Document:

Exhibit 10.6

 

WALGREENS BOOTS ALLIANCE, INC.

2013 OMNIBUS INCENTIVE PLAN

STOCK OPTION AWARD AGREEMENT

These materials, which may include descriptions of company stock plans, prospectuses and other information and documents, and the information they contain, are provided by your company, not by Fidelity, and are not an offer or solicitation by Fidelity for the purchase of any securities or financial instruments.  These materials were prepared by your company, which is solely responsible for their contents and for compliance with legal and regulatory requirements.  Fidelity is not connected with any offering or acting as an underwriter in connection with any offering of your company's securities or financial instruments.  Fidelity does not review, approve or endorse the contents of these materials and is not responsible for their content.

 

WALGREENS BOOTS ALLIANCE, INC.

 

2013 OMNIBUS INCENTIVE PLAN

 

STOCK OPTION AWARD AGREEMENT

 

Participant Name:  Participant Name

Participant ID:  Participant ID

Grant Date:  Grant Date (the "Grant Date")

Grant Price:  Grant Price

Shares Granted:  Shares Granted (the "Shares Granted")

Vesting:  [If graded - One third of the Shares Granted vest on each of the first, second and third anniversaries of the Grant Date (the "Vesting Dates"); If cliff –Three years from the Grant Date (the “Vesting Date”)]

Expiration Date:  Expiration Date (the "Expiration Date")

Acceptance Date:  Acceptance Date

Electronic Signature:  Electronic Signature

This document (referred to below as this “Agreement”) spells out the terms and conditions of the stock option (the “Option”) granted to you by Walgreens Boots Alliance, Inc., a Delaware corporation (the “Company”), pursuant to the Walgreens Boots Alliance, Inc. 2013 Omnibus Incentive Plan (the “Plan”) on and as of the Grant Date designated above.  Except as otherwise defined herein, capitalized terms used in this Agreement have the respective meanings set forth in the Plan.  For purposes of this Agreement, "Employer" means the entity (the Company or the Affiliate) that employs you on the applicable date.  The Plan, as in effect on the date of this Agreement and as it may be amended from time to time, is incorporated into this Agreement by this reference.

You and the Company agree as follows:

1.             Grant of Option.  Pursuant to the approval and direction of the Compensation Committee of the Company’s Board of Directors (the “Committee”), the Company hereby grants you an Option to purchase all or any part of the number of Shares Granted set forth above of common stock of the Company, par value US$.01 ("Stock"), at the per-share exercise price, which is 100% of the fair market value of a share of Stock on the Grant Date (the "Exercise Price"), subject to the terms and conditions of the Plan and this Agreement.  This stock option is intended to be a "non-qualified stock option" and shall not be treated as an incentive stock option within the meaning of Section 422 of the Code.

2.              Vesting/Exercise/Expiration.  The Employee may not exercise the Option prior to the Vesting Date or Dates set forth above absent action by the Committee to waive or alter such restrictions or as may be permitted under the below paragraphs.  Thereafter, except as hereinafter provided, the Employee may exercise the Option, to the extent it is vested, at any time and from time to time until the close of business on the Expiration Date set forth above.  The Option may be exercised to purchase any number of whole shares of Stock, except that no purchase shall be for less than ten (10) full shares, or the remaining unexercised shares, if less.  This Option is deemed to be "outstanding" until it has been exercised in full or expired pursuant to the terms of this Agreement.

 

3.              Disability.  If, without having fully exercised this Option, you have a Termination of Service due to Disability, then any Shares Granted under the Option that are not yet vested at that time shall thereupon become vested and (a) you may exercise this Option for the full number of Shares Granted (less any shares for which this Option was previously exercised), but (b) your right to exercise this Option shall terminate upon the earlier of the Expiration Date or a date which is one (1) year following the date of your Termination of Service.

4.              Death.  If, without having fully exercised this Option, you have a Termination of Service due to your death, then any Shares Granted under the Option that are not yet vested at that time shall be fully vested and (a) the Option may be exercised by the executor or administrator of your estate or by such person or persons who shall have acquired your rights hereunder by bequest or inheritance or by designation as your beneficiary for the full number of Shares Granted (less any shares for which this Option was previously exercised), but (b), such person’s right to exercise this Option shall terminate upon the earlier of the Expiration Date or a date which is one (1) year after the date of your death.

5.              Retirement.  If without having fully exercised this Option you have a Termination of Service by reason of Retirement, then (a) the number of Shares Granted for which you may exercise the Option shall be determined by treating each Vesting Date specified in the introduction to this Agreement as occurring one year prior to that Vesting Date, but (b) your right to exercise any portion of the Option that is vested upon your Retirement shall terminate upon the earlier of the Expiration Date or a date which is one (1) year after the date of your Retirement.  Shares Granted for which you cannot exercise the Option under this Section 5 shall be forfeited.

6.              Termination of Service Following a Change in Control.  If there is a Change in Control of the Company and within the one-year period thereafter you have a Termination of Service initiated by your Employer other than for Cause (as defined in Section 8), then any Shares Granted under the Option that are not yet vested at that time shall thereupon become vested and (a) you may exercise this Option for the full number of Shares Granted (less any shares for which this Option was previously exercised), but (b) your right to exercise this Option shall terminate upon the earlier of the Expiration Date or a date which is ninety (90) days after the date of your Termination of Service, subject to the right of the Committee to extend the exercise period of this Option.  Shares Granted for which you cannot exercise the Option under this Section 6 shall be forfeited.  The foregoing is also subject to the Committee’s exercise of its discretion under Section 9.01 of the Plan. For purposes of this Section 6, a Termination of Service initiated by your Employer shall include a Termination of Employment for Good Reason under - and pursuant to the terms and conditions of – the Walgreens Boots Alliance, Inc. Executive Severance and Change in Control Plan, but only to the extent applicable to you as an eligible participant in such Plan.

7.              Other Termination of Service.  If without having fully exercised this Option you have a voluntary or involuntary Termination of Service for any reason other than as set forth in Section 3, 4, 5 or 6 above, as determined by the Committee, then (a) for any Shares Granted with respect to which such Termination of Service is prior to the applicable Vesting Date, this Option shall be forfeited, and (b) for any Shares Granted with respect to which such Termination of Service is on or after the applicable Vesting Date, then your right to exercise this Option shall terminate upon the earlier of the Expiration Date or a date which is ninety (90) days after the date of your Termination of Service.  The foregoing is subject to the right of the Committee to extend the exercise period of this Option, including any extension granted by the Committee or its delegate as needed to allow your right to exercise to extend beyond a period during which you are restricted from exercising the Option due to a Company-designated trading blackout period, and is subject to earlier expiration as provided in Section 8 below.

 

8.              Forfeiture of Outstanding Options Upon Termination for Cause or Following Termination of Service.  Notwithstanding any provision of this Agreement to the contrary, your remaining right, if any, to exercise the Option shall immediately terminate if you are terminated for Cause or if and when you violate any post-employment obligation that you may have to the Company, including but not limited to any non-competition, non-solicitation, confidentiality, non-disparagement or other restrictive covenant.  For purposes of this Agreement, “Cause” means any one or more of the following, as determined by the Committee in its sole discretion:

(a)            your commission of a felony or any crime of moral turpitude;

 

(b)            your dishonesty or material violation of standards of integrity in the course of fulfilling your employment duties to the Company or any Affiliate;

 

(c)            your material violation of a material written policy of the Company or any Affiliate violation of which is grounds for immediate termination;

 

(d)            your willful and deliberate failure to perform your employment duties to the Company or any Affiliate in any material respect, after reasonable notice of such failure and an opportunity to correct it; or

 

(e)            your failure to comply in any material respect with the United States ("U.S.") Foreign Corrupt Practices Act, the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, the U.S. Sarbanes-Oxley Act of 2002, the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the U.S. Truth in Negotiations Act, or any rules or regulations thereunder.

9.              Exercise Process.  This Option may be exercised by giving notice to Fidelity, the third party administrator to administer the Option exercise process.  The exercise notice (a) shall be signed by you or (in the event of your death) your legal representative, (b) shall specify the number of full shares of Stock then elected to be purchased, and (c) shall be accompanied by payment in full of the Exercise Price of the shares to be purchased.  Payment may be made in cash or by check payable to the order of the Company, and such payment shall include any income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan that are required to be withheld ("Tax-Related Items"), as set forth in Section 10 below.  Alternatively, the Committee may allow for one or more of the following methods of exercising this Option:

(a)           Payment for shares as to which this Option is being exercised and/or payment of any Tax-Related Items may be made by transfer to the Company of shares of Stock you already own, or any combination of such shares and cash, having a fair market value determined at the time of exercise of the Option equal to, but not exceeding, the Exercise Price and/or the tax withholding obligation, as the case may be.

 

(b)           A “same day sale” transaction pursuant to which a third party (engaged by you or the Company) loans funds to you to enable you to purchase the shares of Stock and pay any Tax-Related Items, and then sells a sufficient number of the exercised shares on your behalf to enable you to repay the loan and any fees.  The remaining shares and/or cash are then delivered by the third party to you.

 

(c)           A “net exercise” transaction, pursuant to which the Company delivers to you the net number of whole shares of Stock remaining from the portion of the Option being exercised after deduction of a number of shares of Stock with a fair market value equal to the Exercise Price and a number of shares of Stock with a fair market value equal to the amount of any Tax-Related Items

 

As promptly as practicable after receipt of such notice of exercise and payment (including payment with respect to any Tax-Related Items), subject to Section 13 below, the Company shall cause to be issued and delivered to you (or in the event of your death to your legal representative, as the case may be), certificates for the shares of Stock so purchased.  Alternatively, such shares of Stock may be issued and held in book entry form.

Notwithstanding any provision within the Agreement to the contrary, if you are resident or employed outside of the U.S., the Committee may require that you (or in the event of your death, your legal representative, as the case may be) exercise the Option in a method other than as specified above, may require you to exercise the Option only by means of a “same day sale” transaction (either a “sell-all” transaction or a “sell-to-cover” transaction) as it shall determine in its sole discretion, or may require you to sell any shares of Stock you acquire under the Plan immediately or within a specified period following your Termination of Service (in which case, you hereby agree that the Company shall have the authority to issue sale instructions in relation to such shares of Stock on your behalf).

10.           Responsibility for Taxes; Tax Withholding.

(a)            You acknowledge that, regardless of any action taken by the Company or your Employer, the ultimate liability for all Tax-Related Items related to your participation in the Plan and legally applicable to you is and remains your responsibility and may exceed the amount actually withheld by the Company or your Employer.  You further acknowledge that the Company and/or your Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of shares of Stock acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result.  Further, if you are subject to Tax-Related Items in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, you acknowledge that the Company and/or your Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

(b)           Prior to any relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to the Company and/or your Employer to satisfy all Tax-Related Items.  In this regard, you authorize the Company, your Employer or its agent to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:  (i) withholding from your wages or other cash compensation paid to you by the Company and/or your Employer; (ii) withholding from proceeds of the sale of Stock acquired upon exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization without further consent); or (iii) withholding from the shares of Stock to be delivered upon exercise of the Option that number of shares of Stock having a Fair Market Value equal to (but not in excess of) the minimum amount required by law to be withheld. For purposes of the foregoing, no fractional shares of Stock will be withheld or issued pursuant to the grant of the Option and the issuance of shares of Stock hereunder.

 

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable statutory minimum withholding rates (as determined by the Company in good faith and in its sole discretion) or other applicable withholding rates, including maximum applicable rates, in which case you will receive a refund of any over-withheld amount in cash and will have no entitlement to the share equivalent.  If the obligation for Tax-Related Items is satisfied by withholding from the shares of Stock to be delivered upon exercise of the Option, for tax purposes, you are deemed to have been issued the full number of shares of Stock subject to the exercised Option, notwithstanding that a number of the shares of Stock are held back solely for the purpose of paying the Tax-Related Items.

 

You agree to pay to the Company or your Employer any amount of Tax-Related Items that the Company or your Employer may be required to withhold or account for as a result of your participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver the shares of Stock or the proceeds from the sale of shares of Stock if you fail to comply with your obligations in connection with the Tax-Related Items.

11.           Limited Transferability.  You may not sell, transfer, pledge, assign or otherwise alienate or hypothecate this Option, whether voluntarily or involuntarily or by operation of law, other than by beneficiary designation effective upon your death, by will or by the laws of intestacy.  During your lifetime, this Option and all rights granted hereunder shall be exercisable only by you.  Notwithstanding the foregoing, you may transfer this Option, in whole or in part, by gift to a Permitted Transferee in accordance with rules and subject to any conditions specified by the Committee under the Plan.

12.           Rights as Stockholder.  You shall have no rights as a stockholder of the Company with respect to the shares of Stock subject to this Option until such time as the Exercise Price has been paid and a certificate of stock for such shares has been issued to you or such shares of Stock have been recorded in your name in book entry form.  Except as provided in Section 18 below, no adjustment shall be made for dividends or distributions or other rights with respect to such shares for which the record date is prior to the date on which you become the holder of record thereof.  Anything herein to the contrary notwithstanding, if a law or any regulation of the U.S. Securities and Exchange Commission or of any other body having jurisdiction shall require the Company or you to take any action before shares of Stock can be delivered to you hereunder, then the date of delivery of such shares may be delayed accordingly.

13.           Securities Laws.  If a Registration Statement under the U.S. Securities Act of 1933, as amended, is not in effect with respect to the shares of Stock to be delivered pursuant to this Agreement, you hereby represent that you are acquiring the shares of Stock for investment and with no present intention of selling or transferring them and that you will not sell or otherwise transfer the shares except in compliance with all applicable securities laws and requirements of any stock exchange on which the shares of Stock may then be listed.

14.           Not a Public Offering.  If you are resident outside the U.S., the grant of the Option is not intended to be a public offering of securities in your country of residence (or country of employment, if different).  The Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise required under local law), and the grant of the Option is not subject to the supervision of the local securities authorities.

15.           Insider Trading/Market Abuse Laws.  Your country of residence may have insider trading and/or market abuse laws that may affect your ability to acquire or sell shares of Stock under the Plan during such times you are considered to have "inside information" (as defined in the laws in your country).  These laws may be the same or different from any Company insider trading policy.  You acknowledge that it is your responsibility to be informed of and compliant with such regulations, and you are advised to speak to your personal advisor on this matter.

 

16.           Repatriation; Compliance with Law; Method of Exercise.  If you are resident or employed outside the U.S., as a condition of the Option, you agree to repatriate all payments attributable to the shares of Stock and/or cash acquired under the Plan in accordance with applicable foreign exchange rules and regulations in your country of residence (and country of employment, if different).  In addition, you agree to take any and all actions, and consent to any and all actions taken by the Company and its Affiliates, as may be required to allow the Company and its Affiliates to comply with local laws, rules and/or regulations in your country of residence (and country of employment, if different).  Finally, you agree to take any and all actions as may be required to comply with your personal obligations under local laws, rules and/or regulations in your country of residence and country of employment, if different).

17.           No Advice Regarding Grant.  No employee of the Company is permitted to advise you regarding your participation in the Plan or your acquisition or sale of the shares of Stock underlying the Option.  Investment in shares of Stock involves a degree of risk.  Before deciding to purchase shares of Stock pursuant to the Option, you should carefully consider all risk factors relevant to the acquisition of shares of Stock under the Plan and you should carefully review all of the materials related to the Option and the Plan. You are hereby advised to consult with your own personal tax, legal and financial advisors before taking any action related to the Plan.

18.           Change in Stock.  In the event of any change in Stock by reason of any stock dividend, recapitalization, reorganization, split-up, merger, consolidation, exchange of shares, or of any similar change affecting Stock, the number of shares of Stock subject to this Option and the Exercise Price shall be equitably adjusted by the Committee.

19.           Nature of the Option.  In accepting the Option, you acknowledge, understand and agree that:

(a)           the Plan is established voluntarily by the Company, it is discretionary in nature and limited induration, and it may be modified, amended, suspended or terminated by the Company, in its sole discretion, at any time;

 

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

 

(c)           all decisions with respect to future grants of stock options or other grants, if any, will be at the sole discretion of the Company, including, but not limited to, the form and timing of any grant, the number of shares of Stock subject to the stock options, vesting provisions, and the exercise price applicable to the stock option;

 

(d)          the Option and your participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company or any Affiliate and shall not interfere with the ability of the Company, your Employer or an Affiliate, as applicable, to terminate your employment or service relationship;

 

(e)            you are voluntarily participating in the Plan;

 

(f)            the Option and the shares of Stock subject to the Option are not intended to replace any pension rights or compensation;

 

(g)           the Option, the shares of Stock subject to the Option and the value of same, is an extraordinary item of compensation outside the scope of your employment (and employment contract, if any) and is not part of normal or expected compensation for any purpose, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

 

(h)           the future value of the shares of Stock underlying the Option is unknown, indeterminable and cannot be predicted with certainty;

 

(i)             unless otherwise determined by the Committee in its sole discretion, a Termination of Service shall be effective from the date on which active employment or service ends and shall not be extended by any statutory or common law notice of termination period;

 

(j)             no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from a Termination of Service (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and in consideration of the grant of the Option to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company, your Employer or any Affiliate, waive your ability, if any, to bring any such claim, and release the Company, the Employer and all Affiliates from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

 

(k)           unless otherwise provided herein, in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Agreement do not create any entitlement to have the Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of Stock of the Company; and

 

(l)             neither the Company nor any Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the U.S. dollar that may affect the value of the Option or of any amounts due to you pursuant to the settlement of the Option or the subsequent sale of any shares of Stock acquired upon settlement of the Option.

20.           Committee Authority; Recoupment.  It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate for the administration of the Plan and this Agreement, including the enforcement of any recoupment policy, all of which shall be binding upon you and any claimant.  Any inconsistency between this Agreement and the Plan shall be resolved in favor of the Plan.

21.           Consent to Collection/Processing/Transfer of Personal Data.  Pursuant to applicable personal data protection laws, the Company hereby notifies you of the following in relation to your personal data and the collection, processing and transfer of such data in relation to the Company's grant of this Option and your participation in the Plan.  The collection, processing and transfer of personal data is necessary for the Company’s administration of the Plan and your participation in the Plan, and your denial and/or objection to the collection, processing and transfer of personal data may affect your participation in the Plan.  As such, you voluntarily acknowledge and consent (where required under applicable law) to the collection, use, processing and transfer of personal data as described herein:

 

(a)            The Company and your Employer hold certain personal information about you, including (but not limited to) your name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all entitlements to shares of Stock awarded, canceled, purchased, vested, unvested or outstanding in your favor, for the purpose of managing and administering the Plan ("Data").  The Data may be provided by you or collected, where lawful, from the Company, its Affiliates and/or third parties, and the Company and your Employer will process the Data for the exclusive purpose of implementing, administering and managing your participation in the Plan.  The Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations in your country of residence (or country of employment, if different).  Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought.  Data will be accessible within the organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for the participation in the Plan.

 

(b)           The Company and your Employer will transfer Data internally as necessary for the purpose of implementation, administration and management of your participation in the Plan, and the Company and/or your Employer may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan.  These recipients may be located in the European Economic Area, or elsewhere throughout the world, such as the United States.  You hereby authorize (where required under applicable law) the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, as may be required for the administration of the Plan and/or the subsequent holding of the shares of Stock on your behalf, to a broker or other third party with whom you may elect to deposit any shares of Stock acquired pursuant to the Plan.

 

(c)            You may, at any time, exercise your rights provided under applicable personal data protection laws, which may include the right to (i) obtain confirmation as to the existence of the Data, (ii) verify the content, origin and accuracy of the Data, (iii) request the integration, update, amendment, deletion or blockage (for breach of applicable laws) of the Data, (iv) oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Plan and your participation in the Plan, and (v) withdraw your consent to the collection, processing or transfer of Data as provided hereunder (in which case, your Option will become null and void).  You may seek to exercise these rights by contacting your Human Resources manager or the Company's Human Resources Department, who may direct the matter to the applicable Company privacy official.

22.           Non-Competition, Non-Solicitation and Confidentiality.  As a condition to the receipt of this Option, you must agree to the Non-Competition, Non-Solicitation and Confidentiality Agreement attached hereto as Exhibit A by executing that Agreement.  Failure to execute and return the Non-Competition, Non-Solicitation and Confidentiality Agreement within 120 days of the Grant Date shall constitute your decision to decline to accept this Award.

23.           Addendum to Agreement.  Notwithstanding any provision of this Agreement to the contrary, the Option shall be subject to any special terms and conditions for your country of residence (and country of employment, if different) as set forth in the addendum to the Agreement, attached hereto as Exhibit B (the “Addendum”).  Further, if you transfer your residence and/or employment to another country reflected in the Addendum, the special terms and conditions for such country will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable to comply with local laws, rules and/or regulations or to facilitate the operation and administration of the Option and the Plan (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate your transfer).  The Addendum shall constitute part of this Agreement.

 

24.           Additional Requirements.  The Company reserves the right to impose other requirements on the Option, any shares of Stock acquired pursuant to the Option and your participation in the Plan to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws, rules and/or regulations or to facilitate the operation and administration of the Option and the Plan.  Such requirements may include (but are not limited to) requiring you to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

25.           Amendment or Modification, Waiver.  Except as set forth in the Plan, no provision of this Agreement may be amended or waived unless the amendment or waiver is agreed to in writing, signed by you and by a duly authorized officer of the Company. No waiver of any condition or provision of this Agreement shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.

26.           Electronic Delivery.  The Company may, in its sole discretion, deliver by electronic means any documents related to the Option or your future participation in the Plan.  You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

27.           Governing Law and Jurisdiction.  This Agreement is governed by the substantive and procedural laws of the state of Illinois.  You and the Company shall submit to the exclusive jurisdiction of, and venue in, the courts in Illinois in any dispute relating to this Agreement without regard to any choice or law rules thereof which might apply the laws of any other jurisdiction.

28.           English Language.  If you are resident in a country where English is not an official language, you acknowledge and agree that it is your express intent that this Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Option, be drawn up in English.  If you have received this Agreement, the Plan or any other documents related to the Option translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

29.           Conformity with Applicable Law.  If any provision of this Agreement is determined to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement or the validity, legality or enforceability of such provision in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

30.           Successors.  This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon your death, acquire any rights hereunder.

 

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This Agreement contains highly sensitive and confidential information.  Please handle it accordingly.

 

Please read the attached Exhibits A and B. Once you have read and understood this Agreement and Exhibits A and B, please click the acceptance box to certify and confirm your agreement to be bound by the terms and conditions of this Agreement and Exhibits A and B, and to acknowledge your receipt of the Prospectus, the Plan and this Agreement and your acceptance of the terms and conditions of the Option granted hereunder.

 

EXHIBIT A

WALGREENS BOOTS ALLIANCE, INC. NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY AGREEMENT

This Exhibit forms a part of the Stock Option  Award Agreement covering Options awarded to an employee of Walgreens Boots Alliance, Inc., on behalf of itself, its affiliates, subsidiaries, and successors (collectively referred to as “Employee” and the “Company”).

WHEREAS, the Company develops and/or uses valuable business, technical, proprietary, customer and patient information it protects by limiting its disclosure and by keeping it secret or confidential;

WHEREAS, Employee acknowledges that during the course of employment, he or she has or will receive, contribute, or develop such confidential information; and

WHEREAS, the Company desires to protect from its competitors such confidential information and also desires to protect its legitimate business interests and goodwill in maintaining its employee and customer relationships.

NOW THEREFORE, in consideration of the Stock Option issued to Employee pursuant the Agreement to which this is attached as Exhibit A, Employee agrees to be bound by the terms of this Agreement:

1.              Confidentiality.  At all times during and after the termination of my employment with the Company, I will not, without the Company’s prior written permission, directly or indirectly for any purpose other than performance of my duties for the Company, utilize or disclose to anyone outside of the Company any confidential information, of the Company or any information received by the Company in confidence from or about third parties, as long as such matters remain trade secrets or confidential.  Trade secrets and other confidential information shall include any information or material which is not generally known to the public, and which (a) is generated or collected by or utilized in the operations of the Company and relates to the actual or anticipated business of the Company or the Company’s actual or prospective vendors or clients; or (b) is suggested by or results from any task assigned to me by the Company or work performed by me for or on behalf of the Company or any client of the Company.  Confidential information shall not be considered generally known to the public if revealed improperly to the public by me or others without the Company’s express written consent and/or in violation of an obligation of confidentiality to the Company.   Examples of confidential information include, but are not limited to, customer and supplier identification and contacts, confidential information about customers, business relationships, contract provisions, pricing, margins, business plans, marketing plans, identities of contractors and terms of payment, identities of customer referral sources, financial data, business and customer strategy, techniques, formulations, technical know-how, formulae, research, development and production information, processes, designs, architecture, prototypes, models, software, solutions, discussion guides, personal or performance information about employees, research and development, patent applications and plans, projections, proposals or legal advice related to the foregoing. The restrictions set forth in this paragraph are in addition to and not in lieu of any obligations I have by law with respect to the Company’s confidential information, including any obligations I may owe under the Trade Secrets Act of any state or similar statutes.  Further, the confidentiality obligations herein shall not prevent me from revealing evidence of criminal wrongdoing to law enforcement or prohibit me from divulging confidential information or trade secrets by order of court or agency of competent jurisdiction or as required by law; however, I shall promptly inform the Company of any such situations and shall take reasonable steps to prevent disclosure of confidential information or trade secrets until the Company has been informed of such required disclosure and has had a reasonable opportunity to seek a protective order.

 

2.              Non-Competition.  I agree that during my employment with the Company and for one year after the termination of my employment, I will not, directly or indirectly, invest in, own, operate, finance, control, or provide Competing Services to any Competing Business Line, in both cases as defined below.  I understand that the restrictions in this paragraph apply no matter whether my employment is terminated by me or the Company and no matter whether that termination is voluntary or involuntary.  The above restrictions shall not apply to passive investments of less than 5% ownership interest in any entity. I understand that the term “Competing Business Line” used in this Agreement means any business that is in competition with any business engaged in by the Company with respect to which I provide substantial services during the last two years of my employment with the Company.

I understand that I will be deemed to be providing “Competing Services” if the nature of such services are sufficiently similar in position scope and geographic scope to any position held by me during the last two years of my employment with the Company, such that my engaging in such services on behalf of a Competing Business Line may pose competitive harm to the Company.

3.              Non-Solicitation.  I agree that during my employment with the Company and for two years after the termination of my employment from the Company for any reason, whether voluntary or involuntary:

	 	
(a)

	
I will not directly or indirectly, solicit any Restricted Customer for purposes of providing Competing Products or Services, or offer, provide or sell Competing Products or Services to any Restricted Customer.  For purposes of this Agreement, “Competing Products or Services” means products or services that are competitive with products or services offered by, developed by, designed by or distributed by the Company to any Restricted Customer, and “Restricted Customer” means any person, company or entity which was a customer, potential customer or referral source of the Company and with which I had direct contact or about which I learned confidential information at any time during the last two years of my employment with the Company; and

		(b)	I will not, nor will I assist any third party to, directly or indirectly (i) raid, hire, solicit, or attempt to persuade any employee of the Company or any person who was an employee of the Company during the 6 months preceding the termination of my employment with the Company,  who possesses or had access to confidential information of the Company, to leave the employ of the Company; (ii) interfere with the performance by any such persons of their duties for the Company; or (iii) communicate with any such persons for the purposes described in items (i) and (ii) in this paragraph.

4.              Non-Inducement.  I will not directly or indirectly assist or encourage any person or entity in carrying out or conducting any activity that would be prohibited by this Agreement if such activity were carried out or conducted by me.

5.              Non-Disparagement.  I agree (whether or not I am then an Employee) not to make negative comments or otherwise disparage the Company, its Affiliates, or any of their officers, directors, employees, shareholders, members, agents or products other than in the good faith performance of my duties to the Company and its Affiliates while I am employed by the Company and its Affiliates and thereafter.  The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

 

6.              Intellectual Property.  The term "Intellectual Property" shall mean all trade secrets, ideas, inventions, designs, developments, devices, software, computer programs, methods and processes (whether or not patented or patentable, reduced to practice or included in the Confidential Information) and all patents and patent applications related thereto, all copyrights, copyrightable works and mask works (whether or not included in the Confidential Information) and all registrations and  applications for registration related thereto, all Confidential Information, and all other proprietary rights contributed to, or conceived or created by, or reduced to practice by Employee or anyone acting on its behalf (whether alone or jointly with others) at any time from the beginning of Employee’s employment with Walgreens Boots Alliance, Inc. to the termination of that employment plus ninety (90) days (i) relate to the business or to the actual or anticipated research or development of Walgreens Boots Alliance, Inc.; (ii) result from any services that Employee or anyone acting on its behalf perform for Walgreens; or (iii) are created using the equipment, supplies or facilities of Walgreens Boots Alliance, Inc. or any Confidential Information.

		a.	Ownership.  All Intellectual Property is, shall be and shall remain the exclusive property of the Company.  Employee hereby assigns to the Company all right, title and interest, if any, in and to the Intellectual Property; provided, however, that, when applicable, the Company shall own the copyrights in all copyrightable works included in the Intellectual Property pursuant to the "work-made-for-hire" doctrine (rather than by assignment), as such term is defined in the 1976 Copyright Act.  All Intellectual Property shall be owned by the Company irrespective of any copyright notices or confidentiality legends to the contrary which may be placed on such works by Employee or by others.  Employee shall ensure that all copyright notices and confidentiality legends on all work product authored by Employee or anyone acting on its behalf shall conform to the Company's practices and shall specify the Company as the owner of the work.  The Company hereby provides notice to Employee that the obligation to assign does not apply to an invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on the Employee's own time, unless (a) the invention relates (i) to the business of the Company, or (ii) to the Company’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by Employee for the Company.

		b.	Keep Records.  Employee shall keep and maintain, or cause to be kept and maintained by anyone acting on its behalf, adequate and current written records of all Intellectual Property in the form of notes, sketches, drawings, computer files, reports or other documents relating thereto.  Such records shall be and shall remain the exclusive property of the Company and shall be available to the Company at all times during the term of this Agreement.

		c.	Assistance. Employee shall supply all assistance requested in securing for Company’s benefit any patent, copyright, trademark, service mark, license, right or other evidence of ownership of any such Intellectual Property, and will provide full information regarding any such item and execute all appropriate documentation prepared by Company in applying or otherwise registering, in Company’s name, all rights to any such item or the defense and protection of such Intellectual Property.

		d.	Prior Inventions.  I have disclosed to the Company any continuing obligations to any third party with respect to Intellectual Property.  I claim no rights to any inventions created prior to my employment for which a patent application has not previously been filed, unless I have described them in detail on a schedule attached to this Agreement.

 

7.              Return of Company Property.  I agree that I will not take any of the Company’s property or information with me when I leave the Company’s employ, no matter what form that property or information is in and no matter how I acquired it.  When my employment with the Company terminates, I will immediately return to the Company any and all Company information, documents, and electronics.

8.              Consideration and Acknowledgments.  I acknowledge and agree that the covenants described in this Agreement are essential terms, and the underlying Stock Option Award would not be provided by the Company in the absence of these covenants.  I further acknowledges that these covenants are supported by adequate consideration as set forth in this Agreement, that full compliance with these covenants will not prevent me from earning a livelihood following the termination of my employment, and that these covenants do not place undue restraint on me and are not in conflict with any public interest.  I further acknowledge and agree that I fully understand these covenants, have had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, and have voluntarily agreed to comply with these covenants for their stated terms.  I further acknowledge and agree that these covenants are reasonable and enforceable in all respects.  I agree that in the event I am offered employment with a Competing Business at any time in the future, I shall immediately notify the Competing Business of the existence of the covenants set forth above.

9.              Enforceability; General Provisions.

		(a)	I agree that the restrictions contained in this Agreement are reasonable and necessary to protect the Company’s legitimate business interests and that full compliance with the terms of this Agreement will not prevent me from earning a livelihood following the termination of my employment, and that these covenants do not place undue restraint on me.

		(b)	Because the Company’s current base of operations is in Illinois, I consent to the jurisdiction of the state and federal courts of Illinois with respect to any claim arising out of this Agreement.

		(c)	Because the Company’s current base of operations is in Illinois, I agree that this Agreement shall be governed by the laws of Illinois without regard to its choice of law rules.

		(d)	In the event of a breach or a threatened breach of this Agreement, I acknowledge that the Company will face irreparable injury which may be difficult to calculate in dollar terms and that the Company shall be entitled, in addition to all remedies otherwise available in law or in equity, to temporary restraining orders and preliminary and final injunctions enjoining such breach or threatened breach in any court of competent jurisdiction without the necessity of posting a surety bond, as well as to obtain an equitable accounting of all profits or benefits arising out of any violation of this Agreement.

		(e)	I agree that if a court determines that any of the provisions in this Agreement is unenforceable or unreasonable in duration, territory, or scope, then that court shall modify those provisions so they are reasonable and enforceable, and enforce those provisions as modified.

 

		(f)	If any phrase or provision of this Agreement is declared invalid or unenforceable by a court of competent jurisdiction, that phrase, clause or provision shall be deemed severed from this Agreement, and will not affect the enforceability of any other provisions of this Agreement, which shall otherwise remain in full force and effect.

		(g)	Notwithstanding the foregoing provisions of this Agreement, the non-competition provisions of Paragraph 2 above shall not restrict Employee from performing legal services as a licensed attorney for a Competing Business to the extent that the attorney licensure requirements in the applicable jurisdiction do not permit Employee to agree to the otherwise applicable restrictions of Paragraph 2.

		(h)	Waiver of any of the provisions of this Agreement by the Company in any particular instance shall not be deemed to be a waiver of any provision in any other instance and/or of the Company’s other rights at law or under this Agreement.

		(i)	I agree that the Company may assign this Agreement to its successors and that any such successor may stand in the Company’s shoes for purposes of enforcing this Agreement.

		(j)	I agree to reimburse Company for all attorneys’ fees, costs, and expenses that it reasonably incurs in connection with enforcing its rights and remedies under this Agreement, but only to the extent the Company is ultimately the prevailing party in the applicable legal proceedings.

 

	 	
(k)

	
If I violate this Agreement, then the restrictions set out in Paragraphs 2 - 6 shall be extended by the same period of time as the period of time during which the violation(s) occurred.

		(l)	I fully understand my obligations in this Agreement, have had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, and have voluntarily agreed to comply with these covenants for their stated terms.

10.           Relationship of Parties.  I acknowledge that my relationship with the Company is “terminable at will” by either party and that the Company or I can terminate the relationship with or without cause and without following any specific procedures.  Nothing contained in this Agreement is intended to or shall be relied upon to alter the “terminable at will” relationship between the parties.

11.           Modifications and Other Agreements.  I agree that the terms of this Agreement may not be modified except by a written agreement signed by both me and the Company.  This Agreement shall not supersede any other restrictive covenants to which I may be subject under an employment contract, benefit program or otherwise, such that the Company may enforce the terms of any and all restrictive covenants to which I am subject.

 

12.           Notification.  I agree that in the event I am offered employment at any time in the future with any entity that may be considered a Competing Business Line, I shall immediately notify such Competing business of the existence and terms of this Agreement.  I also understand and agree that the Company may notify anyone later employing me of the existence and provisions of this Agreement.

 

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

By clicking the acceptance box for this grant agreement, I acknowledge receipt of the Stock Option Award Agreement to which this Agreement is attached as Exhibit A, and I agree to the terms and conditions expressed in this Agreement.

 

EXHIBIT B

ADDENDUM TO THE

WALGREENS BOOTS ALLIANCE, INC. 2013 OMNIBUS INCENTIVE PLAN

STOCK OPTION AWARD AGREEMENT

In addition to the terms of the Plan and the Agreement, the Option is subject to the following additional terms and conditions to the extent you reside and/or are employed in one of the countries addressed herein.  Pursuant to Section 23 of the Agreement, if you transfer your residence and/or employment to another country reflected in this Addendum, the additional terms and conditions for such country (if any) will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and/or regulations or to facilitate the operation and administration of the Option and the Plan (or the Company may establish alternative terms as may be necessary or advisable to accommodate your transfer).  All defined terms contained in this Addendum shall have the same meaning as set forth in the Plan and the Agreement.

CHILE

Private Placement.  The following provision shall replace Section 14 of the Agreement:

The grant of the Option hereunder is not intended to be a public offering of securities in Chile but instead is intended to be a private placement.

		a)	The starting date of the offer will be the Grant Date, and this offer conforms to general ruling no. 336 of the Chilean superintendence of securities and insurance;

		b)	The offer deals with securities not registered in the registry of securities or in the registry of foreign securities of the Chilean superintendence of securities and insurance, and therefore such securities are not subject to its oversight;

		c)	The issuer is not obligated to provide public information in Chile regarding the foreign securities, since such securities are not registered with the Chilean superintendence of securities and insurance; and

		d)	The foreign securities shall not be subject to public offering as long as they are not registered with the corresponding registry of securities in Chile.

		a)	La fecha de inicio de la oferta será el de la fecha de otorgamiento y esta oferta se acoge a la norma de carácter general n° 336 de la superintendencia de valores y seguros chilena;

		b)	La oferta versa sobre valores no inscritos en el registro de valores o en el registro de valores extranjeros que lleva la superintendencia de valores y seguros chilena, por lo que tales valores no están sujetos a la fiscalización de ésta;

		c)	Por tratar de valores no inscritos no existe la obligación por parte del emisor de entregar en chile información pública respecto de esos valores; y

		d)	Esos valores no podrán ser objeto de oferta pública mientras no sean inscritos en el registro de valores correspondiente.

FRANCE

1.              Nature of Grant.  The Option is not granted under the French specific regime provided by Articles L.225-177 and seq. of the French commercial code.

 

2.              Use of English Language.  You acknowledge that it is your express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Vous reconnaissez avoir expressément exigé la rédaction en anglais de la présente Convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relatifs à, ou suite à, la présente Convention.

HONG KONG

1.              Sale of Shares of Stock.  Shares of Stock purchased upon exercise of the Option are accepted as a personal investment.  In the event that shares of Stock are issued in respect of the Option within six (6) months after the Grant Date, you agree that the shares of Stock may not be offered to the public or otherwise disposed of prior to the six-month anniversary of the Grant Date.

2.              IMPORTANT NOTICE.  WARNING: The contents of the Agreement the Addendum, the Plan, the Plan prospectus, the Plan administrative rules and all other materials pertaining to the Option and/or the Plan have not been reviewed by any regulatory authority in Hong Kong.  You are hereby advised to exercise caution in relation to the offer thereunder.  If you have any doubts about any of the contents of the aforesaid materials, you should obtain independent professional advice.

3.              Wages.  The Option and shares of Stock subject to the Option do not form part of your wages for the purposes of calculating any statutory or contractual payments under Hong Kong law.

ITALY

Mandatory Same Day, Sell-All Exercise.  Notwithstanding any provision in the Agreement or the Plan to the contrary, as permitted under Section 9 of the Agreement and unless and until the Committee determines otherwise, the method of exercise of the Option shall be limited to mandatory same day, sell-all exercise.

MEXICO

1.              Commercial Relationship.  You expressly recognize that your participation in the Plan and the Company’s grant of the Option does not constitute an employment relationship between you and the Company.  You have been granted the Option as a consequence of the commercial relationship between the Company and the Affiliate in Mexico that employs you, and the Company’s Affiliate in Mexico is your sole employer.  Based on the foregoing, you expressly recognize that (a) the Plan and the benefits you may derive from your participation in the Plan do not establish any rights between you and the Company’s Affiliate in Mexico that employs you, (b) the Plan and the benefits you may derive from your participation in the Plan are not part of the employment conditions and/or benefits provided by the Company’s Affiliate in Mexico that employs you, and (c) any modifications or amendments of the Plan by the Company, or a termination of the Plan by the Company, shall not constitute a change or impairment of the terms and conditions of your employment with the Company’s Affiliate in Mexico that employs you.

2.              Extraordinary Item of Compensation.  You expressly recognize and acknowledge that your participation in the Plan is a result of the discretionary and unilateral decision of the Company, as well as your free and voluntary decision to participate in the Plan in accordance with the terms and conditions of the Plan, the Agreement and this Addendum.  As such, you acknowledge and agree that the Company, in its sole discretion, may amend and/or discontinue your participation in the Plan at any time and without any liability.  The Option, the shares of Stock subject to the Option and the value of same is an extraordinary item of compensation outside the scope of your employment contract, if any, and is not part of your regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Company’s Affiliate in Mexico that employs you.

 

MONACO

Use of English Language.  You acknowledge that it is your express wish that the Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.  Vous reconnaissez avoir expressément exigé la rédaction en anglais de la présente Convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relatifs à, ou suite à, la présente Convention.

NETHERLANDS

Exclusion of Claim.  You acknowledge and agree that you will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from your ceasing to have rights under or to be entitled to the Option, whether or not as a result of your Termination of Service (whether such termination is in breach of contract or otherwise), or from the loss or diminution in value of the Option.  Upon the grant of the Option, you shall be deemed irrevocably to have waived any such entitlement.

ROMANIA

Voluntary Termination of Service.  For the sake of clarity, a voluntary Termination of Service shall include the situation where your employment contract is terminated by operation of law on the date you reach the standard retirement age and have completed the minimum contribution record for receipt of state retirement pension or the relevant authorities award you an early-retirement pension of any type.

RUSSIA

1.              No Offering of Securities in Russia.  The grant of the Option is not intended to be an offering of securities within the territory of the Russian Federation, and you acknowledge and agree that you will be unable to make any subsequent sale of the shares of Stock acquired pursuant to the Option in the Russian Federation.

2.              Cash Payments to a Russian Bank Account.  If you are a Russian citizen, any sale proceeds resulting from the sale of shares of Stock acquired upon exercise of the Option may be delivered only to a bank account that you maintain with an authorized bank in Russia.

SPAIN

1.              Acknowledgement of Discretionary Nature of the Plan; No Vested Rights. This provision supplements the terms of the Agreement:

In accepting the Award, you acknowledge that you consent to participation in the Plan and have received a copy of the Plan.

You understand that the Company has unilaterally, gratuitously and in its sole discretion granted the Option under the Plan to individuals who may be employees of the Company or its Affiliates throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Affiliates on an ongoing basis.  Consequently, you understand that the Option is granted on the assumption and condition that the Option and the shares of Stock acquired upon exercise of the Option shall not become a part of any employment contract (either with the Company or any of its Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, you understand that this grant would not be made to you but for the assumptions and conditions referenced above; thus, you acknowledge and freely accept that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the Option shall be null and void.

 

Further, you understand and agree that the vesting of the Option is expressly conditioned on your continued and active rendering of service, such that upon a Termination of Service, the Option may cease vesting immediately, in whole or in part, effective on the date of your Termination of Service (unless otherwise specifically provided in Section 3, 4, 5 or 6 of the Agreement). This will be the case, for example, even if (a) you are considered to be unfairly dismissed without good cause; (b) you are dismissed for disciplinary or objective reasons or due to a collective dismissal; (c) you terminate service due to a change of work location, duties or any other employment or contractual condition, (d) you terminate service due to a unilateral breach of contract by the Company or an Affiliate.  Consequently, upon a Termination of Service for any of the above reasons, you may automatically lose any rights to the Option that were not vested on the date of your Termination of Service, as described in the Plan and Agreement.  In addition, you understand and agree that the post-Termination of Service exercise period specified in the Agreement shall run from the date of your Termination of Service, as determined by the Committee, in its sole discretion.

 

You acknowledge that you have read and specifically accept the conditions referred to in the Agreement regarding the impact of a Termination of Service on your Option.

2.              Termination for Cause.  “Cause” shall be defined as indicated in Section 8 of the Agreement, irrespective of whether the termination is or is not considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

UNITED KINGDOM

1.              Responsibility for Taxes; Tax Withholding.  The following provision supplements Section 10 of the Agreement:

If payment or withholding of the income tax due in connection with the Option is not made within ninety (90) days after the end of the U.K. tax year in which the event giving rise to the income tax liability occurred or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected income tax shall constitute a loan owed by you to your Employer, effective as of the Due Date.  You agree that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or Employer may recover it at any time thereafter by any of the means referred to in Section 10 of the Agreement.  Notwithstanding the foregoing, if you are a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), will not be eligible for a loan to cover the income tax liability.  In the event that you are a director or executive officer and the income tax is not collected from or paid by you by the Due Date, the amount of any uncollected income tax may constitute a benefit to you on which additional income tax and national insurance contributions (“NICs”) will be payable.  You will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime, and for reimbursing the Company or your Employer (as applicable) the value of any employee NICs due on this additional benefit.

 

2.              Exclusion of Claim.  You acknowledge and agree that you will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from your ceasing to have rights under or to be entitled to the Option, whether or not as a result of your Termination of Service (whether such termination is in breach of contract or otherwise), or from the loss or diminution in value of the Option.  Upon the grant of the Option, you shall be deemed irrevocably to have waived any such entitlement.

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

By clicking the acceptance box for this grant agreement, I acknowledge receipt of the Stock Option Award Agreement to which this Addendum is attached as Exhibit B, and I agree to the terms and conditions expressed in this Addendum.Exhibit 10.16

 

WALGREENS BOOTS ALLIANCE, INC.

 

2013 OMNIBUS INCENTIVE PLAN (AS AMENDED AND RESTATED)

 

UK SUB-PLAN

 

Adopted by the Committee on October 13, 2015

 

	1.	INTRODUCTION

 

	1.1	The Committee has established this UK Sub-Plan (the "UK Sub-Plan") of the Walgreens Boots Alliance, Inc. 2013 Omnibus Incentive Plan (as may be amended or restated from time to time) (the "Plan") pursuant to Section 10.14 of the Plan for the purpose of granting Tax-advantaged Options (as defined below) to eligible employees of Walgreens Boots Alliance, Inc. (the "Company") and its Subsidiaries (as defined in Rule 2 below), who are or may be subject to United Kingdom taxation.  Except as otherwise defined herein, capitalized terms used in this UK Sub-Plan have the respective meanings set forth in the Plan.

 

	1.2	The UK Sub-Plan is intended to be a CSOP Scheme compliant with the requirements of Schedule 4 to the (UK) Income Tax (Earnings and Pensions) Act 2003 ("Schedule 4").  Specifically, the purpose of the UK Sub-Plan shall be as described in paragraph 5 of Schedule 4 and is to provide, in accordance with Schedule 4, benefits for Employees (as defined in Rule 2 below) in the form of Tax-advantaged Options.  This UK Sub-Plan does not permit benefits to be provided to employees or directors otherwise than in accordance with Schedule 4.  The Company makes no undertaking nor representation that the UK Sub-Plan will qualify as a CSOP Scheme, nor that it will maintain the UK Sub-Plan's status as a CSOP Scheme.

 

	1.3	The terms of the Plan shall form part of the UK Sub-Plan insofar as they have not been replaced, disapplied or modified by the Rules of this UK Sub-Plan and insofar as such terms are compliant with the requirements of Schedule 4. All provisions of the Plan which form part of this UK Sub-Plan shall be construed, interpreted and applied in accordance with and subject to the Rules of this UK Sub-Plan.  Where any section of the Plan refers to the Plan, for the purposes of the UK Sub-Plan such section shall be read and construed as modified by the UK Sub-Plan.  In the event of any conflict between the Plan and the UK Sub-Plan, the UK Sub-Plan will prevail.

 

	1.4	Where the Committee wishes to grant Options to Employees (as defined below) in the United Kingdom, such Options may be granted subject to and in accordance with the Rules of this UK Sub-Plan.

 

	1.5	Options granted under this UK Sub-Plan shall be rights to purchase Shares subject to the Rules of this UK Sub-Plan and shall be referred to as "Tax-advantaged Options".  Only Tax-advantaged Options, a type of Nonstatutory Option, may be granted under the UK Sub-Plan and accordingly references in the Plan to "ISOs" and any other types of award shall be disregarded for the purposes of the UK Sub-Plan.

 

	1.6	The provisions of the UK Sub-Plan shall apply only to Tax-advantaged Options granted under the UK Sub-Plan.

 

	1.7	The endnotes contained in this UK Sub-Plan are provided for information purposes only.

 

	2.	DEFINITIONS (SECTION 3 OF THE PLAN)

 

	2.1	Unless defined herein, capitalized words or phrases shall have the meaning given to them in the Plan.  For the purposes of the UK Sub-Plan:

 

1

		(a)	"Control" has the meaning given in section 995i of the (UK) Income Tax Act 2007.

 

		(b)	"CSOP Scheme" means a CSOP scheme compliant with the requirements of Schedule 4 (thus qualifying as a 'Schedule 4 CSOP scheme' under paragraph 1(A1) of Schedule 4).

 

		(c)	"Employee" means (i) any person employed by the Company or any Subsidiary (other than a director) and (ii) any "full-time" director of the Company or any Subsidiary, being a director required to work at least 25 hours or more per week (excluding meal breaks).

 

		(d)	"Fair Market Value" means, as at any date, the value of a Share determined as follows:

 

		(i)	if the Shares are listed on NASDAQ Stock Market or other United States national securities exchange registered under the Exchange Act which constitutes a recognised stock exchange for HMRC's purposes, the closing price for the Shares (or if more than one closing price is shown, the lower price plus one-half of the difference between those two figures) on that day (or on the previous trading day, if the applicable date is not a trading day); or

 

		(ii)	if the Shares are not so listed, the market value as determined by the Committee in good faith in accordance with the provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance for the purposes of the UK Sub-Plan with HMRC Shares and Assets Valuation,

 

in either case determined without regard to the effect of any restrictions that may apply to the Shares within the meaning of paragraph 36(3)ii of Schedule 4.

 

		(e)	"HMRC" means the United Kingdom's HM Revenue & Customs.

 

		(f)	"Optionee" means an individual who has been granted a Tax-advantaged Option in accordance with the Rules of the UK Sub-Plan.

 

		(g)	"Rules" means the rules of this UK Sub-Plan.

 

		(h)	"Share" means a share of Common Stock in the Company, which satisfies the conditions of paragraphs 16 to 18 (inclusive) and 20iii of Schedule 4 at all material times.

 

		(i)	"Subsidiary" means any company over which the Company has Control and which meets the definition of Affiliate in the Plan.

 

		(j)	"Subsisting Option" means a Tax-advantaged Option which has neither lapsed nor been exercised.

 

	2.2	Any reference in this UK Sub-Plan to any enactment includes a reference to that enactment as from time to time modified, extended or replaced.

 

	3.	ADMINISTRATION (SECTION 4 OF THE PLAN)

 

	3.1	AUTHORITY OF THE COMMITTEE. The UK Sub-Plan shall be administered in accordance with and subject to the Rules of this UK Sub-Plan, and the Plan (including, without limitation, Section 4 of the Plan) shall be interpreted accordingly. Any discretion that the Committee and any delegated body has with respect to Tax-advantaged Options may only be exercised fairly and reasonably and not in breach of this UK Sub-Plan, Schedule 4 or any other requirements applicable to CSOP Schemes.

 

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	3.2	Without limitation to the foregoing, the discretions set out in Section 4.01(e) of the Plan shall not apply to Tax-advantaged Options granted under the UK Sub-Plan.  Tax-advantaged Options may be granted only over Shares and may not be settled in cash nor any other property other than Shares (other than shares in a Successor Entity, as defined in Rule 8.2 below, pursuant to an exchange of Tax-advantaged Options pursuant to Rule 8.2 below).

 

	3.3	The Committee shall not have any right to extend the exercise period of a Tax-advantaged Option beyond the time at which it would otherwise lapse under the Rules of the UK Sub-Plan or the terms of the applicable Award Agreement, and the Plan shall be interpreted accordingly.

 

	4.	SHARES SUBJECT TO THE PLAN (SECTION 5 OF THE PLAN)

 

	4.1	NUMBER OF SHARES. In addition to the per person award limits stated in Section 5.03 of the Plan, the following shall apply for the purposes of the UK Sub-Plan:

 

Tax-advantaged Options granted to any person shall be limited and take effect so that the aggregate Fair Market Value of the Shares subject to the Tax-advantaged Option, when aggregated with the Fair Market Value of Shares subject to Subsisting Options, shall not exceed £30,000 or such other limit as may be specified in paragraph 6 of Schedule 4. For the purposes of this paragraph, Subsisting Options shall include all outstanding Tax-advantaged Options granted under this UK Sub-Plan and all outstanding tax-advantaged options granted under any other CSOP Scheme which has or may be established by the Company or any associated company within the meaning of paragraph 35 of Schedule 4. This limit shall be determined on the basis of the Fair Market Value of Shares as at the date(s) of grant of the relevant Tax-advantaged Options and the market value of the Shares as at the date(s) of grant of the options granted under the rules of any other relevant CSOP Scheme, converted from US dollars into pounds sterling at the rate of exchange applicable as at the date(s) of grant.

 

	4.2	ADJUSTMENTS. The following shall replace Section 5.04 of the Plan for the purposes of the UK Sub-Plan:

 

Tax-advantaged Options may not be re-priced or adjusted otherwise than in accordance with this Rule 4.2. In the event of any variation in the share capital of the Company within paragraph 22(3) of Schedule 4, including (without limitation) any change to the capitalization, rights issue, consolidation, subdivision or reduction of share capital within paragraph 22(3) of Schedule 4, the number and description of Shares subject to a Tax-advantaged Option and the exercise price for each of those Shares may be adjusted in such manner as the Committee considers to be fair and reasonable provided that:

 

		(a)	the aggregate amount payable on the exercise of a Tax-advantaged Option in full immediately after the variation or variations is substantially the same as what it was immediately before the variation or variations;

 

		(b)	the total market value of the Shares which may be acquired by the exercise of the Tax-advantaged Option immediately after the variation or variations is substantially the same as what it was immediately before the variation or variations;

 

		(c)	following the adjustment the Shares continues to satisfy the conditions specified in paragraphs 16 to 18 (inclusive) and 20 of Schedule 4; and

 

		(d)	the variation does not result in the requirements of Schedule 4 not being met in relation to the Tax-advantaged Option.

 

For the purposes of this Rule 4.2, the market value of Shares subject to a restriction (within the meaning of paragraph 36(3) of Schedule 4) is to be determined as if they were not subject to the restriction.

 

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	5.	ELIGIBILITY AND GENERAL CONDITIONS (SECTION 6 OF THE PLAN)

 

	5.1    	ELIGIBILITY.  The following shall replace the first sentence of Section 6.01 of the Plan for the purposes of the UK Sub-Plan:

 

Tax-advantaged Options may be granted only to Employees (as defined in this UK Sub-Plan), and not to non-employees or consultants.  No Tax-advantaged Option may be granted to any Employee who is precluded by paragraph 9iv of Schedule 4 from participating in a CSOP Scheme.

 

	5.2    	TERMS AND CONDITIONS.   The terms and conditions of Tax-advantaged Options must be consistent with the UK Sub-Plan and must be set out in the applicable Award Agreement at the time of grant, and Section 6.02 of the Plan shall be interpreted accordingly.

 

	5.3	The terms and conditions of a Tax-advantaged Option may not be amended or supplemented following grant other than (i) pursuant to the Rules of this UK Sub-Plan (including, without limitation, Rules 4.2 and 9.10(f)), (ii) where such amendment or supplement is not to the advantage or disadvantage of the Options and the requirements of Schedule 4 are still met in relation to the Option, or (iii) as required by law or applicable regulatory rules, and the Plan (including, without limitation, Section 6.02 of the Plan) shall be interpreted accordingly.

 

	5.4	The following terms of a Tax-advantaged Option shall be stated at the time the Tax-advantaged Option is granted, and shall be notified to the Optionee who was granted the Tax-advantaged Option as soon as practicable after the grant of such Tax-advantaged Option:

 

		(a)	the exercise price;

 

		(b)	the number and description of the Shares which may be acquired by the exercise of the Tax-advantaged Option;

 

		(c)	the restrictions (within the meaning of paragraph 36(3) of Schedule 4) to which the Shares which may be acquired by the exercise of the Tax-advantaged Option may be subject (if any);

 

		(d)	the times at which the Tax-advantaged Option may be exercised (in whole or in part);

 

		(e)	the circumstances under which the Tax-advantaged Option will lapse or be cancelled (in whole or in part), including any conditions to which the exercise of the Tax-advantaged Option is subject (in whole or in part); and

 

		(f)	any mechanism for amending the terms stated pursuant to Rules 5.4(b) to 5.4(e) (inclusive).

 

	5.5	Any mechanism for amending the terms stated pursuant to Rules 5.4(b) to 5.4(e) (inclusive) shall, if applied, be applied in a way that is fair and reasonable and shall be consistent with the Rules of the UK Sub-Plan and Schedule 4.

 

	5.6	TERMINATION OF SERVICE. In the event of the Optionee's death, an outstanding Tax-advantaged Option shall become fully vested and exercisable (to the extent not already vested and exercisable and not already lapsed) and may be exercised during a period of up to 12 months after the date of death, but may not be exercised more than 12 months after the date of death and may only be exercised by the personal representative(s) of the Optionee.

 

	5.7	For the purposes of the UK Sub-Plan and without limitation, Section 6.04(a) of the Plan shall apply in the event of the Optionee's Termination of Service by reason of disability or injury (provided this is evidenced to the satisfaction of the Committee).

 

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	5.8	For the purposes of the UK Sub-Plan, Section 6.04(c) of the Plan shall apply, without limitation, where the Optionee's Termination of Service is by reason of retirement or where the Optionee's Termination of Service is due to involuntary termination by the Company or any Affiliate by reason of:

 

		(a)	redundancy (within the meaning of the Employment Rights Act 1996 or the Employment Rights (Northern Ireland) Order 1996);

 

		(b)	a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006; or

 

		(c)	the company with which the Optionee holds office or employment ceasing to be controlled by the Company,

 

or in any other circumstance where the Optionee's Termination of Service is due to involuntary termination by the Company or any Affiliate.

 

	5.9	For the purposes of the UK Sub-Plan, the definitions of "Retire" and "Retirement" in the Plan shall not apply.

 

	5.10	The Optionee's rights to exercise a Tax-advantaged Option pursuant to Section 6.04 of the Plan in the circumstances referred to in section 524(2B) of the UK Income Tax (Earnings and Pensions) Act 2003 or upon death shall be set out in the Plan and/or the applicable Award Agreement and shall not be subject to any discretion.

 

	5.11	Section 6.04(e) of the Plan (Automatic Extended Exercisability in Certain Cases) shall be disapplied for the purposes of the UK Sub-Plan.

 

	5.12	The discretions contained in Section 6.04(g) of the Plan (Waiver by Committee) may only be exercised fairly and reasonably and not in breach of this UK Sub-Plan, Schedule 4 or any other requirements applicable to CSOP Schemes.

 

	5.13	NON-TRANSFERABILITY.  The following shall replace Section 6.05 of the Plan for the purposes of the UK Sub-Plan:

 

Notwithstanding any other provision of the UK Sub-Plan, a Tax-advantaged Option may not be sold, pledged, assigned, hypothecated, alienated, transferred, disposed of or encumbered in any manner, and the Plan shall be interpreted accordingly. A Tax-advantaged Option may be exercised during the life of the Optionee, in accordance with the UK Sub-Plan and applicable Award Agreement, only by the Optionee.  A Tax-advantaged Option may be exercised after the Optionee's death by the Optionee's personal representative(s) in accordance with Rule 5.6 of the UK Sub-Plan.

 

	5.14	Section 10.03 of the Plan (Designation of Beneficiary) shall be disapplied for the purposes of the UK Sub-Plan.

 

	5.15	SETTLEMENT, DEFERRAL AND CANCELLATION. Tax-advantaged Options may be granted only over Shares and may not be settled in cash nor any other property other than Shares, and the Plan (including, without limitation, Sections 4 and 6 of the Plan) shall be interpreted accordingly.

 

	5.16	The Company may not net settle the exercise of Tax-advantaged Options by withholding Shares, including for the purpose of satisfying the exercise price or any taxes due in respect of the Tax-advantaged Option.

 

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	5.17	Tax-advantaged Options may not be automatically exercised using a net settlement method and Section 6.04(f) (Automatic Exercise in Certain Cases) shall be disapplied accordingly.

 

	5.18	Tax-advantaged Options shall be settled in accordance with Rule 6.4 of the UK Sub-Plan and shall not be deferred, and Section 6.08 of the Plan (Deferred Awards) shall be disapplied accordingly.

 

	5.19	Tax-advantaged Options may not be cancelled in return for cash or any other property pursuant to any provision in the Plan.

 

	5.20	STANDALONE OPTIONS. Tax-advantaged Options may be granted as standalone awards only and may not be granted in tandem with any other award.  Section 6.07 of the Plan (Standalone, Tandem and Substitute Awards) shall be disapplied for the purposes of the UK Sub-Plan.

 

	6.	SPECIFIC PROVISIONS REGARDING EXERCISE (SECTION 7 OF THE PLAN)

 

	6.1	EXERCISE PRICE.  The exercise price of a Tax-Advantaged Option shall not be less than the Fair Market Value of a Share as at the date of grant of the Tax-advantaged Option. The applicable Award Agreement may not provide for the exercise price to be changed after grant other than in accordance with Rule 4.2.

 

	6.2	PAYMENT OF EXERCISE PRICE. The exercise price of a Tax-advantaged Option may only be paid by cash, cheque, and/or (to the extent permitted by the applicable Award Agreement) through a cashless exercise, and Section 7.01 of the Plan shall be interpreted accordingly.  The exercise price may not be paid using previously acquired Shares nor any other property. No Shares shall be retained by the Company upon exercise of a Tax-advantaged Option in order to satisfy the exercise price (nor any taxes due).

 

	6.3	EXERCISABILITY. No Tax-advantaged Option may be exercised by any Optionee who is precluded by paragraph 9v of Schedule 4 from participating in a CSOP Scheme.

 

	6.4	ISSUE/TRANSFER OF SHARES TO OPTIONEE: Subject to applicable laws and any applicable regulatory rules, Shares shall be allocated or issued to the Optionee within 30 days of exercise. Except for any rights determined by reference to a date preceding the date of allotment or transfer, such Shares shall rank equally and as one class with other Shares of the same class already in issue.

 

	6.5	POST-EXERCISE RESTRICTIONS ON SHARES.  The Shares acquired on exercise may be subject to such restrictions as the Board or Committee may determine and/or such restrictions that may apply to all Shares. The details of any restrictions applying to the Shares must be stated at the time of grant and notified to the Optionee in accordance with Rule 5.4 of the UK Sub-Plan.

 

	6.6	DIVIDEND EQUIVALENTS. Dividend Equivalents shall not be paid to Optionees in respect of  Tax-advantaged Options and Section 7.05 of the Plan (Dividend Equivalents) shall be disapplied accordingly.

 

	6.7	OTHER AWARDS. Sections 7.02, 7.03, 7.04, 7.06, 7.07, 7.08 and 7.09 of the Plan shall be disapplied for the purposes of the UK Sub-Plan.

 

	7.	PERFORMANCE OPTIONS (SECTION 8 OF THE PLAN)

 

	7.1	Any performance conditions imposed on the exercise of a Tax-advantaged Option:

 

		(a)	must be objective and set at the date of grant of the Tax-advantaged Option; and

 

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		(b)	cannot be waived or amended unless events occur which cause the Committee to consider that the performance conditions will not achieve their original purpose (in which case the Committee may make such alterations or additions to the performance conditions as are fair and reasonable provided that the amended performance conditions are no more difficult to meet than those originally imposed).

 

	8.	CHANGE IN CONTROL (SECTION 9 OF THE PLAN)

 

	8.1	Section 9.01(c) of the Plan and the last sentence of Section 9.01 of the Plan shall not apply for the purposes of the UK Sub-Plan.     

 

	8.2	A Tax-advantaged Option may be exchanged for another option only in accordance with this Rule 8.2, and Section 9.01(a) of the Plan shall be interpreted accordingly.  If any company (the "Successor Entity"):

 

		(a)	obtains Control of the Company as a result of making a general offer (i) to acquire the whole of the issued ordinary share capital of the Company which is made on a condition such that if it is satisfied the person making the offer will have Control of the Company or (ii) to acquire all the shares in the Company which are of the same class as the Shares subject to Subsisting Options;

 

		(b)	obtains Control of the Company as a result of a compromise or arrangement sanctioned by the court under section 899 of the Companies Act 2006;

 

		(c)	becomes bound or entitled to acquire shares in the Company under sections 979 to 982 or 983 to 985  of the Companies Act 2006; or

 

		(d)	obtains Control of the Company as a result of a non-UK company reorganization arrangement (within the meaning of paragraph 35ZA of Schedule 4) which has become binding on the shareholders covered by it,

 

the Optionee may agree with the Successor Entity to release the Tax-advantaged Option (the "Old Option") in consideration of the grant of a new option (the "New Option") which satisfies the conditions below.

 

	8.3	For the purposes of Rule 8.2(a)(i), the reference to the issued ordinary share capital of the Company does not include any capital already held by the person making the offer or a person connected with that person, and for the purposes of Rule 8.2(a)(ii), the reference to the shares in the Company does not include any shares already held by the person making the offer or a person connected with that person. For the purposes of Rule 8.2(a), it does not matter if the general offer is made to different shareholders by different means.

 

	8.4	The conditions are that the New Option:

 

		(a)	is over shares in the Successor Entity or in a company which has Control over the Successor Entity which satisfies the conditions specified in paragraphs 16 to 18 (inclusive) and 20 of Schedule 4;

 

		(b)	is a right to acquire shares which, on acquisition of the New Option, have an aggregate market value which is substantially the same as the aggregate Fair Market Value of the shares subject to the Old Option on its disposal;

 

		(c)	has a purchase price per share such that the aggregate price payable on complete exercise substantially the same as the aggregate price which would have been payable on complete exercise of the Old Option; and

 

7

		(d)	is otherwise identical in terms to the Old Option.

 

	8.5	For the purposes of Rule 8.4:

 

		(a)	the market value of any Shares is to be determined using a methodology agreed by HMRC; and

 

		(b)	the market value of Shares subject to a restriction (within the meaning of paragraph 36(3) of Schedule 4) is to be determined as if they were not subject to the restriction.

 

	8.6	Where any New Option is granted pursuant to Rule 8.2, the provisions of the UK Sub-Plan shall, in relation to the New Option, be construed as if references to the Company and the Shares were references to the Successor Entity or, as the case may be, to the other company to whose shares the New Option relates and to the shares in the Successor Entity or that other company. The New Option shall, for all other purposes of the UK Sub-Plan, be treated as having been acquired at the same time as the Old Option, which is released in consideration for the grant of the New Option.

 

	8.7	The agreement to release the Old Option in exchange for the grant of a New Option under Rule 8.2 must take place within the period of six months beginning with the time when, as the case may be, Control of the Company has been obtained and any conditions subject to which the offer is made is met, the court sanctions the compromise or arrangement, or the non-UK reorganisation arrangement becomes binding on the shareholders covered by it, or within the period during which the Successor entity remains bound or entitled in accordance with Rule 8.2(c) above.

 

	8.8	If an event has occurred pursuant to Rule 8.2, the UK Sub-Plan remains that of the Company and no further Tax-advantaged Options may be granted under the UK Sub-Plan.

 

	9.	GENERAL PROVISIONS (SECTION 10 OF THE PLAN)

 

	9.1	BENEFICIARIES.  Section 10.03 of the Plan (Designation of Beneficiary) shall be disapplied for the purposes of the UK Sub-Plan.

 

	9.2	WITHHOLDING TAXES.  The following shall replace Section 10.04 of the Plan for the purposes of the UK Sub-Plan:

 

If the Company or any Subsidiary is liable to withhold and account to HMRC for any sum in respect of income tax or national insurance contributions ("Taxes") in connection with the Tax-advantaged Option, and the Optionee has not accompanied the notice of exercise with a sufficient amount to cover the Taxes arising on exercise, the Company shall be entitled to withhold or collect such Taxes:

 

		(a)	by deduction from salary or any other amount payable to the Optionee at any time, including proceeds acquired upon a cashless exercise;

 

		(b)	directly from the Optionee by payment in cash or cleared funds; or

 

		(c)	by arranging, on behalf of the Optionee, for the sale of a sufficient number of the Shares that the Optionee is entitled to receive on the exercise of the Tax-advantaged Option.

 

A withholding liability may not be satisfied by the Company withholding Shares otherwise due to be received by the Optionee on the exercise of the Tax-advantaged Option.

 

8

If the Company or any Subsidiary is liable to withhold and account to any other tax authority for any sum in respect of tax or social security contributions in connection with the Tax-advantaged Option, the Company shall be entitled to withhold or collect such amounts using any of the methods referred to in this Rule 9.2.

 

	9.3	The applicable Award Agreement may provide that it is a condition of exercise that the Optionee agrees to accept any liability for secondary Class 1 National Insurance contributions which may be payable by the Company or Subsidiary on the exercise of the Tax-advantaged Option ("Employer NICs"). The Optionee may also be required to execute a joint election with the Company or the Optionee's employer in relation to the Employer NICs, the form of such election being formally approved by HMRC, and any other joint election which may be required between the Optionee and any successor to the Company or the Optionee's employer.

 

	9.4	The applicable Award Agreement may provide that it is a condition of participation in the UK Sub-Plan that the Optionee enter into a joint election within section 431 of the (UK) Income Tax (Earnings and Pensions) Act 2003 in respect of computing any tax charge on the acquisition of "restricted securities" (as defined in sections 423 and 424 of the (UK) Income Tax (Earnings and Pensions) Act 2003).

 

	9.5	LIMITATION ON BENEFITS.  Section 10.05 of the Plan (Limitation on Benefits) shall be disapplied for the purposes of the UK Sub-Plan.

 

	9.6	REPRICING. Section 10.07 of the Plan (No Repricing) shall be subject to Rules 4.2 and 5.19 of the UK Sub-Plan, for the purposes of the UK Sub-Plan.

 

	9.7	FORFEITURE AND RECOUPMENT. The first sentence of Section 10.08 of the Plan (Clawback) shall be disapplied for the purposes of the UK Sub-Plan, except to the extent that a provision is included in the applicable Award Agreement in a manner consistent with the requirements of Schedule 4. The remainder of Section 10.08 of the Plan (Clawback; Right of Setoff) shall be disapplied for the purposes of the UK Sub-Plan.

 

	9.8	Section 10.01 of the Plan shall be replaced by the following for the purposes of the UK Sub-Plan:

 

The Committee may provide in the applicable Award Agreement that the Committee has the right to cause a Tax-advantaged Option to lapse in the event that the Optionee does not comply with specified conditions relating to non-competition, confidentiality of information relating to the Company, non-solicitation of customers, suppliers, and employees of the Company, cooperation in litigation, non-disparagement of the Company and its officers, Directors and Affiliates, or other requirements applicable to the Participant, as determined by the Committee, including during specified periods following Termination of Service.

 

	9.9	For the purposes of the UK Sub-Plan, the words from and including "and provided further that" to the end of that sentence in Section 10.16 shall be disapplied.

 

	9.10	MISCELLANEOUS. The following provisions shall be added to Section 10 of the Plan:

 

		(a)	The rights and obligations of any individual under the terms of that person’s employment with the Company or any Affiliate shall not be affected by participation (or non-participation) in the UK Sub-Plan. An individual who is granted a Tax-advantaged Option shall have no right to compensation or damages in consequence of the loss or diminution in value of the Tax-advantaged Option or Shares acquired pursuant to the Tax-advantaged Option for any reason including, but not limited to, as a result of the termination of that person’s employment with the Company or Affiliate for any reason whatsoever and whether or not in breach of contract. If an individual did acquire any such rights, that person would be deemed to have waived them irrevocably by not renouncing the Tax-advantaged Option.

 

9

		(b)	The UK Sub-Plan shall terminate in accordance with the termination of the Plan or such earlier time as the Board or Committee may decide.

 

		(c)	Subject to Rule 9.10(d) below, the Board or Committee may amend, suspend or terminate the UK Sub-Plan at any time and for any reason.

 

		(d)	For as long as the UK Sub-Plan is intended to qualify as a CSOP Scheme, no amendment may be made to the UK Sub-Plan that would result in the UK Sub-Plan not meeting the requirements of Schedule 4.

 

		(e)	The Board or Committee may make any amendment which it considers necessary or desirable in order for the UK Sub-Plan to qualify or continue to qualify as a CSOP Scheme, including (without limitation) to reflect any legislative amendments to Schedule 4 or pursuant to the issuance by HMRC to the Company of a notice under paragraph 28I of Schedule 4 requiring that the Company secure that the requirements of Schedule 4 are met in the relation to the UK Sub-Plan.

 

		(f)	Further, the Board or Committee may make amendments to Tax-advantaged Options granted under the UK Sub-Plan without the consent of the affected Optionees in order to comply or continue to comply with the provisions of, or reflect any legislative amendments to, Schedule 4, and/or to enable the Company to comply with any notice issued by HMRC to the Company under paragraph 28I of Schedule 4.

 

i  Section 995 of the Income Tax Act 2007: Control means the power of a person to secure, by holding sufficient shares or voting rights or as a result of other powers conferred, that the affairs of a company are conducted in accordance with that person's wishes.

 

ii Paragraph 36(3) of Schedule 4: Shares are subject to a restriction if there is any contract, agreement, arrangement or condition which may provide for:

		●	a transfer, reversion or forfeiture of the shares for less than market value;

		●	a restriction on the freedom of the holder to dispose of or hold onto the shares; or

		●	a disadvantage due to the disposal or retention of the shares.

 

iii Paragraphs 16 to 18 and 20 of Schedule 4 (as they apply to the Company): The Shares must:

		●	form part of the ordinary share capital of the Company, as the scheme organiser;

		●	be in a company listed on a recognised stock exchange (such as NASDAQ) or be in a company which is not under the control of another company;

		●	be fully paid up and not redeemable; and

		●	unless the ordinary share capital consists of one class only, the majority of the issued shares of the same class as the Shares must be "open market" shares (i.e. if the persons holding the shares are not (a) persons who acquired their shares as a result of a right conferred on them or an opportunity afforded to them as a director or employee of the scheme organiser or any other company, and not as a result of an offer to the public, or (b) trustees holding shares on behalf of persons who acquired their beneficial interests in the shares as mentioned in (a)).

 

iv Paragraph 9 of Schedule 4: A Tax-advantaged Option may not be granted to or exercised by an individual holding an interest of more than 30% of the ordinary share capital of the Company, if the Company is a close company.  A close company is one that is controlled by its directors or five or fewer persons.

 

v See note iv.

 

 

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