Document:

Exhibit 10.2

 

Award No.:     

 

TESARO, INC.

2012 OMNIBUS INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AGREEMENT

 

TESARO, Inc., a Delaware corporation (the “Company”), hereby grants an award of restricted stock units with respect to an equivalent number of shares of the Company’s common stock, par value $0.0001 (the “Common Stock”) to the individual named below.  The terms and conditions of the award are set forth in this cover sheet and in the attachment (collectively, the “Agreement”) and in the Company’s 2012 Omnibus Incentive Plan (as it may be amended, the “Plan”).

 

Grant Date:

 

Name of Participant:

 

Participant’s Employee Identification Number:             -        -

 

Number of Shares of Common Stock Covered by Award:

 

Grant Date Fair Value of Award (per share):

 

Vesting Schedule:

 

By signing this cover sheet, you agree to all of the terms and conditions described in this Agreement and in the Plan, a copy of which is also attached.  You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in the event any provision of this Agreement should appear to be inconsistent with the Plan.  Certain capitalized terms used in this Agreement are defined in the Plan, and have the meaning set forth in the Plan.

 

	
Participant:
    	
 
    	
 
    
	
 
    	
(Signature)
    	
 
    
	
 
    	
 
    	
 
    
	
Company:
    	
 
    	
 
    
	
 
    	
(Signature)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    
	
 
    	
 
    
	
Attachment
    	
 
    
				

 

This is not a stock certificate or a negotiable instrument

 

 

TESARO, INC.

2012 OMNIBUS INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AGREEMENT

 

	
Restricted Stock Unit/   Nontransferability
    	
 
    	
This grant is an award of stock units in the number   of units set forth on the Notice of Grant of Restricted Stock Units (the   “Notice”), and subject to the vesting conditions described in the Notice of   Grant (“Restricted Stock Units”) and in this Agreement. Your Restricted Stock   Units may not be sold, assigned, transferred, pledged or otherwise   encumbered, whether voluntarily or by operation of law, except by will or the   laws of descent and distribution.
    
	
 
    	
 
    	
 
    
	
Vesting
    	
 
    	
Your Restricted Stock Units vest as to the number of   Restricted Stock Units indicated in the Notice in accordance with the terms   and conditions set forth in the Notice. Except as may be specifically provided   in other agreements between you and the Company, no additional Restricted   Stock Units will vest after your Service has terminated for any reason.
    
	
 
    	
 
    	
 
    
	
Share Delivery Pursuant to Vested Units
    	
 
    	
Shares underlying the vested shares of Common Stock   represented by the Restricted Stock Units will be delivered to you by the   Company within thirty (30) days after the applicable vesting date. The   purchase price for the vested Shares of Common Stock is deemed paid by your   prior services to the Company.
    
	
 
    	
 
    	
 
    
	
Forfeiture of Unvested Units
    	
 
    	
Except as specifically provided in this Agreement or   as may be provided in other agreements between you and the Company, no   additional Restricted Stock Units will vest after your Service has terminated   for any reason. In the event that your Service terminates for any reason, you   will forfeit to the Company all of the Restricted Stock Units subject to this   grant that have not yet vested or with respect to which all applicable   restrictions and conditions have not lapsed.
    
	
 
    	
 
    	
 
    
	
Evidence of Issuance
    	
 
    	
The issuance of the shares of Common Stock upon any   vesting of the Restricted Stock Unit shall be evidenced in such a manner as   the Company, in its discretion, will deem appropriate, including, without   limitation, book-entry, direct registration or issuance of one or more stock   certificates.
    
	
 
    	
 
    	
 
    
	
Withholding Taxes
    	
 
    	
You agree, as a condition of this grant, that you   will make acceptable arrangements to pay any withholding or other taxes that   may be due as a result of the payment of dividends or the 
    

 

2

 

	
 
    	
 
    	
delivery of Common Stock acquired under this grant.   In the event that the Company determines that any tax or withholding payment   is required relating to the payment of dividends or the delivery of shares   arising from this grant under applicable laws, the Company shall have the   right to require such payments from you, or to withhold such amounts from   other payments due to you from the Company or any Subsidiary (including by   repurchasing vested shares of Common Stock under this Agreement). If you do   not elect to otherwise satisfy your withholding obligations in connection   with this grant, the Company will withhold shares of Common Stock otherwise   issuable to you upon vesting. The shares of Common Stock withheld will have   an aggregate Fair Market Value equal to the withholding obligation and may   not be subject to any repurchase, forfeiture, unfulfilled vesting, or other   similar requirements.
    
	
 
    	
 
    	
 
    
	
Retention Rights
    	
 
    	
This Agreement does not give you the right to be   retained or employed by the Company (or any of its Subsidiaries) in any   capacity. The Company (and any Subsidiary) reserve the right to terminate   your Service at any time and for any reason.
    
	
 
    	
 
    	
 
    
	
Shareholder Rights
    	
 
    	
You do not have any of the rights of a shareholder   with respect to the Restricted Stock Units unless and until the Common Stock   relating to the Restricted Stock Units has been delivered to you.

 

You will, however, be entitled to receive an amount   of cash, paid at the same time as the shares of Common Stock are delivered,   equal to the cumulative per-share dividends, if any, paid on shares of Common   Stock equal to the number of Restricted Stock Units in which you vest that   were outstanding as of the record date for such dividend.
    
	
 
    	
 
    	
 
    
	
Forfeiture of Rights
    	
 
    	
If you should take actions in competition with the   Company, the Company shall have the right to cause a forfeiture of your   Restricted Stock Units, and with respect to those shares of Restricted Stock   Units vesting during the period commencing twelve (12) months prior to your   termination of Service with the Company due to taking actions in competition   with the Company, the right to cause a forfeiture of the vested shares of   Common Stock delivered pursuant to such vested Restricted Stock Units.

   Unless otherwise specified in an employment or other agreement between the   Company and you, you take actions in competition with the Company if you   directly or indirectly, own, manage, operate, join or control, or participate   in the ownership,
    

 

3

 

	
 
    	
 
    	
management, operation or control of, or are a   proprietor, director, officer, stockholder, member, partner or an employee or   agent of, or a consultant to any business, firm, corporation, partnership or   other entity which competes with any business in which the Company or any of   its Subsidiaries is engaged during your employment or other relationship with   the Company or its Subsidiaries or at the time of your termination of   Service.

   If it is ever determined by the Board of Directors that your actions have   constituted wrongdoing that contributed to any material misstatement or   omission from any report or statement filed by the Company with the U.S.   Securities and Exchange Commission, gross misconduct, breach of fiduciary   duty to the Company, or fraud, then the Restricted Stock Units shall be   immediately forfeited; provided, however, that if the Restricted Stock Units   have vested within two years prior to the Board of Directors determination,   you shall be required to pay to the Company an amount equal to the aggregate   value of the shares acquired upon such vesting at the date of the Board of   Directors’ determination.
    
	
 
    	
 
    	
 
    
	
Adjustments
    	
 
    	
In the event of a stock split, reverse stock split,   stock dividend, recapitalization, combination or reclassification of shares,   spin-off, or other similar change in capitalization or event, the number of   shares covered by this grant shall be adjusted pursuant to the Plan. Your   Restricted Stock Units shall be subject to the terms of the agreement of   merger, liquidation or reorganization in the event the Company is subject to   such corporate activity in accordance with the terms of the Plan.
    
	
 
    	
 
    	
 
    
	
Applicable Law
    	
 
    	
This Agreement will be interpreted and enforced   under the laws of the State of Delaware, other than any conflicts or choice   of law rule or principle that might otherwise refer construction or   interpretation of this Agreement to the substantive law of another   jurisdiction.
    
	
 
    	
 
    	
 
    
	
The Plan
    	
 
    	
The text of the Plan and the Notice are incorporated   in this Agreement by reference.

   This Agreement and the Plan constitute the entire understanding between you   and the Company regarding this grant of Restricted Stock Units. Any prior   agreements, commitments or negotiations concerning this grant are superseded.
    
	
 
    	
 
    	
 
    
	
Data Privacy
    	
 
    	
In order to administer the Plan, the Company may   process personal data about you. Such data includes but is not limited to the   information provided in this Agreement and any changes 
    

 

4

 

	
 
    	
 
    	
thereto, other appropriate personal and financial   data about you such as home address and business addresses and other contact   information, payroll information and any other information that might be   deemed appropriate by the Company to facilitate the administration of the   Plan.

   By accepting this grant, you give explicit consent to the Company to process   any such personal data. You also give explicit consent to the Company to   transfer any such personal data outside the country in which you work or are   employed, including, with respect to non-U.S. resident grantees, to the   United States, to transferees who shall include the Company and other persons   who are designated by the Company to administer the Plan.
    
	
 
    	
 
    	
 
    
	
Consent to Electronic Delivery
    	
 
    	
The Company may choose to deliver certain statutory   materials relating to the Plan in electronic form. By accepting this grant   you agree that the Company may deliver the Plan prospectus and the Company’s   annual report to you in an electronic format. If at any time you would prefer   to receive paper copies of these documents, as you are entitled to, the   Company would be pleased to provide copies. Please contact the Company’s   Secretary to request paper copies of these documents.
    
	
 
    	
 
    	
 
    
	
Other Agreements
    	
 
    	
You agree, as a condition of this grant, that you   will execute such document(s) as necessary to become a party to any   shareholder agreement or voting trust as the Company may require.
    
	
 
    	
 
    	
 
    
	
Code Section 409A
    	
 
    	
It is intended that this award comply with   Section 409A of the Code (“Section 409A”) or an exemption to   Section 409A. To the extent that the Company determines that the   Participant would be subject to the additional 20% tax imposed on certain   nonqualified deferred compensation plans pursuant to Section 409A as a   result of any provision of any this Agreement, such provision shall be deemed   amended to the minimum extent necessary to avoid application of such   additional tax. The nature of any such amendment shall be determined by the   Company. For purposes of this Award, a termination of Service only occurs   upon an event that would be a Separation from Service within the meaning of   Section 409A. Notwithstanding anything herein to the contrary, in the event   that the Participant is deemed to be a “specified employee” for purposes of   Section 409A(a)(2)(B)(i) of the Code, and the Company determines   that the delivery of shares of Common Stock hereunder is subject to the   provisions of Code Section 409A, such shares of Common Stock shall not   be delivered until the six-month anniversary of the Participant’s 
    

 

5

 

	
 
    	
 
    	
termination of Service, or, if earlier, the   Participant’s death.
    

 

By signing the cover sheet of this Agreement, you agree to all of the terms and
 conditions described above and in the Plan.

 

6Exhibit 10.3

 

 

TESARO, INC.

 

2015 NON-EMPLOYEE DIRECTOR STOCK INCENTIVE PLAN

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
PURPOSE
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
3.
    	
ADMINISTRATION OF THE   PLAN
    	
6
    
	
 
    	
3.1
    	
Committee
    	
6
    
	
 
    	
 
    	
3.1.1
    	
Powers and Authorities
    	
6
    
	
 
    	
 
    	
3.1.2
    	
Composition of the   Committee
    	
6
    
	
 
    	
3.2
    	
Board
    	
6
    
	
 
    	
3.3
    	
Terms of Awards
    	
7
    
	
 
    	
 
    	
3.3.1
    	
Committee Authority
    	
7
    
	
 
    	
 
    	
3.3.2
    	
Forfeiture; Recoupment
    	
7
    
	
 
    	
3.4
    	
No Repricing Without Stockholder   Approval
    	
8
    
	
 
    	
3.5
    	
Deferral Arrangement
    	
8
    
	
 
    	
3.6
    	
Registration; Share   Certificates
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
STOCK SUBJECT TO THE   PLAN
    	
8
    
	
 
    	
4.1
    	
Number of Shares of   Stock Available for Awards
    	
8
    
	
 
    	
4.2
    	
Share Usage
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
TERM; AMENDMENT AND   TERMINATION
    	
9
    
	
 
    	
5.1
    	
Term
    	
9
    
	
 
    	
5.2
    	
Amendment, Suspension,   and Termination
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
AWARD ELIGIBILITY AND   LIMITATIONS
    	
9
    
	
 
    	
6.1
    	
Eligible Grantees
    	
9
    
	
 
    	
6.2
    	
Stand-Alone,   Additional, Tandem, and Substitute Awards
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
AWARD AGREEMENT
    	
10
    
	
 
    	
 
    	
 
    
	
8.
    	
TERMS AND CONDITIONS OF   OPTIONS
    	
10
    
	
 
    	
8.1
    	
Option Price
    	
10
    
	
 
    	
8.2
    	
Vesting and   Exercisability
    	
10
    
	
 
    	
8.3
    	
Term
    	
10
    
	
 
    	
8.4
    	
Termination of Service
    	
11
    
	
 
    	
8.5
    	
Limitations on Exercise   of Option
    	
11
    
	
 
    	
8.6
    	
Method of Exercise
    	
11
    
	
 
    	
8.7
    	
Rights of Holders of   Options
    	
11
    
	
 
    	
8.8
    	
Delivery of Stock
    	
11
    
	
 
    	
8.9
    	
Transferability of   Options
    	
11
    
	
 
    	
8.10
    	
Family Transfers
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
TERMS AND CONDITIONS OF   STOCK APPRECIATION RIGHTS
    	
12
    
	
 
    	
9.1
    	
Right to Payment and   SAR Price
    	
12
    
	
 
    	
9.2
    	
Other Terms
    	
12
    
	
 
    	
9.3
    	
Term
    	
12
    
	
 
    	
9.4
    	
Rights of Holders of   SARs
    	
13
    
						

 

i

 

	
 
    	
9.5
    	
Transferability of SARs
    	
13
    
	
 
    	
9.6
    	
Family Transfers
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
TERMS AND CONDITIONS OF   RESTRICTED STOCK AND RESTRICTED STOCK UNITS
    	
13
    
	
 
    	
10.1
    	
Grant of Restricted   Stock and Restricted Stock Units
    	
13
    
	
 
    	
10.2
    	
Restrictions
    	
13
    
	
 
    	
10.3
    	
Registration;   Restricted Stock Certificates
    	
14
    
	
 
    	
10.4
    	
Rights of Holders of   Restricted Stock
    	
14
    
	
 
    	
10.5
    	
Rights of Holders of   Restricted Stock Units
    	
14
    
	
 
    	
 
    	
10.5.1
    	
Voting and Dividend   Rights
    	
14
    
	
 
    	
 
    	
10.5.2
    	
Creditor’s Rights
    	
14
    
	
 
    	
10.6
    	
Termination of Service
    	
15
    
	
 
    	
10.7
    	
Purchase of Restricted   Stock and Shares of Stock Subject to Restricted Stock Units
    	
15
    
	
 
    	
10.8
    	
Delivery of Shares of   Stock
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
TERMS AND CONDITIONS OF   UNRESTRICTED STOCK AWARDS
    	
15
    
	
 
    	
11.1
    	
Unrestricted Stock   Awards
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
FORMS OF PAYMENT
    	
16
    
	
 
    	
12.1
    	
General Rule
    	
16
    
	
 
    	
12.2
    	
Surrender of Shares of   Stock
    	
16
    
	
 
    	
12.3
    	
Cashless Exercise
    	
16
    
	
 
    	
12.4
    	
Other Forms of Payment
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
REQUIREMENTS OF LAW
    	
16
    
	
 
    	
13.1
    	
General
    	
16
    
	
 
    	
13.2
    	
Rule 16b-3
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
EFFECT OF CHANGES IN   CAPITALIZATION
    	
17
    
	
 
    	
14.1
    	
Changes in Stock
    	
17
    
	
 
    	
14.2
    	
Reorganization in Which   the Company Is the Surviving Entity Which Does not Constitute a Change in   Control
    	
18
    
	
 
    	
14.3
    	
Change in Control in   which Awards are not Assumed
    	
18
    
	
 
    	
14.4
    	
Change in Control in   which Awards are Assumed
    	
19
    
	
 
    	
14.5
    	
Adjustments
    	
19
    
	
 
    	
14.6
    	
No Limitations on   Company
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
GENERAL PROVISIONS
    	
20
    
	
 
    	
15.1
    	
Disclaimer of Rights
    	
20
    
	
 
    	
15.2
    	
Nonexclusivity of the   Plan
    	
20
    
	
 
    	
15.3
    	
Withholding Taxes
    	
20
    
	
 
    	
15.4
    	
Captions
    	
21
    
	
 
    	
15.5
    	
Construction
    	
21
    
	
 
    	
15.6
    	
Other Provisions
    	
21
    
	
 
    	
15.7
    	
Number and Gender
    	
21
    
	
 
    	
15.8
    	
Severability
    	
21
    
	
 
    	
15.9
    	
Governing Law
    	
21
    
	
 
    	
15.10
    	
Section 409A of   the Code
    	
21
    
	
 
    	
15.11
    	
Limitation on Liability
    	
22
    

 

ii

 

TESARO, INC.

2015 NON-EMPLOYEE DIRECTOR STOCK INCENTIVE PLAN

 

1.                                      PURPOSE

 

The Plan is intended to promote the best interests of the Company by enhancing the Company’s ability to attract and retain highly qualified Non-Employee Directors and by rewarding the Company’s current Non-Employee Directors for their services to the Company.  To this end, the Plan provides for the grant of Awards of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, and Unrestricted Stock.

 

2.                                      DEFINITIONS

 

For purposes of interpreting the Plan documents, including the Plan and Award Agreements, the following capitalized terms shall have the meanings specified below, unless the context clearly indicates otherwise:

 

2.1                               “Affiliate” shall mean any Person that controls, is controlled by, or is under common control with the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including any Subsidiary.  For purposes of grants of Options or Stock Appreciation Rights, an entity may not be considered an Affiliate unless the Company holds a Controlling Interest in such entity.

 

2.2                               “Applicable Laws” shall mean the legal requirements relating to the Plan and the Awards under (a) applicable provisions of the Code, the Securities Act, the Exchange Act, any rules or regulations thereunder, and any other laws, rules, regulations, and government orders of any jurisdiction applicable to the Company or its Affiliates, (b) applicable provisions of the corporate, securities, tax, and other laws, rules, regulations, and government orders of any jurisdiction applicable to Awards granted to residents thereof, and (c) the rules of any Stock Exchange or Securities Market on which the Common Stock is listed or publicly traded.

 

2.3                               “Award” shall mean a grant under the Plan of an Option, a Stock Appreciation Right, Restricted Stock, a Restricted Stock Unit, or Unrestricted Stock.

 

2.4                               “Award Agreement” shall mean the written agreement, in such written, electronic, or other form as determined by the Committee, between the Company and a Grantee that evidences and sets forth the terms and conditions of an Award.

 

2.5                               “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

 

2.6                               “Board” shall mean the Board of Directors of the Company.

 

2.7                               “Capital Stock” shall mean, with respect to any Person, any and all shares, interests, participations, or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Effective Date or issued thereafter, including, without limitation, all shares of Common Stock.

 

2.8                               “Change in Control” shall mean, subject to Section 15.10, the occurrence of any of the following:

 

1

 

(a)                                 A Person or Group becomes the Beneficial Owner of more than fifty percent (50%) of the total voting power of the Voting Stock of the Company, on a Fully Diluted Basis;

 

(b)                                 Individuals who on the effective date of the Plan constitute the board of directors (together with any new directors whose election by such board or whose nomination by such board for election by the stockholders of the Company was approved by a vote of at least a majority of the members of such board then in office who either were members of such board on the effective date of the Plan or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of such board then in office;

 

(c)                                  The Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, other than any such transaction in which the holders of securities that represented 100% of the voting stock of the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction;

 

(d)                                 The consummation of any direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one transaction or a series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any Person or Group; or

 

(e)                                  the stockholders of the Company adopt a plan or proposal for the liquidation, winding up or dissolution of the Company.

 

2.9                               “Code” shall mean the Internal Revenue Code of 1986, as amended, as now in effect or as hereafter amended, and any successor thereto.  References in the Plan to any Code Section shall be deemed to include, as applicable, regulations and guidance promulgated under such Code Section.

 

2.10                        “Committee” shall mean a committee of, and designated from time to time by resolution of, the Board, which shall be constituted as provided in Section 3.1.2 (or, if no Committee has been so designated, the Board).

 

2.11                        “Common Stock” shall mean the common stock, par value $0.0001 per share, of the Company that may be issued and outstanding from time to time.

 

2.12                        “Company” shall mean Tesaro, Inc. and any successor thereto.

 

2.13                        “Controlling Interest” shall have the meaning set forth in Treasury Regulation Section 1.414(c)-2(b)(2)(i); provided that (a) except as specified in clause (b) below, an interest of “at least 50 percent” shall be used instead of an interest of “at least 80 percent” in each case where “at least 80 percent” appears in Treasury Regulation Section 1.414(c)-2(b)(2)(i) and (b) where a grant of Options or Stock Appreciation Rights is based upon a legitimate business criterion, an interest of “at least 20 percent” shall be used instead of an interest of “at least 80 percent” in each case where “at least 80 percent” appears in Treasury Regulation Section 1.414(c)-2(b)(2)(i).

 

2.14                        “Effective Date” shall mean the date the Plan is approved by the Company’s stockholders.

 

2

 

2.15                        “Employee” shall mean, as of any date of determination, an employee (including an officer) of the Company or an Affiliate.

 

2.16                        “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, as now in effect or as hereafter amended, and any successor thereto.

 

2.17                        “Fair Market Value” shall mean the fair market value of a share of Stock for purposes of the Plan, which shall be, as of any date of determination:

 

(a)                                 If on such date the shares of Stock are listed on a Stock Exchange, or are publicly traded on another Securities Market, the Fair Market Value of a share of Stock shall be the closing price of the Stock as reported on such Stock Exchange or such Securities Market (provided that, if there is more than one such Stock Exchange or Securities Market, the Committee shall designate the appropriate Stock Exchange or Securities Market for purposes of the Fair Market Value determination).  If there is no such reported closing price on such date, the Fair Market Value of a share of Stock shall be the closing price of the Stock on the next preceding day on which any sale of Stock shall have been reported on such Stock Exchange or such Securities Market.

 

(b)                                 If on such date the shares of Stock are not listed on a Stock Exchange or publicly traded on a Securities Market, the Fair Market Value of a share of Stock shall be the value of the Stock as determined by the Committee by the reasonable application of a reasonable valuation method, in a manner consistent with Code Section 409A.

 

Notwithstanding this Section 2.17 or Section 15.3, for purposes of determining taxable income and the amount of the related tax withholding obligation pursuant to Section 15.3, the Fair Market Value will be determined by the Committee in good faith using any reasonable method as it deems appropriate, to be applied consistently with respect to Grantees; provided, further, that the Committee shall determine the Fair Market Value of shares of Stock for tax withholding obligations due in connection with sales, by or on behalf of a Grantee, of such shares of Stock subject to an Award to pay the Option Price, SAR Price, and/or any tax withholding obligation on the same date on which such shares may first be sold pursuant to the terms of the applicable Award Agreement (including broker-assisted cashless exercises of Options and Stock Appreciation Rights, as described in Section 12.3, and sell-to-cover transactions) in any manner consistent with applicable provisions of the Code, including but not limited to using the sale price of such shares on such date (or if sales of such shares are effectuated at more than one sale price, the weighted average sale price of such shares on such date) as the Fair Market Value of such shares, so long as such Grantee has provided the Company, or its designee or agent, with advance written notice of such sale.

 

2.18                        “Family Member” shall mean, with respect to any Grantee as of any date of determination, (a) a Person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of such Grantee, (b) any Person sharing such Grantee’s household (other than a tenant or employee), (c) a trust in which any one or more of the Persons specified in clauses (a) and (b) above (and such Grantee) own more than fifty percent (50%) of the beneficial interest, (d) a foundation in which any one or more of the Persons specified in clauses (a) and (b) above (and such Grantee) control the management of assets, and (e) any other entity in which one or more of the Persons specified in clauses (a) and (b) above (and such Grantee) own more than fifty percent (50%) of the voting interests.

 

2.19                        “Fully Diluted Basis” shall mean, as of any date of determination, the sum of (x) the number of shares of Voting Stock outstanding as of such date of determination plus (y) the number of shares of Voting

 

3

 

Stock issuable upon the exercise, conversion, or exchange of all then-outstanding warrants, options, convertible Capital Stock or indebtedness, exchangeable Capital Stock or indebtedness, or other rights exercisable for or convertible or exchangeable into, directly or indirectly, shares of Voting Stock, whether at the time of issue or upon the passage of time or upon the occurrence of some future event, and whether or not in-the-money as of such date of determination.

 

2.20                        “Grant Date” shall mean, as determined by the Committee, the latest to occur of (a) the date as of which the Committee approves the Award, (b) the date on which the recipient of an Award first becomes eligible to receive an Award under Article 6 hereof, or (c) such subsequent date specified by the Committee in the corporate action approving the Award.

 

2.21                        “Grantee” shall mean a Non-Employee Director who receives or holds an Award under the Plan.

 

2.22                        “Group” shall have the meaning set forth in Sections 13(d) and 14(d)(2) of the Exchange Act.

 

2.23                        “Non-Employee Director” shall have the meaning set forth in Rule 16b-3 under the Exchange Act; provided at the time of grant such Non-Employee Director must be (i) a natural person, (ii) who is currently providing bona fide services to the Company or an Affiliate as a member of the Board.

 

2.24                        “Option” shall mean an option to purchase one or more shares of Stock at a specified Option Price awarded to a Grantee pursuant to Article 8.

 

2.25                        “Option Price” shall mean the per share exercise price for shares of Stock subject to an Option.

 

2.26                        “Person” shall mean an individual, a corporation, a partnership, a limited liability company, an association, a trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof; provided that, for purposes of Section 2.8(a) and Section 2(d), Person shall have the meaning set forth in Sections 13(d) and 14(d)(2) of the Exchange Act.

 

2.27                        “Plan” shall mean this Tesaro, Inc. Non-Employee Director Stock Incentive Plan, as amended from time to time.

 

2.28                        “Restricted Period” shall mean a period of time established by the Committee during which an Award of Restricted Stock or Restricted Stock Units is subject to restrictions.

 

2.29                        “Restricted Stock” shall mean shares of Stock awarded to a Grantee pursuant to Article 10.

 

2.30                        “Restricted Stock Unit” shall mean a bookkeeping entry representing the equivalent of one (1) share of Stock awarded to a Grantee pursuant to Article 10 that may be settled, subject to the terms and conditions of the applicable Award Agreement, in shares of Stock, cash, or a combination thereof.

 

2.31                        “SAR Price” shall mean the per share exercise price of a SAR.

 

2.32                        “Securities Act” shall mean the Securities Act of 1933, as amended, as now in effect or as hereafter amended, and any successor thereto.

 

4

 

2.33                        “Securities Market” shall mean an established securities market.

 

2.34                        “Separation from Service” shall have the meaning set forth in Code Section 409A.

 

2.35                        “Service” shall mean service performed by a Grantee as a Non-Employee Director, Employee, or consultant of the Company or an Affiliate.  Unless otherwise provided in the applicable Award Agreement, a Grantee’s change in position or duties shall not result in interrupted or terminated Service, so long as such Grantee continues to provide Service to the Company or an Affiliate as a Non-Employee Director, Employee, or consultant.  Subject to the preceding sentence, any determination by the Committee whether a termination of Service shall have occurred for purposes of the Plan shall be final, binding, and conclusive.  If a Grantee’s Service relationship is with an Affiliate and the applicable entity ceases to be an Affiliate, a termination of Service shall be deemed to have occurred when such entity ceases to be an Affiliate unless the Grantee transfers his or her employment or other Service relationship to the Company or any other Affiliate.

 

2.36                        “Service Recipient Stock” shall have the meaning set forth in Code Section 409A.

 

2.37                        “Share Limit” shall have the meaning set forth in Section 4.1.

 

2.38                        “Short-Term Deferral Period” shall have the meaning set forth in Code Section 409A.

 

2.39                        “Stock” shall mean the common stock, par value $0.0001 per share, of the Company, or any security into which shares of Stock may be changed or for which shares of Stock may be exchanged as provided in Section 14.1.

 

2.40                        “Stock Appreciation Right” or “SAR” shall mean a right granted to a Grantee pursuant to Article 9.

 

2.41                        “Stock Exchange” shall mean the New York Stock Exchange, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, or another established national or regional stock exchange.

 

2.42                        “Subsidiary” shall mean any corporation (other than the Company) or non-corporate entity with respect to which the Company owns, directly or indirectly, fifty percent (50%) or more of the total combined voting power of all classes of Voting Stock.  In addition, any other entity may be designated by the Committee as a Subsidiary, provided that (a) such entity could be considered as a subsidiary according to generally accepted accounting principles in the United States of America and (b) in the case of an Award of Options or Stock Appreciation Rights, such Award would be considered to be granted in respect of Service Recipient Stock under Code Section 409A.

 

2.43                        “Substitute Award” shall mean an Award granted upon assumption of, or in substitution for, outstanding awards previously granted under a compensatory plan of the Company or an Affiliate.

 

2.44                        “Unrestricted Stock” shall mean Stock that is free of any restrictions.

 

2.45                        “Voting Stock” shall mean, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers, or other voting members of the governing body of such Person.

 

5

 

3.                                      ADMINISTRATION OF THE PLAN

 

3.1                               Committee.

 

3.1.1                     Powers and Authorities.

 

The Committee shall administer the Plan and shall have such powers and authorities related to the administration of the Plan as are consistent with the Company’s certificate of incorporation and bylaws and Applicable Laws.  Without limiting the generality of the foregoing, the Committee shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award, or any Award Agreement and shall have full power and authority to take all such other actions and to make all such other determinations not inconsistent with the specific terms and provisions of the Plan which the Committee deems to be necessary or appropriate to the administration of the Plan, any Award, or any Award Agreement.  All such actions and determinations shall be made by (a) the affirmative vote of a majority of the members of the Committee present at a meeting at which a quorum is present, or (b) the unanimous consent of the members of the Committee executed in writing or evidenced by electronic transmission in accordance with the Company’s certificate of incorporation and bylaws and Applicable Laws.  Unless otherwise expressly determined by the Board, the Committee shall have the authority to interpret and construe all provisions of the Plan, any Award, and any Award Agreement, and any such interpretation or construction, and any other determination contemplated to be made under the Plan or any Award Agreement, by the Committee shall be final, binding, and conclusive on all Persons, whether or not expressly provided for in any provision of the Plan, such Award, or such Award Agreement.

 

In the event that the Plan, any Award, or any Award Agreement provides for any action to be taken by the Board or any determination to be made by the Board, such action may be taken or such determination may be made by the Committee constituted in accordance with this Section 3.1 if the Board has delegated the power and authority to do so to such Committee.

 

3.1.2                     Composition of the Committee.

 

The Committee shall be a committee composed of not fewer than two (2) directors of the Company designated by the Board to administer the Plan.  Each member of the Committee shall be (a) a Non-Employee Director, (b) an Outside Director, and (c) an independent director in accordance with the rules of any Stock Exchange on which the Stock is listed; provided that any action taken by the Committee shall be valid and effective whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 3.1.2 or otherwise provided in any charter of the Committee.  Without limiting the generality of the foregoing, the Committee may be the Compensation Committee of the Board or a subcommittee thereof if the Compensation Committee of the Board or such subcommittee satisfies the foregoing requirements.

 

3.2                               Board.

 

The Board, from time to time, may exercise any or all of the powers and authorities related to the administration and implementation of the Plan, as set forth in Section 3.1 and other applicable provisions of the Plan, as the Board shall determine, consistent with the Company’s certificate of incorporation and bylaws and Applicable Laws.

 

6

 

3.3                               Terms of Awards.

 

3.3.1                     Committee Authority.

 

Subject to the other terms and conditions of the Plan, the Committee shall have full and final authority to:

 

(a)                                 designate Grantees;

 

(b)                                 determine the type or types of Awards to be made to a Grantee;

 

(c)                                  determine the number of shares of Stock to be subject to an Award or to which an Award relates;

 

(d)                                 establish the terms and conditions of each Award (including the Option Price, the SAR Price, and the purchase price for applicable Awards; the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock subject thereto;  the treatment of an Award in the event of a Change in Control (subject to applicable agreements);

 

(e)                                  prescribe the form of each Award Agreement evidencing an Award;

 

(f)                                   subject to the limitation on repricing in Section 3.4, amend, modify, or supplement the terms of any outstanding Award, which authority shall include the authority, in order to effectuate the purposes of the Plan but without amending the Plan, to make Awards or to modify outstanding Awards made to eligible natural Persons who are foreign nationals or are natural Persons who are employed outside the United States to reflect differences in local law, tax policy, or custom; provided that, notwithstanding the foregoing, no amendment, modification, or supplement of the terms of any outstanding Award shall, without the consent of the Grantee thereof, impair such Grantee’s rights under such Award; and

 

(g)                                  make Substitute Awards.

 

3.3.2                     Forfeiture; Recoupment.

 

The Committee may reserve the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee with respect to an Award thereunder on account of actions taken by, or failed to be taken by, such Grantee in violation or breach of, or in conflict with, any (a) employment agreement, (b) non-competition agreement, (c) agreement prohibiting solicitation of Employees or clients of the Company or an Affiliate, (d) confidentiality obligation with respect to the Company or an Affiliate, (e) Company or Affiliate policy or procedure, (f) other agreement, or (g) other obligation of such Grantee to the Company or an Affiliate, as and to the extent specified in such Award Agreement.

 

Any Award granted pursuant to the Plan shall be subject to mandatory repayment by the Grantee to the Company (x) to the extent set forth in this Plan or an Award Agreement or (y) to the extent the Grantee is, or in the future becomes, subject to (1) any Company or Affiliate “clawback” or recoupment policy that is adopted to comply with the requirements of any Applicable Laws, or (2) any Applicable Laws which impose mandatory recoupment, under circumstances set forth in such Applicable Laws.

 

7

 

3.4                               No Repricing Without Stockholder Approval.

 

Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, shares of Stock, other securities, or other property), stock split, extraordinary dividend, recapitalization, Change in Control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of Stock, or other securities or similar transaction), the Company may not: (a) amend the terms of outstanding Options or SARs to reduce the Option Price or SAR Price, as applicable, of such outstanding Options or SARs; (b) cancel outstanding Options or SARs in exchange for or substitution of Options or SARs with an Option Price or SAR Price, as applicable, that is less than the Option Price or SAR Price, as applicable, of the original Options or SARs; or (c) cancel outstanding Options or SARs with an Option Price or SAR Price, as applicable, above the current Fair Market Value in exchange for cash or other securities, in each case, unless such action (i) is subject to and approved by the Company’s stockholders or (ii) would not be deemed to be a repricing under the rules of any Stock Exchange or Securities Market on which the Common Stock is listed or publicly traded.

 

3.5                               Deferral Arrangement.

 

The Committee may permit or require the deferral of any payment pursuant to any Award into a deferred compensation arrangement, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or dividend equivalent rights and, in connection therewith, , provisions for converting such credits into deferred stock units and for restricting deferrals to comply with hardship distribution rules affecting tax-qualified retirement plans subject to Code Section 401(k)(2)(B)(IV); provided that no dividend equivalent rights may be granted in connection with, or related to, an Award of Options or SARs.  Any such deferrals shall be made in a manner that complies with Code Section 409A, including, if applicable, with respect to when a Separation from Service occurs.

 

3.6                               Registration; Share Certificates.

 

Notwithstanding any provision of the Plan to the contrary, the ownership of the shares of Stock issued under the Plan may be evidenced in such a manner as the Committee, in its sole discretion, deems appropriate, including by book-entry or direct registration (including transaction advices) or the issuance of one or more share certificates.

 

4.                                      STOCK SUBJECT TO THE PLAN

 

4.1                               Number of Shares of Stock Available for Awards.

 

Subject to adjustment pursuant to Article 14, the maximum number of shares of Stock reserved for issuance under the Plan shall be five-hundred thousand (500,000) shares of Stock (the “Share Limit”).  The shares of Stock available for issuance under the Plan will be reserved for issuance from the Tesaro, Inc. 2012 Omnibus Incentive Plan.  Such shares of Stock may be authorized and unissued shares of Stock, treasury shares of Stock, or any combination of the foregoing, as may be determined from time to time by the Board or by the Committee.  Any of the shares of Stock reserved and available for issuance under the Plan may be used for any type of Award under the Plan.

 

4.2                               Share Usage.

 

(a)                                 Shares of Stock covered by an Award shall be counted as used as of the Grant Date for purposes of calculating the number of shares of Stock available for issuance under Section 4.1.

 

8

 

(b)                                 Any shares of Stock that are subject to Awards, including shares of Stock acquired through dividend reinvestment pursuant to Article 10, will be counted against the Share Limit set forth in Section 4.1 as one (1) share of Stock for every one (1) share of Stock subject to an Award.  The number of shares of Stock subject to an Award of SARs will be counted against the Share Limit set forth in Section 4.1 as one (1) share of Stock for every one (1) share of Stock subject to such Award regardless of the number of shares of Stock actually issued to settle such SARs upon the exercise of the SARs.

 

(c)                                  If any shares of Stock covered by an Award are not purchased or are forfeited or expire or if an Award otherwise terminates without delivery of any Stock subject thereto or is settled in cash in lieu of shares, then the number of shares of Stock counted against the Share Limit with respect to such Award shall, to the extent of any such forfeiture, termination, expiration, or settlement, again be available for making Awards under the Plan.

 

(d)                                 The number of shares of Stock available for issuance under the Plan will not be increased by the number of shares of Stock (i) tendered, withheld, or subject to an Award granted under the Plan surrendered in connection with the purchase of shares of Stock upon exercise of an Option, (ii) that were not issued upon the net settlement or net exercise of a Stock-settled SAR granted under the Plan, (iii) deducted or delivered from payment of an Award granted under the Plan in connection with the Company’s tax withholding obligations as provided in Section 15.3, or (iv) purchased by the Company with proceeds from Option exercises.

 

5.                                      TERM; AMENDMENT AND TERMINATION

 

5.1                               Term.

 

The Plan shall become effective as of the Effective Date.  The Plan shall terminate on the first to occur of (a) the tenth (10th) anniversary of the Effective Date, (b) the date determined in accordance with Section 5.2, and (c) the date determined in accordance with Section 14.3.  Upon such termination of the Plan, all outstanding Awards shall continue to have full force and effect in accordance with the provisions of the terminated Plan and the applicable Award Agreement (or other documents evidencing such Awards).

 

5.2                               Amendment, Suspension, and Termination.

 

The Board may, at any time and from time to time, amend, suspend, or terminate the Plan; provided that, with respect to Awards theretofore granted under the Plan, no amendment, suspension, or termination of the Plan shall, without the consent of the Grantee, impair the rights or obligations under any such Award.  The effectiveness of any amendment to the Plan shall be contingent on approval of such amendment by the Company’s stockholders to the extent provided by the Board or required by Applicable Laws.  No amendment will be made to the no-repricing provisions of Section 3.4 or the Option Price or SAR Price provisions of Section 8.1 or Section 9.1, respectively, without the approval of the Company’s stockholders.

 

6.                                      AWARD ELIGIBILITY AND LIMITATIONS

 

6.1                               Eligible Grantees.

 

Subject to this Article 6, Awards may be made under the Plan to any Non-Employee Director, as the Committee shall determine and designate from time to time.

 

9

 

6.2                               Stand-Alone, Additional, Tandem, and Substitute Awards.

 

Subject to Section 3.4, Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, (a) any other Award, (b) any award granted under another plan of the Company, an Affiliate, or any business entity that has been a party to a transaction with the Company or an Affiliate, or (c) any other right of a Grantee to receive payment from the Company or an Affiliate.  Such additional, tandem, exchange, or Substitute Awards may be granted at any time.  If an Award is granted in substitution or exchange for another Award, or for an award granted under another plan of the Company, an Affiliate, or any business entity that has been a party to a transaction with the Company or an Affiliate, the Committee shall require the surrender of such other Award or award under such other plan in consideration for the grant of such exchange or Substitute Award.  In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash payments under other plans of the Company or an Affiliate.  Notwithstanding Section 8.1 and Section 9.1, but subject to Section 3.4, the Option Price of an Option or the SAR Price of a SAR that is a Substitute Award may be less than one hundred percent (100%) of the Fair Market Value of a share of Stock on the original Grant Date; provided that such Option Price or SAR Price is determined consistent with Code Section 409A for any Option or SAR.

 

7.                                      AWARD AGREEMENT

 

Each Award granted pursuant to the Plan shall be evidenced by an Award Agreement, which shall be in such form or forms as the Committee shall from time to time determine.  Award Agreements utilized under the Plan from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan.  In the event of any inconsistency between the Plan and an Award Agreement, the provisions of the Plan shall control.

 

8.                                      TERMS AND CONDITIONS OF OPTIONS

 

8.1                               Option Price.

 

The Option Price of each Option shall be fixed by the Committee and stated in the Award Agreement evidencing such Option.  Except in the case of Substitute Awards, the Option Price of each Option shall be at least the Fair Market Value of one (1) share of Stock on the Grant Date.  In no case shall the Option Price of any Option be less than the par value of one (1) share of Stock.

 

8.2                               Vesting and Exercisability.

 

Subject to Sections 8.3 and 14.3, each Option granted under the Plan shall become vested and/or exercisable at such times and under such conditions as shall be determined by the Committee and stated in the Award Agreement, in another agreement with the Grantee, or otherwise in writing.

 

8.3                               Term.

 

Each Option granted under the Plan shall terminate, and all rights to purchase shares of Stock thereunder shall cease, on the tenth (10th) anniversary of the Grant Date of such Option, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the Award Agreement relating to such Option; provided that, to the extent deemed necessary or appropriate by the Committee to reflect differences in local law, tax policy, or custom with respect to any Option granted to a Grantee who is a foreign national or is a natural Person who is employed outside the United States, such Option may terminate, and all rights to purchase shares of Stock thereunder may cease,

 

10

 

upon the expiration of a period longer than ten (10) years from the Grant Date of such Option as the Committee shall determine.

 

8.4                               Termination of Service.

 

Each Award Agreement with respect to the grant of an Option shall set forth the extent to which the Grantee thereof, if at all, shall have the right to exercise such Option following termination of such Grantee’s Service.  Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

 

8.5                               Limitations on Exercise of Option.

 

Notwithstanding any provision of the Plan to the contrary, in no event may any Option be exercised, in whole or in part, after the occurrence of an event referred to in Article 14 which results in the termination of such Option.

 

8.6                               Method of Exercise.

 

Subject to the terms of Article 12 and Section 15.3, an Option that is exercisable may be exercised by the Grantee’s delivery to the Company or its designee or agent of notice of exercise on any business day, at the Company’s principal office or the office of such designee or agent, on the form specified by the Company and in accordance with any additional procedures specified by the Committee.  Such notice shall specify the number of shares of Stock with respect to which such Option is being exercised and shall be accompanied by payment in full of the Option Price of the shares of Stock for which such Option is being exercised, plus the amount (if any) of federal and/or other taxes which the Company may, in its judgment, be required to withhold with respect to the exercise of such Option.

 

8.7                               Rights of Holders of Options.

 

Unless otherwise stated in the applicable Award Agreement, a Grantee or other Person holding or exercising an Option shall have none of the rights of a stockholder of the Company (for example, the right to receive cash or dividend payments or distributions attributable to the shares of Stock subject to such Option, to direct the voting of the shares of Stock subject to such Option, or to receive notice of any meeting of the Company’s stockholders) until the shares of Stock subject thereto are fully paid and issued to such Grantee or other Person.  Except as provided in Article 14, no adjustment shall be made for dividends, distributions, or other rights with respect to any shares of Stock subject to an Option for which the record date is prior to the date of issuance of such shares of Stock.

 

8.8                               Delivery of Stock.

 

Promptly after the exercise of an Option by a Grantee and the payment in full of the Option Price with respect thereto, such Grantee shall be entitled to receive such evidence of such Grantee’s ownership of the shares of Stock subject to such Option as shall be consistent with Section 3.6.

 

8.9                               Transferability of Options.

 

Except as provided in Section 8.10, during the lifetime of a Grantee of an Option, only such Grantee (or, in the event of such Grantee’s legal incapacity or incompetency, such Grantee’s guardian or legal

 

11

 

representative) may exercise such Option.  Except as provided in Section 8.10, no Option shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution.

 

8.10                        Family Transfers.

 

If authorized in the applicable Award Agreement and by the Committee, in its sole discretion, a Grantee may transfer, not for value, all or part of an Option to any Family Member.  For the purpose of this Section 8.10, a transfer “not for value” is a transfer which is (a) a gift, (b) a transfer under a domestic relations order in settlement of marital property rights, or (c) unless Applicable Laws do not permit such transfer, a transfer to an entity in which more than fifty percent (50%) of the voting interests are owned by Family Members (and/or the Grantee) in exchange for an interest in such entity.  Following a transfer under this Section 8.10, any such Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to such transfer.  Subsequent transfers of transferred Options shall be prohibited except to Family Members of the original Grantee in accordance with this Section 8.10 or by will or the laws of descent and distribution.  The provisions of Section 8.4 relating to termination of Service shall continue to be applied with respect to the original Grantee of the Option, following which such Option shall be exercisable by the transferee only to the extent, and for the periods specified, in Section 8.4.

 

9.                                      TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

 

9.1                               Right to Payment and SAR Price.

 

A SAR shall confer on the Grantee to whom it is granted a right to receive, upon exercise thereof, the excess of (a) the Fair Market Value of one (1) share of Stock on the date of exercise, over (b) the SAR Price as determined by the Committee.  The Award Agreement for a SAR shall specify the SAR Price, which shall be no less than the Fair Market Value of one (1) share of Stock on the Grant Date of such SAR.  SARs may be granted in tandem with all or part of an Option granted under the Plan or at any subsequent time during the term of such Option, in combination with all or any part of any other Award, or without regard to any Option or other Award; provided that a SAR that is granted in tandem with all or part of an Option will have the same term, and expire at the same time, as the related Option; provided, further, that a SAR that is granted subsequent to the Grant Date of a related Option must have a SAR Price that is no less than the Fair Market Value of one (1) share of Stock on the Grant Date of such SAR.

 

9.2                               Other Terms.

 

The Committee shall determine, on the Grant Date or thereafter, the time or times at which, and the circumstances under which, a SAR may be exercised in whole or in part (including based on achievement of future Service requirements); the time or times at which SARs shall cease to be or become exercisable following termination of Service or upon other conditions; the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which shares of Stock shall be delivered or deemed to be delivered to Grantees, whether or not a SAR shall be granted in tandem or in combination with any other Award; and any and all other terms and conditions of any SAR.

 

9.3                               Term.

 

Each SAR granted under the Plan shall terminate, and all rights thereunder shall cease, on the tenth (10th) anniversary of the Grant Date of such SAR or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the Award Agreement relating to such SAR.

 

12

 

9.4                               Rights of Holders of SARs.

 

Unless otherwise stated in the applicable Award Agreement, a Grantee or other Person holding or exercising a SAR shall have none of the rights of a stockholder of the Company (for example, the right to receive cash or dividend payments or distributions attributable to the shares of Stock underlying such SAR, to direct the voting of the shares of Stock underlying such SAR, or to receive notice of any meeting of the Company’s stockholders) until the shares of Stock underlying such SAR, if any, are issued to such Grantee or other Person.  Except as provided in Article 14, no adjustment shall be made for dividends, distributions, or other rights with respect to any shares of Stock underlying a SAR for which the record date is prior to the date of issuance of such shares of Stock, if any.

 

9.5                               Transferability of SARs.

 

Except as provided in Section 9.6, during the lifetime of a Grantee of a SAR, only the Grantee (or, in the event of such Grantee’s legal incapacity or incompetency, such Grantee’s guardian or legal representative) may exercise such SAR.  Except as provided in Section 9.6, no SAR shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution.

 

9.6                               Family Transfers.

 

If authorized in the applicable Award Agreement and by the Committee, in its sole discretion, a Grantee may transfer, not for value, all or part of a SAR to any Family Member.  For the purpose of this Section 9.6, a transfer “not for value” is a transfer which is (a) a gift, (b) a transfer under a domestic relations order in settlement of marital property rights, or (c) unless Applicable Laws do not permit such transfer, a transfer to an entity in which more than fifty percent (50%) of the voting interests are owned by Family Members (and/or the Grantee) in exchange for an interest in such entity.  Following a transfer under this Section 9.6, any such SAR shall continue to be subject to the same terms and conditions as were in effect immediately prior to such transfer.  Subsequent transfers of transferred SARs shall be prohibited except to Family Members of the original Grantee in accordance with this Section 9.6 or by will or the laws of descent and distribution.

 

10.                               TERMS AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

10.1                        Grant of Restricted Stock and Restricted Stock Units.

 

Awards of Restricted Stock and Restricted Stock Units may be made for consideration or for no consideration, other than the par value of the shares of Stock, which shall be deemed paid by past Service or, if so provided in the related Award Agreement or a separate agreement, the promise by the Grantee to perform future Service to the Company or an Affiliate.

 

10.2                        Restrictions.

 

At the time a grant of Restricted Stock or Restricted Stock Units is made, the Committee may, in its sole discretion, (a) establish a Restricted Period applicable to such Restricted Stock or Restricted Stock Units and (b) prescribe restrictions in addition to or other than the expiration of the Restricted Period.  Awards of Restricted Stock and Restricted Stock Units may not be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during the Restricted Period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect to such Awards.

 

13

 

10.3                        Registration; Restricted Stock Certificates.

 

Pursuant to Section 3.6, to the extent that ownership of Restricted Stock is evidenced by a book-entry registration or direct registration (including transaction advices), such registration shall be notated to evidence the restrictions imposed on such Award of Restricted Stock under the Plan and the applicable Award Agreement.  Subject to Section 3.6 and the immediately following sentence, the Company may issue, in the name of each Grantee to whom Restricted Stock has been granted, certificates representing the total number of shares of Restricted Stock granted to the Grantee, as soon as reasonably practicable after the Grant Date of such Restricted Stock.  The Committee may provide in an Award Agreement with respect to an Award of Restricted Stock that either (a) the Secretary of the Company shall hold such certificates for such Grantee’s benefit until such time as such shares of Restricted Stock are forfeited to the Company or the restrictions applicable thereto lapse and such Grantee shall deliver a stock power to the Company with respect to each certificate, or (b) such certificates shall be delivered to such Grantee, provided that such certificates shall bear legends that comply with Applicable Laws and make appropriate reference to the restrictions imposed on such Award of Restricted Stock under the Plan and such Award Agreement.

 

10.4                        Rights of Holders of Restricted Stock.

 

Unless the Committee provides otherwise in an Award Agreement and subject to the restrictions set forth in the Plan, any applicable Company program, and the applicable Award Agreement, holders of Restricted Stock shall have the right to vote such shares of Restricted Stock and the right to receive any dividend payments or distributions declared or paid with respect to such shares of Restricted Stock.  The Committee may provide in an Award Agreement evidencing a grant of Restricted Stock that (a) any cash dividend payments or distributions paid on Restricted Stock shall be reinvested in shares of Stock, which may or may not be subject to the same vesting conditions and restrictions as applicable to such underlying shares of Restricted Stock or (b) any dividend payments or distributions declared or paid on shares of Restricted Stock shall only be made or paid upon satisfaction of the vesting conditions and restrictions applicable to such shares of Restricted Stock.  All stock dividend payments or distributions, if any, received by a Grantee with respect to shares of Restricted Stock as a result of any stock split, stock dividend, combination of stock, or other similar transaction shall be subject to the same vesting conditions and restrictions as applicable to such underlying shares of Restricted Stock.

 

10.5                        Rights of Holders of Restricted Stock Units .

 

10.5.1              Voting and Dividend Rights.

 

Holders of Restricted Stock Units shall have no rights as stockholders of the Company (for example, the right to receive dividend payments or distributions attributable to the shares of Stock underlying such Restricted Stock Units, to direct the voting of the shares of Stock underlying such Restricted Stock Units, or to receive notice of any meeting of the Company’s stockholders).

 

10.5.2              Creditor’s Rights.

 

A holder of Restricted Stock Units shall have no rights other than those of a general unsecured creditor of the Company.  Restricted Stock Units represent unfunded and unsecured obligations of the Company, subject to the terms and conditions of the applicable Award Agreement.

 

14

 

10.6                        Termination of Service.

 

Unless the Committee provides otherwise in an Award Agreement, in another agreement with the Grantee, or otherwise in writing after such Award Agreement is issued, but prior to termination of Grantee’s Service, upon the termination of such Grantee’s Service, any Restricted Stock or Restricted Stock Units held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited.  Upon forfeiture of such Restricted Stock or Restricted Stock Units, the Grantee thereof shall have no further rights with respect thereto, including any right to vote such Restricted Stock or any right to receive dividends or dividend equivalent rights, as applicable with respect to such Restricted Stock or Restricted Stock Units.

 

10.7                        Purchase of Restricted Stock and Shares of Stock Subject to Restricted Stock Units.

 

The Grantee of an Award of Restricted Stock or vested Restricted Stock Units shall be required, to the extent required by Applicable Laws, to purchase such Restricted Stock or the shares of Stock subject to such vested Restricted Stock Units from the Company at a purchase price equal to the greater of (x) the aggregate par value of the shares of Stock represented by such Restricted Stock or such vested Restricted Stock Units or (y) the purchase price, if any, specified in the Award Agreement relating to such Restricted Stock or such vested Restricted Stock Units.  Such purchase price shall be payable in a form provided in Article 12 or, in the sole discretion of the Committee, in consideration for Service rendered or to be rendered by the Grantee to the Company or an Affiliate.

 

10.8                        Delivery of Shares of Stock.

 

Upon the expiration or termination of any Restricted Period and the satisfaction of any other conditions prescribed by the Committee, including, without limitation, any delayed delivery period, the restrictions applicable to Restricted Stock or Restricted Stock Units settled in shares of Stock shall lapse, and, unless otherwise provided in the applicable Award Agreement, a book-entry or direct registration (including transaction advices) or a certificate evidencing ownership of such shares of Stock shall, consistent with Section 3.6, be issued, free of all such restrictions, to the Grantee thereof or such Grantee’s beneficiary or estate, as the case may be.  Neither the Grantee, nor the Grantee’s beneficiary or estate, shall have any further rights with regard to a Restricted Stock Unit once the shares of Stock represented by such Restricted Stock Unit have been delivered in accordance with this Section 10.8.

 

11.                               TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS

 

11.1                        Unrestricted Stock Awards.

 

The Committee may, in its sole discretion, grant (or sell at the par value of a share of Stock or at such other higher purchase price as shall be determined by the Committee) an Award to any Grantee pursuant to which such Grantee may receive shares of Unrestricted Stock under the Plan.  Awards of Unrestricted Stock may be granted or sold to any Grantee as provided in the immediately preceding sentence in respect of Service rendered or, if so provided in the related Award Agreement or a separate agreement, to be rendered by the Grantee to the Company or an Affiliate or other valid consideration, in lieu of or in addition to any cash compensation due to such Grantee.

 

15

 

12.                               FORMS OF PAYMENT

 

12.1                        General Rule.

 

Payment of the Option Price for the shares of Stock purchased pursuant to the exercise of an Option or the purchase price, if any, for Restricted Stock and/or vested Restricted Stock Units shall be made in cash or in cash equivalents acceptable to the Company.

 

12.2                        Surrender of Shares of Stock.

 

To the extent that the applicable Award Agreement so provides, payment of the Option Price for shares of Stock purchased pursuant to the exercise of an Option or the purchase price, if any, for Restricted Stock and/or vested Restricted Stock Units may be made all or in part through the tender or attestation to the Company of shares of Stock, which shall be valued, for purposes of determining the extent to which such Option Price or purchase price has been paid thereby, at their Fair Market Value on the date of such tender or attestation.

 

12.3                        Cashless Exercise.

 

To the extent permitted by Applicable Laws and to the extent the Award Agreement so provides, payment of the Option Price for shares of Stock purchased pursuant to the exercise of an Option may be made all or in part by delivery (on a form acceptable to the Committee) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver all or part of the proceeds of such sale to the Company in payment of such Option Price and/or any withholding taxes described in Section 15.3.

 

12.4                        Other Forms of Payment.

 

To the extent that the applicable Award Agreement so provides and/or unless otherwise specified in an Award Agreement, payment of the Option Price for shares of Stock purchased pursuant to exercise of an Option or the purchase price, if any, for Restricted Stock and/or vested Restricted Stock Units may be made in any other form that is consistent with Applicable Laws, including (a) with respect to Restricted Stock and/or vested Restricted Stock Units, Service rendered or to be rendered by the Grantee thereof to the Company or an Affiliate and (b) with the consent of the Company, by withholding the number of shares of Stock that would otherwise vest or be issuable in an amount equal in value to the Option Price or purchase price and/or the required tax withholding amount.

 

13.                               REQUIREMENTS OF LAW

 

13.1                        General.

 

The Company shall not be required to offer, sell, or issue any shares of Stock under any Award, whether pursuant to the exercise of an Option, a SAR, or otherwise, if the offer, sale, or issuance of such shares of Stock would constitute a violation by the Grantee, the Company, an Affiliate, or any other Person of any provision of the Company’s certificate of incorporation or bylaws or of Applicable Laws, including any federal or state securities laws or regulations.  If at any time the Company shall determine, in its discretion, that the listing, registration, or qualification of any shares of Stock subject to an Award upon any Stock Exchange or Securities Market or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the offering, sale, issuance, or purchase of shares of Stock in connection with any Award, no shares of Stock may be offered, sold, or issued to the Grantee or any other Person under such Award, whether

 

16

 

pursuant to the exercise of an Option, a SAR, or otherwise, unless such listing, registration, or qualification shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of such Award.  Without limiting the generality of the foregoing, upon the exercise of any Option or any SAR that may be settled in shares of Stock or the delivery of any shares of Stock underlying an Award, unless a registration statement under the Securities Act is in effect with respect to the shares of Stock subject to such Award, the Company shall not be required to offer, sell, or issue such shares of Stock unless the Committee shall have received evidence satisfactory to it that the Grantee or any other Person exercising such Option or SAR or accepting delivery of such shares may acquire such shares of Stock pursuant to an exemption from registration under the Securities Act.  Any determination by the Committee in connection with the foregoing shall be final, binding, and conclusive.  The Company may register, but shall in no event be obligated to register, any shares of Stock or other securities issuable pursuant to the Plan pursuant to the Securities Act.  The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or a SAR or the issuance of shares of Stock or other securities issuable pursuant to the Plan or any Award to comply with any Applicable Laws.  As to any jurisdiction that expressly imposes the requirement that an Option or SAR that may be settled in shares of Stock shall not be exercisable until the shares of Stock subject to such Option or SAR are registered under the securities laws thereof or are exempt from such registration, the exercise of such Option or SAR under circumstances in which the laws of such jurisdiction apply shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption.

 

13.2                        Rule 16b-3.

 

During any time when the Company has any class of common equity securities registered under Section 12 of the Exchange Act, it is the intention of the Company that Awards pursuant to the Plan and the exercise of Options and SARs granted hereunder that would otherwise be subject to Section 16(b) of the Exchange Act shall qualify for the exemption provided by Rule 16b-3 under the Exchange Act.  To the extent that any provision of the Plan or action by the Committee does not comply with the requirements of such Rule 16b-3, such provision or action shall be deemed inoperative with respect to such Awards to the extent permitted by Applicable Laws and deemed advisable by the Committee and shall not affect the validity of the Plan.  In the event that such Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify the Plan in any respect necessary or advisable in its judgment to satisfy the requirements of, or to permit the Company to avail itself of the benefits of, the revised exemption or its replacement.

 

14.                               EFFECT OF CHANGES IN CAPITALIZATION

 

14.1                        Changes in Stock.

 

If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number of shares or kind of Capital Stock or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse stock split, spin-off, combination of stock, exchange of stock, stock dividend or other distribution payable in capital stock, or other increase or decrease in shares of Stock effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of shares of Capital Stock for which grants of Options and other Awards may be made under the Plan, including the Share Limit set forth in Section 4.1, shall be adjusted proportionately and accordingly by the Committee.  In addition, the number and kind of shares of Capital Stock for which Awards are outstanding shall be adjusted proportionately and accordingly by the Committee so that the proportionate interest of the Grantee therein immediately following such event shall, to the extent practicable, be the same as immediately before such event.  Any such adjustment in outstanding Options or SARs shall not change the aggregate Option Price or SAR Price payable with respect to shares that are subject

 

17

 

to the unexercised portion of such outstanding Options or SARs, as applicable, but shall include a corresponding proportionate adjustment in the per share Option Price or SAR Price, as the case may be.  The conversion of any convertible securities of the Company shall not be treated as an increase in shares effected without receipt of consideration.  Notwithstanding the foregoing, in the event of any distribution to the Company’s stockholders of securities of any other entity or other assets (including an extraordinary dividend, but excluding a non-extraordinary dividend, declared and paid by the Company) without receipt of consideration by the Company, the Board or the Committee constituted pursuant to Section 3.1.2 shall, in such manner as the Board or the Committee deems appropriate, adjust (a) the number and kind of shares of Capital Stock subject to outstanding Awards and/or (b) the aggregate and per share Option Price of outstanding Options and the aggregate and per share SAR Price of outstanding SARs as required to reflect such distribution.

 

14.2                        Reorganization in Which the Company Is the Surviving Entity Which Does not Constitute a Change in Control.

 

Subject to Section 14.3, if the Company shall be the surviving entity in any reorganization, merger, or consolidation of the Company with one or more other entities which does not constitute a Change in Control, any Award theretofore granted pursuant to the Plan shall pertain to and apply to the Capital Stock to which a holder of the number of shares of Stock subject to such Award would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the per share Option Price or SAR Price of any outstanding Option or SAR so that the aggregate Option Price or SAR Price thereafter shall be the same as the aggregate Option Price or SAR Price of the shares of Stock remaining subject to the Option or SAR as in effect immediately prior to such reorganization, merger, or consolidation.  Subject to any contrary language in an Award Agreement, in another agreement with the Grantee, or as otherwise set forth in writing, any restrictions applicable to such Award shall apply as well to any replacement shares of Capital Stock subject to such Award, or received by the Grantee, as a result of such reorganization, merger, or consolidation.

 

14.3                        Change in Control in which Awards are not Assumed.

 

Except as otherwise provided in the applicable Award Agreement, in another agreement with the Grantee, or as otherwise set forth in writing, upon the occurrence of a Change in Control in which outstanding Awards are not being assumed or continued, the following provisions shall apply to such Award, to the extent not assumed or continued:

 

(a)                                 Immediately prior to the occurrence of such Change in Control, in each case, all outstanding shares of Restricted Stock and all Restricted Stock Units shall be deemed to have vested, and all shares of Stock and/or cash subject to such Awards shall be delivered; and either of the following two (2) actions shall be taken:

 

(i)                                     At least fifteen (15) days prior to the scheduled consummation of such Change in Control, all Options and SARs outstanding hereunder shall become immediately exercisable and shall remain exercisable for a period of fifteen (15) days.  Any exercise of an Option or SAR during this fifteen (15)-day period shall be conditioned upon the consummation of the applicable Change in Control and shall be effective only immediately before the consummation thereof, and upon consummation of such Change in Control, the Plan and all outstanding but unexercised Options and SARs shall terminate, with or without consideration (including, without limitation, consideration in accordance with clause (ii) below) as determined by the Committee in its sole discretion.  The Committee shall send notice of an event that shall result in such a termination to all Persons who hold

 

18

 

Options and SARs not later than the time at which the Company gives notice thereof to its stockholders.

 

or

 

(ii)                                  The Committee may elect, in its sole discretion, to cancel any outstanding Awards of Options, SARs, Restricted Stock and/or Restricted Stock Units and pay or deliver, or cause to be paid or delivered, to the holder thereof an amount in cash or Capital Stock having a value (as determined by the Committee acting in good faith), in the case of Restricted Stock and Restricted Stock Units, equal to the formula or fixed price per share paid to holders of shares of Stock pursuant to such Change in Control and, in the case of Options or SARs, equal to the product of the number of shares of Stock subject to such Options or SARs multiplied by the amount, if any, by which (x) the formula or fixed price per share paid to holders of shares of Stock pursuant to such transaction exceeds (y) the Option Price or SAR Price applicable to such Options or SARs.

 

14.4                        Change in Control in which Awards are Assumed.

 

Except as otherwise provided in the applicable Award Agreement, in another agreement with the Grantee, or as otherwise set forth in writing, upon the occurrence of a Change in Control in which outstanding Awards are being assumed or continued, the following provisions shall apply to such Award, to the extent assumed or continued:

 

The Plan and the Options, SARs, Restricted Stock, and Restricted Stock Units granted under the Plan shall continue in the manner and under the terms so provided in the event of any Change in Control to the extent that provision is made in writing in connection with such Change in Control for the assumption or continuation of such Options, SARs, Restricted Stock, and Restricted Stock Units, or for the substitution for such Options, SARs, Restricted Stock, and Restricted Stock Units of new stock options, stock appreciation rights, restricted stock, and restricted stock units, relating to the Capital Stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number of shares (disregarding any consideration that is not common stock) and exercise prices of options and stock appreciation rights.

 

14.5                        Adjustments.

 

Adjustments under this Article 14 related to shares of Stock or other Capital Stock of the Company shall be made by the Committee, whose determination in that respect shall be final, binding, and conclusive.  No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share.  The Committee may provide in the applicable Award Agreement as of the Grant Date, in another agreement with the Grantee, or otherwise in writing at any time thereafter with the consent of the Grantee, for different provisions to apply to an Award in place of those provided in Sections 14.1, 14.2, 14.3, and 14.4.  This Article 14 shall not limit the Committee’s ability to provide for alternative treatment of Awards outstanding under the Plan in the event of a change in control event involving the Company that is not a Change in Control.

 

14.6                        No Limitations on Company.

 

The making of Awards pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or

 

19

 

assets (including all or any part of the business or assets of any Subsidiary or other Affiliate) or to engage in any other transaction or activity.

 

15.                               GENERAL PROVISIONS

 

15.1                        Disclaimer of Rights.

 

No provision in the Plan, any Award, or any Award Agreement shall be construed (a) to confer upon any individual the right to remain in the Service of the Company or an Affiliate, (b) to interfere in any way with any contractual or other right or authority of the Company or an Affiliate either to increase or decrease the compensation or other payments to any Person at any time, or (c) to terminate any Service or other relationship between any Person and the Company or an Affiliate.  In addition, notwithstanding any provision of the Plan to the contrary, unless otherwise stated in the applicable Award Agreement, in another agreement with the Grantee, or otherwise in writing, no Award granted under the Plan shall be affected by any change of duties or position of the Grantee thereof, so long as such Grantee continues to provide Service.  The obligation of the Company to pay any benefits pursuant to the Plan shall be interpreted as a contractual obligation to pay only those amounts provided herein, in the manner and under the conditions prescribed herein.  The Plan and Awards shall in no way be interpreted to require the Company to transfer any amounts to a third-party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary under the terms of the Plan.

 

15.2                        Nonexclusivity of the Plan.

 

Neither the adoption of the Plan nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations upon the right and authority of the Board or the Committee to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or particular individuals) as the Board or the Committee in their discretion determine desirable.

 

15.3                        Withholding Taxes.

 

The Company or an Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by Applicable Laws to be withheld with respect to the vesting of or other lapse of restrictions applicable to an Award or upon the issuance of any shares of Stock upon the exercise of an Option or pursuant to any other Award.  At the time of such vesting, lapse, or exercise, the Grantee shall pay in cash to the Company or an Affiliate, as the case may be, any amount that the Company or such Affiliate may reasonably determine to be necessary to satisfy such withholding obligation; provided that if there is a same-day sale of shares of Stock subject to an Award, the Grantee shall pay such withholding obligation on the day on which such same-day sale is completed.  Subject to the prior approval of the Company or an Affiliate, which may be withheld by the Company or such Affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy such withholding obligation, in whole or in part, (a) by causing the Company or such Affiliate to withhold shares of Stock otherwise issuable to the Grantee or (b) by delivering to the Company or such Affiliate shares of Common Stock already owned by the Grantee.  The shares of Common Stock so withheld or delivered shall have an aggregate Fair Market Value equal to such withholding obligation.  The Fair Market Value of the shares of Common Stock used to satisfy such withholding obligation shall be determined by the Company or such Affiliate as of the date on which the amount of tax to be withheld is to be determined.  A Grantee who has made an election pursuant to this Section 15.3 may satisfy such Grantee’s withholding obligation only with shares of Common Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar

 

20

 

requirements.  The maximum number of shares of Stock that may be withheld from any Award to satisfy any federal, state, or local tax withholding requirements upon the exercise, vesting, or lapse of restrictions applicable to any Award or payment of shares of Stock pursuant to such Award, as applicable, may not exceed such number of shares of Stock having a Fair Market Value equal to the minimum statutory amount required by the Company or the applicable Affiliate to be withheld and paid to any such federal, state, or local taxing authority with respect to such exercise, vesting, lapse of restrictions, or payment of shares of Stock.

 

15.4                        Captions.

 

The use of captions in the Plan or any Award Agreement is for convenience of reference only and shall not affect the meaning of any provision of the Plan or such Award Agreement.

 

15.5                        Construction.

 

Unless the context otherwise requires, all references in the Plan to “including” shall mean “including without limitation.”

 

15.6                        Other Provisions.

 

Each Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.

 

15.7                        Number and Gender.

 

With respect to words used in the Plan, the singular form shall include the plural form, and the masculine gender shall include the feminine gender, as the context requires.

 

15.8                        Severability.

 

If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

 

15.9                        Governing Law.

 

The validity and construction of the Plan and the instruments evidencing the Awards hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan and the instruments evidencing the Awards granted hereunder to the substantive laws of any other jurisdiction.

 

15.10                 Section 409A of the Code.

 

The Plan is intended to comply with Code Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan will be interpreted and administered to be in compliance with Code Section 409A.  Any payments described in the Plan that are due within the Short-Term Deferral Period will not be treated as deferred compensation unless Applicable Laws require otherwise.  Notwithstanding any provision of the Plan to the contrary, to the extent required to avoid accelerated taxation and tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would

 

21

 

otherwise be provided pursuant to the Plan during the six (6)-month period immediately following the Grantee’s Separation from Service will instead be paid on the first payroll date after the six (6)-month anniversary of the Grantee’s Separation from Service (or the Grantee’s death, if earlier).

 

Furthermore, notwithstanding anything in the Plan to the contrary, in the case of an Award that is characterized as deferred compensation under Code Section 409A, and pursuant to which settlement and delivery of the cash or shares of Stock subject to the Award is triggered based on a Change in Control, in no event will a Change in Control be deemed to have occurred for purposes of such settlement and delivery of cash or shares of Stock if the transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).  If an Award characterized as deferred compensation under Code Section 409A is not settled and delivered on account of the provision of the preceding sentence, the settlement and delivery shall occur on the next succeeding settlement and delivery triggering event that is a permissible triggering event under Code Section 409A.  No provision of this paragraph shall in any way affect the determination of a Change in Control for purposes of vesting in an Award that is characterized as deferred compensation under Code Section 409A.

 

Notwithstanding the foregoing, neither the Company nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Grantee under Code Section 409A, and neither the Company or an Affiliate nor the Board or the Committee will have any liability to any Grantee for such tax or penalty.

 

15.11                 Limitation on Liability.

 

No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan, any Award, or any Award Agreement.  Notwithstanding any provision of the Plan to the contrary, neither the Company, an Affiliate, the Board, the Committee, nor any person acting on behalf of the Company, an Affiliate, the Board, or the Committee will be liable to any Grantee or to the estate or beneficiary of any Grantee or to any other holder of an Award under the Plan by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Code Section 422 or Code Section 409A or by reason of Code Section 4999, or otherwise asserted with respect to the Award; provided, that this Section 15.11 shall not affect any of the rights or obligations set forth in an applicable agreement between the Grantee and the Company or an Affiliate.

 

************

 

22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00248-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00248-of-00352.parquet"}]]