Company Policies. This Plan and all Awards are subject to the charter and By-Laws of the Company, as they may be amended from time to time, and all other Company policies duly adopted by the Board, the Committee or any other committee of the Board and as in effect from time to time regarding the acquisition, ownership or sale of Stock by officers, employees, directors, consultants, advisors and other service providers, including, without limitation, policies intended to limit the potential for insider trading and to avoid or recover compensation payable or paid on the basis of inaccurate financial results or statements, employee conduct, and other similar events.

 

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11.                               Reservation of Stock

 

The Company shall at all times during the term of the Plan and any outstanding Awards reserve or otherwise keep available such number of shares of Stock as will be sufficient to satisfy the requirements of the Plan (if then in effect) and the Awards and shall pay all fees and expenses necessarily incurred by the Company in connection therewith.

 

12.                               Limitation of Rights in Stock; No Special Service Rights

 

A Participant shall not be deemed for any purpose to be a stockholder of the Company with respect to any of the shares of Stock subject to an Award, unless and until a certificate shall have been issued therefor and delivered to the Participant or his agent, or the Stock shall be issued through the direct registration system of the Company’s transfer agent.  Any Stock to be issued pursuant to Awards shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the certificate or articles of incorporation and the by-laws of the Company.  Nothing contained in the Plan or in any Award Agreement shall confer upon any recipient of an Award any right with respect to the continuation of his or her employment or other association with the Company (or any Affiliate), or interfere in any way with the right of the Company (or any Affiliate), subject to the terms of any separate employment or consulting agreement or provision of law or corporate articles or by-laws to the contrary, at any time to terminate such employment or consulting agreement or to increase or decrease, or otherwise adjust, the other terms and conditions of the recipient’s employment or other association with the Company and its Affiliates.

 

13.                               Unfunded Status of Plan

 

The Plan is intended to constitute an “unfunded” plan for incentive compensation, and the Plan is not intended to constitute a plan subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended.  With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.  In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Stock or payments with respect to Awards, provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

 

14.                               Nonexclusivity of the Plan

 

Neither the adoption of the Plan by the Board nor any action taken in connection with the adoption or operation of the Plan shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of stock options and restricted stock other than under the Plan, and such arrangements may be either applicable generally or only in specific cases.

 

15.                               No Guarantee of Tax Consequences

 

It is intended that all Awards shall be granted and maintained on a basis which ensures they are exempt from, or otherwise compliant with, the requirements of Section 409A of the Code pertaining to non-qualified plans of deferred compensation, and the Plan shall be governed, interpreted and enforced consistent with such intent.  However, neither the Company nor any

 

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Affiliate, nor any director, officer, agent, representative or employee of either, guarantees to the Participant or any other person any particular tax consequences as a result of the grant of, exercise of rights under, or payment in respect of an Award, including but not limited to that an Option granted as an Incentive Option has or will qualify as an “Incentive Option” within the meaning of Section 422 of the Code or that the provisions and penalties of Section 409A of the Code will or will not apply and no person shall have any liability to a Participant or any other party if a payment under an Award that is intended to benefit from favorable tax treatment or avoid adverse tax treatment fails to realize such intention or for any action taken by the Board or the Committee with respect to the Award.

 

16.                               Termination and Amendment of the Plan

 

16.1.                     Termination or Amendment of the Plan. Subject to the limitations contained in Section 16.3 below, including specifically the requirement of stockholder approval, if applicable, the Board may at any time suspend or terminate the Plan or make such modifications of the Plan as it shall deem advisable.  Unless the Board otherwise expressly provides, no amendment of the Plan shall affect the terms of any Award outstanding on the date of such amendment.

 

16.2.                     Termination or Amendment of Outstanding Awards; Assumptions. Subject to the limitations contained in Section 16.3 below, including specifically the requirement of stockholder approval, if applicable, the Committee may at any time:

 

(a) amend the terms of any Award theretofore granted, prospectively or retroactively, provided that the Award as amended is consistent with the terms of the Plan;

 

(b) within the limitations of the Plan, modify, extend or assume outstanding Awards or accept the cancellation of outstanding Awards or of outstanding stock options or other equity-based compensation awards granted by another issuer in return for the grant of new Awards for the same or a different number of shares of Stock and on the same or different terms and conditions (including but not limited to the exercise price of any Option); and

 

(c) offer to buy out for a payment in cash or cash equivalents an Award previously granted or authorize the recipient of an Award to elect to cash out an Award previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

 

16.3.                     Limitations on Amendments, Etc.

 

(a)                                 Without the approval of the Company’s stockholders, no amendment or modification of the Plan by the Board may (i) increase the number of shares of Stock which may be issued under the Plan, (ii) change the description of the persons eligible for Awards, or (iii) effect any other change for which stockholder approval is required by law or the rules of any relevant stock exchange.

 

(b)                                 No action by the Board or the Committee pursuant to this Section 16 shall impair the rights of the recipient of any Award outstanding on the date of such amendment or modification of such Award, as the case may be, without the Participant’s consent; provided, however, that no such consent shall be required (A) in the case of any amendment or termination of any outstanding Award that is permitted by any provision of this Plan that is set forth in Section 16.4 below, Section 8, Section 9 or in any other section of this Plan that is not Section

 

23

 

this Section 16 or (B) if the Board or Committee, as the case may be, (i)  determines in its sole discretion and prior to the date of any Change of Control that such amendment or alteration either is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Code, or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, (ii) determines in its sole discretion and prior to the date of any Change of Control that such amendment or alteration is not reasonably likely to significantly diminish the benefits provided under the Award, or that any such diminution has been adequately compensated, or (iii) reasonably determines on or after the date of Change of Control that such amendment or alteration either is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Code.

 

16.4                        Option or Stock Appreciation Rights Repricing.  The Committee shall have the discretionary authority, exercisable on such terms and conditions that it deems appropriate under the circumstances and without stockholder approval, to (i) implement cancellation/regrant programs pursuant to which outstanding Options or Stock Appreciation Rights under the Plan (regardless of whether granted prior to, on or after the Plan Amendment Effective Time) are cancelled and new Options or Stock Appreciation Rights are granted in replacement with a lower exercise price per share, (ii) cancel outstanding Options or Stock Appreciation Rights under the Plan (regardless of whether granted prior to, on or after the Plan Amendment Effective Time) with exercise prices per share in excess of the then current Market Value per share of Stock for consideration payable in cash or in equity securities of the Company or (iii) reduce the exercise or base price in effect for outstanding Options or Stock Appreciation Rights under the Plan (regardless of whether granted prior to, on or after the Plan Amendment Effective Time).

 

17.                               Notices and Other Communications

 

Any communication or notice required or permitted to be given under the Plan shall be in such form as the Committee may determine from time to time.  If a notice, demand, request or other communication is required or permitted to be given in writing, then any such notice, demand, request or other communication hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular, certified or overnight mail, addressed or telecopied, as the case may be, (i) if to the recipient of an Award, at his or her residence address last filed with the Company and (ii) if to the Company, at its principal place of business, addressed to the attention of its Treasurer, or to such other address or telecopier number, as the case may be, as the addressee may have designated by notice to the addressor.  All such notices, requests, demands and other communications shall be deemed to have been received: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile transmission, when confirmed by facsimile machine report.

 

18.                               Governing Law

 

The Plan and all Award Agreements and actions taken hereunder and thereunder shall be governed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts, without regard to the conflict of laws principles thereof.

 

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19.                               Effectiveness

 

This Amended and Restated 2012 Equity Incentive Plan of the Company has been adopted by the Board on January 20, 2017 and has been approved by the stockholders of the Company on January 20, 2017, but shall not become effective unless and until the Plan Amendment Effective Time occurs on the date of the closing of the Merger.  In the event that the Merger Agreement is terminated by the parties thereto at any time prior to the consummation of the Merger, this Amended and Restated 2012 Equity Incentive Plan shall automatically terminate without having become effective and thereafter shall be of no further force or effect whatsoever.

 

20.                               Treatment of Awards Outstanding Under the Prior Plan

 

Subject to and upon this Amended and Restated 2012 Equity Incentive Plan of the Company becoming effective in accordance with the provisions of Section 19 above, all Awards granted pursuant to the Prior Plan that are outstanding immediately prior to the Plan Amendment Effective Time, and all shares of Stock issued pursuant to the Prior Plan that are outstanding immediately prior to the Plan Amendment Effective Time, shall be subject to all of the terms and conditions of the Plan and shall be treated as outstanding under the Plan to the same extent as if such Awards and such shares of Stock had been granted or issued pursuant to this Amended and Restated 2012 Equity Incentive Plan of the Company after the Plan Amendment Effective Time; provided, however, that the foregoing provisions of this Section 20 shall not be applicable if and to the extent that any other provisions of this Amended and Restated 2012 Equity Incentive Plan of the Company expressly provide that such Awards and such shares of Stock shall be subject to the terms of the Prior Plan instead of the terms of this  Amended and Restated 2012 Equity Incentive Plan of the Company.

 

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ATTACHMENT A

TO

THE AMENDED AND RESTATED

2012 EQUITY INCENTIVE PLAN

 

Provisions Applicable to Participants 
 Resident in California

 

Until such time as the Company’s Stock has been effectively registered under the Securities Act and if required by any applicable law, the following additional terms shall apply to Awards, and Stock issued pursuant to such Awards, to Participants resident in California as of the date of grant of the Award (each such person, a “California Recipient”). Capitalized terms not defined in this Attachment shall have the respective meanings set forth in the Plan.

 

1.                            The following limitations shall apply to the early expiration of Options granted to California Recipients on account of termination of employment with the Company or an Affiliate (unless employment is terminated for cause as defined by applicable law):

 

(a)                                      Subject to Section 1(b) below, in the event the employment with the Company and its Affiliates of a Participant who is a California Resident ends for any reason including because of the Participant’s employer ceasing to be an Affiliate, such California Recipient shall have at least thirty (30) days after the date of such termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to exercise such Option to the extent exercisable as of the date of such termination.

 

(b)                                      In the event that the employment with the Company and its Affiliates of a Participant who is a California Resident is terminated as a result of death or disability, such California Recipient shall have at least six (6) months after the date of such termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to exercise such Option to the extent exercisable as of the date of such termination.

 

2.                                      Awards must be granted within 10 years from September 6, 2012, the date that the Board and the Company’s security holders first adopted the Prior Plan.

 

3.                         The Amended and Restated 2012 Equity Incentive Plan of the Company must be approved by a majority of the Company’s outstanding securities entitled to vote within twelve (12) months before or after the later of (i) the date the Amended and Restated 2012 Equity Incentive Plan of the Company is adopted by the Company and (ii) the date on which any Option or other Award is granted to a California Recipient pursuant to the Amended and Restated 2012 Equity Incentive Plan of the Company.

 

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