Document:

rng-ex1016_6.htm

Exhibit 10.16

RINGCENTRAL, INC.

BONUS PLAN

1.Purposes of the Plan. This Bonus Plan (the “Plan”) is intended to increase shareholder value and the success of the Company by motivating Employees to (a) perform to the best of their abilities, and (b) achieve the Company’s objectives. 

2.Definitions.

(a)“Affiliate” means any corporation or other entity (including, but not limited to, partnerships and joint ventures) controlled by the Company.

(b)“Actual Award” means as to any Performance Period, the actual award (if any) payable to a Participant for the Performance Period, subject to the Committee’s authority under Section 3(d) to modify the award.

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

(d)“Bonus Pool” means the pool of funds available for distribution to Participants.  Subject to the terms of the Plan, the Committee establishes the Bonus Pool for each Performance Period.

(e)“Code” means the Internal Revenue Code of 1986, as amended.  Reference to a specific section of the Code or regulation thereunder will include such section or regulation, any valid regulation promulgated thereunder, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

(f)“Committee” means the committee appointed by the Board (pursuant to Section 5) to administer the Plan.  Unless and until the Board otherwise determines, the Board’s Compensation Committee will administer the Plan.  

(g)“Company” means RingCentral, Inc., or any successor thereto.

(h)“Disability” means a permanent and total disability determined in accordance with uniform and nondiscriminatory standards adopted by the Committee from time to time.

(i)“Employee” means any executive or key employee of the Company or of an Affiliate, whether such individual is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.

(j)“Participant” means as to any Performance Period, an Employee who has been selected by the Committee for participation in the Plan for that Performance Period.

(k)“Performance Period” means the period of time for the measurement of the performance criteria that must be met to receive an Actual Award, as determined by the Committee in its sole discretion.  A Performance Period may be divided into one or more shorter periods if, for example, but not by way of limitation, the Committee desires to measure some performance criteria over 12 months and other criteria over 3 months.

(l)“Plan” means this Bonus Plan, as set forth in this instrument and as hereafter amended from time to time. 

 

(m)“Target Award” means the target award, at 100% performance achievement, payable under the Plan to a Participant for the Performance Period, as determined by the Committee in accordance with Section 3(b).

(n)“Termination of Service” means a cessation of the employee-employer relationship between an Employee and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate.

3.Selection of Participants and Determination of Awards. 

(a)Selection of Participants.  The Committee, in its sole discretion, will select the Employees who will be Participants for any Performance Period.  Participation in the Plan is in the sole discretion of the Committee, on a Performance Period by Performance Period basis.  Accordingly, an Employee who is a Participant for a given Performance Period in no way is guaranteed or assured of being selected for participation in any subsequent Performance Period or Periods.  

(b)Determination of Target Awards.  The Committee, in its sole discretion, will establish a Target Award for each Participant, which generally will be a percentage of a Participant’s average annual base salary for the Performance Period.  

(c)Bonus Pool.  Each Performance Period, the Committee, in its sole discretion, will establish a Bonus Pool.  Actual Awards will be paid from the Bonus Pool.  

(d)Discretion to Modify Awards.  Notwithstanding any contrary provision of the Plan, the Committee may, in its sole discretion and at any time, (i) increase, reduce or eliminate a Participant’s Actual Award, and/or (ii) increase, reduce or eliminate the amount allocated to the Bonus Pool.  The Committee may determine the amount of any increase or reduction on the basis of such factors as it deems relevant, and will not be required to establish any allocation or weighting with respect to the factors it considers.  

(e)Discretion to Determine Criteria.  Notwithstanding any contrary provision of the Plan, the Committee will, in its sole discretion, determine the performance goals applicable to any Target Award which requirement may include, without limitation, (i) cash flow, (ii) cash position, (ii) earnings (which may include earnings before interest and taxes, earnings before taxes and net earnings), (iii) earnings per share, (iv) net income, (v) net profit, (vi) net sales, (vii) operating cash flow, (xxiv) operating expenses, (xxv) operating income, (xxvi) operating margin, (xxvii) overhead or other expense reduction, (xxviii) product defect measures, (xxix) product release timelines, (xxx) productivity, (xxxi) profit, (xxxii) return on assets, (xxxiii) return on capital, (xxxiv) return on equity, (xxxv) return on investment, (xxxvi) return on sales, (xxxvii) revenue, (xxxviii) revenue growth, (xxxix) sales results, (xl) sales growth, (xli) stock price, (xlii) time to market, (xliii) total stockholder return, (xliv) working capital, and individual objectives such as peer reviews or other subjective or objective criteria.  As determined by the Committee, the performance goals may be based on GAAP or Non-GAAP results and any actual results may be adjusted by the Committee for one-time items or unbudgeted or unexpected items when determining whether the performance goals have been met.  The goals may be on the basis of any factors the Committee determines relevant, and may be on an individual, divisional, business unit or Company-wide basis.  The performance goals may differ from Participant to Participant and from award to award.  The Committee may, in its discretion, determine to set forth the applicable performance goals in writing from time-to-time, which writing shall be attached hereto as Appendix A.  Failure to meet the goals will result in a failure to earn the Target Award, except as provided in Section 3(d).  

4.Payment of Awards.

(a)Right to Receive Payment.  Each Actual Award will be paid solely from the general assets of the Company.  Nothing in this Plan will be construed to create a trust or to establish or evidence any 

	

	
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Participant’s claim of any right other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.  

(b)Timing of Payment.  Payment of each Actual Award shall be made as soon as practicable as determined by the Committee after the end of the Performance Period during which the Actual Award was earned, but in no event later than the fifteenth day of the third month of the Fiscal Year following the date the Participant’s Actual Award is no longer subject to a substantial risk of forfeiture.  Unless otherwise determined by the Committee, a Participant must be employed by the Company or any Affiliate on the last day of the Performance Period to receive a payment under the Plan.

It is the intent that this Plan comply with the requirements of Code Section 409A so that none of the payments to be provided hereunder will be subject to the additional tax imposed under Code Section 409A, and any ambiguities herein will be interpreted to so comply.

(c)Form of Payment.  Each Actual Award will be paid in cash (or its equivalent) in a single lump sum.  

(d)Payment in the Event of Death or Disability.  If a Participant dies or becomes Disabled prior to the payment of an Actual Award earned by him or her prior to death or Disability for a prior Performance Period, the Actual Award will be paid to his or her estate or to the Participant, as the case may be, subject to the Committee’s discretion to reduce or eliminate any Actual Award otherwise payable.

5.Plan Administration.

(a)Committee is the Administrator.  The Plan will be administered by the Committee or, if no Committee has been appointed, the Plan shall be administered by the Board.  The Committee will consist of not less than two (2) members of the Board.  The members of the Committee will be appointed from time to time by, and serve at the pleasure of, the Board.

(b)Committee Authority.  It will be the duty of the Committee to administer the Plan in accordance with the Plan's provisions.  The Committee will have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (i) determine which Employees will be granted awards, (ii) prescribe the terms and conditions of awards, (iii) interpret the Plan and the awards, (iv) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by Employees who are foreign nationals or employed outside of the United States, (v) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (vi) interpret, amend or revoke any such rules.  

(c)Decisions Binding.  All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan will be final, conclusive, and binding on all persons, and will be given the maximum deference permitted by law.  

(d)Delegation by Committee.  The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company.  

(e)Indemnification.  Each person who is or will have been a member of the Committee will be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any award, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she will give the Company an 

	

	
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opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

6.General Provisions. 

(a)Tax Withholding.  The Company will withhold all applicable taxes from any Actual Award, including any federal, state and local taxes (including, but not limited to, the Participant’s FICA and SDI obligations).  

(b)No Effect on Employment or Service.  Nothing in the Plan will interfere with or limit in any way the right of the Company to terminate any Participant's employment or service at any time, with or without cause.  For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) will not be deemed a Termination of Service.  Employment with the Company and its Affiliates is on an at-will basis only.  The Company expressly reserves the right, which may be exercised at any time and without regard to when during a Performance Period such exercise occurs, to terminate any individual’s employment with or without cause, and to treat him or her without regard to the effect that such treatment might have upon him or her as a Participant.  

(c)Participation.  No Employee will have the right to be selected to receive an award under this Plan, or, having been so selected, to be selected to receive a future award.  

(d)Successors.  All obligations of the Company under the Plan, with respect to awards granted hereunder, will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.  

(e)Beneficiary Designations.  If permitted by the Committee, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid award will be paid in the event of the Participant's death.  Each such designation will revoke all prior designations by the Participant and will be effective only if given in a form and manner acceptable to the Committee.  In the absence of any such designation, any vested benefits remaining unpaid at the Participant's death will be paid to the Participant's estate.  

(f)Nontransferability of Awards.  No award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 6(e).  All rights with respect to an award granted to a Participant will be available during his or her lifetime only to the Participant.  

7.Amendment, Termination, and Duration.

(a)Amendment, Suspension, or Termination.  The Board, in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan will not, without the consent of the Participant, alter or impair any rights or obligations under any Actual Award theretofore earned by such Participant.  No award may be granted during any period of suspension or after termination of the Plan.  

(b)Duration of Plan.  The Plan will commence on the date specified herein, and subject to Section 7(a) (regarding the Board's right to amend or terminate the Plan), will remain in effect thereafter.

	

	
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8.Legal Construction.  

(a)Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also will include the feminine; the plural will include the singular and the singular will include the plural.  

(b)Severability.  In the event any provision of the Plan will be held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had not been included.  

(c)Requirements of Law.  The granting of awards under the Plan will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.  

(d)Governing Law.  The Plan and all awards will be construed in accordance with and governed by the laws of the State of California, but without regard to its conflict of law provisions.  

(e)Bonus Plan.  The Plan is intended to be a “bonus program” as defined under U.S. Department of Labor regulation 2510.3-2(c) and will be construed and administered in accordance with such intention.  

(f)Captions.  Captions are provided herein for convenience only, and will not serve as a basis for interpretation or construction of the Plan. 

	

	
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APPENDIX A-2017 H1

To RingCentral, Inc. Executive Bonus Plan

2017 First Half Performance Goals

(Effective as of January 1, 2017)

 

	
1.
	
2017 H1 Performance Periods and Performance Goals.  For the first half of calendar year 2017, there are two quarterly Performance Periods, ending on March 31 and June 30, 2017 (each, a “2017 H1 Performance Period”).  For each of the two 2017 H1 Performance Periods, there are two equally weighted (50% each) performance goals (each, a “2017 H1 Performance Goal”): Revenue and Operating Margin (each as defined below).   The chart below set forth the Revenue and Operating Margin Performance Goals for the two 2017 H1 Performance Periods.

 

			
	
2017 H1 Performance Period
	
Revenue Performance Goal

(in millions)
	
Operating Margin Performance Goal

 

	
Q1
	
$111.7
	
2.2%

	
Q2
	
$118.9
	
2.6%

 

“Revenue” means as to each of the 2017 H1 Performance Periods, the Company’s net revenues generated from third parties, including both services revenues and product revenues as defined in the Company’s Form 10-K filed for the calendar year ended December 31, 2016, as adjusted on a pro forma basis to reflect the exclusion of the Company’s carrier partners’ phone sales from the agency model.  Net revenue is defined as gross sales less any pertinent discounts, refunds or other contra-revenue amounts, as presented on the Company’s press releases reporting its quarterly financial results.

   

“Operating Margin” means as to each of the 2017 H1 Performance Periods, the Company’s non-GAAP operating income divided by its Revenue.  Non-GAAP operating income means the Company’s Revenues less cost of revenues and operating expenses, excluding the impact of stock-based compensation expense, amortization of acquisition related intangibles, legal settlement related charges and as adjusted for certain acquisitions, as presented on the Company’s press releases reporting its quarterly financial results.

 

	
2.
	
Funding of 2017 H1 Bonus Pool.  Subject to the terms of the Plan, including but not limited to Section 3(d) of the Plan, following the end of each of the 2017 H1 Performance Periods, the Committee will determine the extent to which each of the 2017 H1 Performance Goals are achieved in accordance with the following guidelines.

 

a.If the Company achieves Revenue in the 2017 H1 Performance Period that is lower than the amount of Revenue expected by analyst consensus estimates after the Company has released its guidance for such 2017 H1 Performance Period (“Revenue Floor”), the 2017 H1 Bonus Pool related to the Revenue Performance Goal for such 2017 H1 Performance Period will not fund. 

 

b.If the Company achieves Operating Margin in the 2017 H1 Performance Period that is lower than the Operating Margin expected by analyst consensus estimates after the Company has released its guidance for such 2017 H1 Performance Period (“Operating Margin Floor”), the 2017 H1 Bonus Pool related to the Operating Margin Performance Goal for such 2017 H1 Performance Period will not fund.

 

	

	
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c.
	
If the Company achieves Revenue that is at least equal to the Revenue Floor, the 2017 H1 Bonus Pool related to the Revenue Performance goal for the 2017 H1 Performance Period will fund as follows based on the achievement relative to the applicable Performance Goal.  

 

Revenue:  For 100% of the Bonus Pool with respect to Revenue to fund, 100% to 101% of the Performance Goal for Revenue must be achieved.  For each 0.5% of Revenue that is achieved above 101% of the Performance Goal for Revenue, the Bonus Pool with respect to Revenue will be increased by 5%, and for each 0.5% of Revenue that is achieved below 100% of the Performance Goal for Revenue, the Bonus Pool with respect to Revenue will be reduced by 5%.

 

	
d.
	
If the Company achieves Operating Margin that is at least equal to the Operating Margin Floor, the 2017 H1 Bonus Pool related to the Operating Margin Performance goal for the 2017 H1 Performance Period will fund as follows based on the achievement relative to the applicable Performance Goal.  

 

Operating Margin: For 100% of the Bonus Pool with respect to Operating Margin to fund, 100% of the Performance Goal for Operating Margin must be achieved.  For each 0.5% of Operating Margin that is achieved above the Performance Goal for Operating Margin, the Bonus Pool with respect to operating Margin will be increased by 5% (up to a maximum of 120%), and for each 0.5% of Operating Margin that is achieved below the Performance Goal for Operating Margin, the Bonus Pool with respect to Operating Margin will be reduced by 5%.

 

The chart below illustrates examples of the funding multiple that will apply to each Performance Goal.

 

 

				
	
Performance Goal Achievement

Revenue
	
2017 H1 Bonus Pool Funding Multiple for Revenue*
	
Performance Goal Achievement

Operating Margin
	
2017 H1 Bonus Pool Funding Multiple for Operating Margin*

	
97%
	
.70x
	
1.5% below Goal
	
.85x

	
97.5%
	
.75x
	
1.0% below Goal
	
.90x

	
98%
	
.80x
	
0.5% below Goal
	
.95x

	
98.5%
	
.85x
	
At Goal
	
1.00x

	
99%
	
.90x
	
0.5% above Goal
	
1.05x

	
99.5%
	
.95x
	
1.0% above Goal
	
1.10x

	
100% - 101%
	
1.00x
	
1.5% above Goal
	
1.15x

	
101.5%
	
1.05x
	
2.0% above Goal
	
1.20x

	
102%
	
1.10x
	
--
	
--

	
102.5%
	
1.15x
	
--
	
--

	
103%
	
1.20x
	
--
	
--

 

* “x” equals the target bonus amount at achievement of 100%-102% of the 2017 H1 Performance Goal for Revenue, and equals the target bonus amount at achievement of 100% of the 2017 H1 Performance Goal for Operating Margin.  The lowest Funding Multiple for Revenue set forth above assumes that the achievement of the 2017 H1 Performance Goal for Revenue is equal to at least the Revenue Floor required to fund the 2017 H1 Bonus Plan.  The maximum Funding Multiple for Operating Margin shall be 1.20x.  There is no maximum Funding Multiple for Revenue.

 

Illustration 

For example, if the Company achieves its Revenue at 101% of the 2017 H1 Performance Goal for Revenue and achieves its Operating Margin at 1.3% above the 2017 H1 Performance Goal for Operating Margin, the 2017 H1 Bonus Pool will fund as to 106.5%, determined as follows:

	
 
	
-
	
50% on achievement of the Revenue 2017 H1 Performance Goal (50% weighted target * 1.00x)

	

	
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-
	
56.5% on achievement of the Operating Margin 2017 H1 Performance Goal (50% weighted target * 1.13x)

	
 
	
-
	

3.Timing of Bonus Payments.  Quarterly bonuses earned under this 2017 H1 Bonus Plan shall be paid in the quarter following the quarter in which earned.  

 

APPENDIX B-2017 H2

To RingCentral, Inc. Executive Bonus Plan

2017 Second Half Performance Goals

(Effective as of July 1, 2017)

 

	
1.
	
2017 H2 Performance Periods and Performance Goals.  For the second half of calendar year 2017, there are two quarterly Performance Periods, ending on September 30 and December 31, 2017 (each, a “2017 H2 Performance Period”).  For each of the two 2017 H2 Performance Periods, there are two equally weighted (50% each) performance goals (each, a “2017 H2 Performance Goal”): Revenue and Operating Margin (each as defined below).   The chart below set forth the Revenue and Operating Margin Performance Goals for the two 2017 H2 Performance Periods.

 

			
	
2017 H2 Performance Period
	
Revenue Performance Goal

(in millions)
	
Operating Margin Performance Goal

 

	
Q3
	
$127.6
	
3.4%

	
Q4
	
$136.8
	
3.7%

   

“Revenue” means as to each of the 2017 H2 Performance Periods, the Company’s net revenues generated from third parties, including both services revenues and product revenues as defined in the Company’s Form 10-K filed for the calendar year ended December 31, 2016.  Net revenue is defined as gross sales less any pertinent discounts, refunds or other contra-revenue amounts, as presented on the Company’s press releases reporting its quarterly financial results.

   

“Operating Margin” means as to each of the 2017 H2 Performance Periods, the Company’s non-GAAP operating income divided by its Revenue.  Non-GAAP operating income means the Company’s Revenues less cost of revenues and operating expenses, excluding the impact of stock-based compensation expense, amortization of acquisition related intangibles, legal settlement related charges and as adjusted for certain acquisitions, as presented on the Company’s press releases reporting its quarterly financial results.

	
2.
	
Funding of 2017 H2 Bonus Pool.  Subject to the terms of the Plan, including but not limited to Section 3(d) of the Plan, following the end of each of the 2017 H2 Performance Periods, the Committee will determine the extent to which each of the 2017 H2 Performance Goals are achieved in accordance with the following guidelines.

 

	
a.
	
If the Company achieves Revenue in the 2017 H2 Performance Period that is lower than the amount of Revenue expected by analyst consensus estimates after the Company has released its guidance for such 2017 H2 Performance Period (“Revenue Floor”), the 2017 H2 Bonus Pool related to the Revenue Performance Goal for such 2017 H2 Performance Period will not fund. 

 

b.If the Company achieves Operating Margin in the 2017 H2 Performance Period that is lower than the Operating Margin expected by analyst consensus estimates after the Company has released its guidance for such 2017 H2 Performance Period (“Operating Margin Floor”), the 2017 H2 Bonus Pool related to the Operating Margin Performance Goal for such 2017 H2 Performance Period will not fund.

	

	
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c.
	
If the Company achieves Revenue that is at least equal to the Revenue Floor, the 2017 H2 Bonus Pool related to the Revenue Performance goal for the 2017 H2 Performance Period will fund as follows based on the achievement relative to the applicable Performance Goal.  

 

Revenue:  For 100% of the Bonus Pool with respect to Revenue to fund, 100% to 101% of the Performance Goal for Revenue must be achieved.  For each 0.5% of Revenue that is achieved above 101% of the Performance Goal for Revenue, the Bonus Pool with respect to Revenue will be increased by 5%, and for each 0.5% of Revenue that is achieved below 100% of the Performance Goal for Revenue, the Bonus Pool with respect to Revenue will be reduced by 5%.

 

	
d.
	
If the Company achieves Operating Margin that is at least equal to the Operating Margin Floor, the 2017 H2 Bonus Pool related to the Operating Margin Performance goal for the 2017 H2 Performance Period will fund as follows based on the achievement relative to the applicable Performance Goal.  

 

Operating Margin: For 100% of the Bonus Pool with respect to Operating Margin to fund, 100% of the Performance Goal for Operating Margin must be achieved.  For each 0.5% of Operating Margin that is achieved above the Performance Goal for Operating Margin, the Bonus Pool with respect to operating Margin will be increased by 5% (up to a maximum of 120%), and for each 0.5% of Operating Margin that is achieved below the Performance Goal for Operating Margin, the Bonus Pool with respect to Operating Margin will be reduced by 5%.

 

The chart below illustrates examples of the funding multiple that will apply to each Performance Goal.

 

 

				
	
Performance Goal Achievement

Revenue
	
2017 H2 Bonus Pool Funding Multiple for Revenue*
	
Performance Goal Achievement

Operating Margin
	
2017 H2 Bonus Pool Funding Multiple for Operating Margin*

	
97%
	
.70x
	
1.5% below Goal
	
.85x

	
97.5%
	
.75x
	
1.0% below Goal
	
.90x

	
98%
	
.80x
	
0.5% below Goal
	
.95x

	
98.5%
	
.85x
	
At Goal
	
1.00x

	
99%
	
.90x
	
0.5% above Goal
	
1.05x

	
99.5%
	
.95x
	
1.0% above Goal
	
1.10x

	
100% - 101%
	
1.00x
	
1.5% above Goal
	
1.15x

	
101.5%
	
1.05x
	
2.0% above Goal
	
1.20x

	
102%
	
1.10x
	
--
	
--

	
102.5%
	
1.15x
	
--
	
--

	
103%
	
1.20x
	
--
	
--

* “x” equals the target bonus amount at achievement of 100%-101% of the 2017 H2 Performance Goal for Revenue, and equals the target bonus amount at achievement of 100% of the 2017 H2 Performance Goal for Operating Margin.  The lowest Funding Multiple for Revenue set forth above assumes that the achievement of the 2017 H2 Performance Goal for Revenue is equal to at least the Revenue Floor required to fund the 2017 H2 Bonus Plan.  The maximum Funding Multiple for Operating Margin shall be 1.20x.  There is no maximum Funding Multiple for Revenue.

 

Illustration 

 

	

	
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For example, if the Company achieves its Revenue at 101% of the 2017 H2 Performance Goal for Revenue and achieves its Operating Margin at 1.3% above the 2017 H2 Performance Goal for Operating Margin, the 2017 H2 Bonus Pool will fund as to 106.5%, determined as follows:

	
 
	
-
	
50% on achievement of the Revenue 2017 H2 Performance Goal (50% weighted target * 1.00x)

	
 
	
-
	
56.5% on achievement of the Operating Margin 2017 H2 Performance Goal (50% weighted target * 1.13x)

3.Timing of Bonus Payments.  Quarterly bonuses earned under this 2017 H2 Bonus Plan shall be paid in the quarter following the quarter in which earned.Exhibit

EXHIBIT 10.31
EAGLE PHARMACEUTICALS, INC.
RESTRICTED STOCK UNIT GRANT NOTICE 
(2014 EQUITY INCENTIVE PLAN)
Eagle Pharmaceuticals, Inc. (the “Company”), pursuant to its 2014 Equity Incentive Plan (as amended, the “Plan”), hereby awards to Participant a Restricted Stock Unit Award for the number of shares of the Company’s Common Stock (“Restricted Stock Units”) set forth below (the “Award”).  The Award is subject to all of the terms and conditions as set forth in this notice of grant (this “Restricted Stock Unit Grant Notice”), and in the Plan and the Restricted Stock Unit Award Agreement (the “Award Agreement”), both of which are attached hereto and incorporated herein in their entirety.  Capitalized terms not explicitly defined herein shall have the meanings set forth in the Plan or the Award Agreement.  In the event of any conflict between the terms in this Restricted Stock Unit Grant Notice or the Award Agreement and the Plan, the terms of the Plan shall control.
Participant:        
Date of Grant:        
Vesting Commencement Date:         
Number of Restricted Stock Units:        

		
	Vesting Schedule: 
	[__________________, subject to Participant’s Continuous Service through each such vesting date.]

		
	Issuance Schedule:
	Subject to any Capitalization Adjustment, one share of Common Stock (or its cash equivalent, at the discretion of the Company) will be issued for each Restricted Stock Unit that vests at the time set forth in Section 6 of the Award Agreement.

Additional Terms/Acknowledgements:  Participant acknowledges receipt of, and understands and agrees to, this Restricted Stock Unit Grant Notice, the Award Agreement and the Plan.  Participant further acknowledges that as of the Date of Grant, this Restricted Stock Unit Grant Notice, the Award Agreement and the Plan set forth the entire understanding between Participant and the Company regarding the acquisition of the Common Stock pursuant to the Award specified above and supersede all prior oral and written agreements on the terms of this Award, with the exception, if applicable, of (i) restricted stock unit awards or options previously granted and delivered to Participant, (ii) the written employment agreement, offer letter or other written agreement entered into between the Company and Participant specifying the terms that should govern this specific Award, and (iii) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law. 
By accepting this Award, Participant acknowledges having received and read the Restricted Stock Unit Grant Notice, the Award Agreement and the Plan and agrees to all of the terms and conditions set forth in these documents.  Participant consents to receive Plan documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
EAGLE PHARMACEUTICALS, INC.    PARTICIPANT:
By:             
Signature    Signature
Title:         Date:     
Date:    
		
	ATTACHMENTS: 
	Award Agreement

ATTACHMENT I
EAGLE PHARMACEUTICALS, INC.
2014 EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT

Pursuant to the Restricted Stock Unit Grant Notice (the “Grant Notice”) and this Restricted Stock Unit Award Agreement (the “Agreement”), Eagle Pharmaceuticals, Inc. (the “Company”) has awarded you (“Participant”) a Restricted Stock Unit Award (the “Award”) pursuant to the Company’s 2014 Equity Incentive Plan (as amended, the “Plan”) for the number of Restricted Stock Units/shares indicated in the Grant Notice. Capitalized terms not explicitly defined in this Agreement or the Grant Notice shall have the same meanings given to them in the Plan. The terms of your Award, in addition to those set forth in the Grant Notice, are as follows.
1.GRANT OF THE AWARD.  This Award represents the right to be issued on a future date one (1) share of Common Stock for each Restricted Stock Unit that vests on the applicable vesting date(s) (subject to any adjustment under Section 3 below) as indicated in the Grant Notice. As of the Date of Grant, the Company will credit to a bookkeeping account maintained by the Company for your benefit (the “Account”) the number of Restricted Stock Units/shares of Common Stock subject to the Award. Notwithstanding the foregoing, the Company reserves the right to issue you the cash equivalent of Common Stock, in part or in full satisfaction of the delivery of Common Stock in connection with the vesting of the Restricted Stock Units, and, to the extent applicable, references in this Agreement and the Grant Notice to Common Stock issuable in connection with your Restricted Stock Units will include the potential issuance of its cash equivalent pursuant to such right.  This Award was granted in consideration of your services to the Company. 
2.VESTING.  Subject to the limitations contained herein, your Award will vest, if at all, in accordance with the vesting schedule provided in the Grant Notice.  Vesting will cease upon the termination of your Continuous Service and the Restricted Stock Units credited to the Account that were not vested on the date of such termination will be forfeited at no cost to the Company and you will have no further right, title or interest in or to such Award or the shares of Common Stock to be issued in respect of such portion of the Award.
3.NUMBER OF SHARES.  The number of Restricted Stock Units subject to your Award may be adjusted from time to time for Capitalization Adjustments, as provided in the Plan. Any additional Restricted Stock Units, shares, cash or other property that becomes subject to the Award pursuant to this Section 3, if any, shall be subject, in a manner determined by the Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery as applicable to the other Restricted Stock Units and shares covered by your Award. Notwithstanding the provisions of this Section 3, no fractional shares or rights for fractional shares of Common Stock shall be created pursuant to this Section 3. Any fraction of a share will be rounded down to the nearest whole share.
4.SECURITIES LAW COMPLIANCE.  You may not be issued any Common Stock under your Award unless the shares of Common Stock underlying the Restricted Stock Units are either (i) then registered under the Securities Act, or (ii) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. Your Award must also comply with other applicable laws and regulations governing the Award, and you shall not receive such Common Stock if the Company determines that such receipt would not be in material compliance with such laws and regulations.
5.TRANSFER RESTRICTIONS.  Prior to the time that shares of Common Stock have been delivered to you, you may not transfer, pledge, sell or otherwise dispose of this Award or the shares issuable in respect of your Award, except as expressly provided in this Section 5. For example, you may not use shares that may be issued in respect of your Restricted Stock Units as security for a loan. The restrictions on transfer set forth herein will lapse upon delivery to you of shares in respect of your vested Restricted Stock Units. 
(a)    Death.  Your Award is transferable by will and by the laws of descent and distribution. At your death, vesting of your Award will cease and your executor or administrator of your estate shall be entitled to receive, on behalf of your estate, any Common Stock or other consideration that vested but was not issued before your death. 
(b)    Domestic Relations Orders.  Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your right to receive the distribution of Common Stock or other consideration hereunder, pursuant to a domestic relations order, marital settlement agreement or other divorce or separation instrument as permitted by applicable law that contains the information required by the Company to effectuate the transfer. You are encouraged to discuss the proposed terms of any division of this Award with the Company General Counsel prior to finalizing the domestic relations order or marital settlement agreement to verify that you may make such transfer, and if so, to help ensure the required information is contained within the domestic relations order or marital settlement agreement.  
6.    DATE OF ISSUANCE. 
(a)    The issuance of shares in respect of the Restricted Stock Units is intended to comply with Treasury Regulations Section 1.409A-1(b)(4) and will be construed and administered in such a manner.  Subject to the satisfaction of the Withholding Obligation set forth in Section 11 of this Agreement, in the event one or more Restricted Stock Units vests, the Company shall issue to you one (1) share of Common Stock for each Restricted Stock Unit that vests on the applicable vesting date(s) (subject to any adjustment under Section 3 above, and subject to any different provisions in the Grant Notice). Each issuance date determined by this paragraph is referred to as an “Original Issuance Date”. 
(b)    If the Original Issuance Date falls on a date that is not a business day, delivery shall instead occur on the next following business day. In addition, if:
(i)    the Original Issuance Date does not occur (1) during an “open window period” applicable to you, as determined by the Company in accordance with the Company’s then-effective policy on trading in Company securities, or (2) on a date when you are otherwise permitted to sell shares of Common Stock on an established stock exchange or stock market (including but not limited to under a previously established written trading plan that meets the requirements of Rule 10b5-1 under the Exchange Act and was entered into in compliance with the Company's policies (a “10b5-1 Arrangement”)), and 
(ii)    either (1) a Withholding Obligation does not apply, or (2) the Company decides, prior to the Original Issuance Date, (A) not to satisfy the Withholding Obligation by withholding shares of Common Stock from the shares otherwise due, on the Original Issuance Date, to you under this Award, and (B) not to permit you to enter into a “same day sale” commitment with a broker-dealer pursuant to Section 11 of this Agreement (including but not limited to a commitment under a 10b5-1 Arrangement) and (C) not to permit you to pay your Withholding Obligation in cash, 
then the shares that would otherwise be issued to you on the Original Issuance Date will not be delivered on such Original Issuance Date and will instead be delivered on the first business day when you are not prohibited from selling shares of the Company’s Common Stock in the open public market, but in no event later than December 31 of the calendar year in which the Original Issuance Date occurs (that is, the last day of your taxable year in which the Original Issuance Date occurs), or, if and only if permitted in a manner that complies with Treasury Regulations Section 1.409A-1(b)(4), no later than the date that is the 15th day of the third calendar month of the applicable year following the year in which the shares of Common Stock under this Award are no longer subject to a “substantial risk of forfeiture” within the meaning of Treasury Regulations Section 1.409A-1(d).
(c)    The form of delivery (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company. 
7.    DIVIDENDS.  You shall receive no benefit or adjustment to your Award with respect to any cash dividend, stock dividend or other distribution that does not result from a Capitalization Adjustment; provided, however, that this sentence will not apply with respect to any shares of Common Stock that are delivered to you in connection with your Award after such shares have been delivered to you.
8.    RESTRICTIVE LEGENDS.  The shares of Common Stock issued in respect of your Award shall be endorsed with appropriate legends as determined by the Company.
9.    EXECUTION OF DOCUMENTS.  You hereby acknowledge and agree that the manner selected by the Company by which you indicate your consent to your Grant Notice is also deemed to be your execution of your Grant Notice and of this Agreement. You further agree that such manner of indicating consent may be relied upon as your signature for establishing your execution of any documents to be executed in the future in connection with your Award.
10.    AWARD NOT A SERVICE CONTRACT. 
(a)    Nothing in this Agreement (including, but not limited to, the vesting of your Award or the issuance of the shares in respect of your Award), the Plan or any covenant of good faith and fair dealing that may be found implicit in this Agreement or the Plan shall: (i) confer upon you any right to continue in the employ or service of, or affiliation with, the Company or an Affiliate; (ii) constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or affiliation; (iii) confer any right or benefit under this Agreement or the Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprive the Company of the right to terminate you at will and without regard to any future vesting opportunity that you may have. 
(b)    By accepting this Award, you acknowledge and agree that the right to continue vesting in the Award pursuant to the vesting schedule provided in the Grant Notice may not be earned unless (in addition to any other conditions described in the Grant Notice and this Agreement) you continue as an employee, director or consultant at the will of the Company and affiliate, as applicable (not through the act of being hired, being granted this Award or any other award or benefit) and that the Company has the right to reorganize, sell, spin-out or otherwise restructure one or more of its businesses or Affiliates at any time or from time to time, as it deems appropriate (a “reorganization”). You acknowledge and agree that such a reorganization could result in the termination of your Continuous Service, or the termination of Affiliate status of your employer and the loss of benefits available to you under this Agreement, including but not limited to, the termination of the right to continue vesting in the Award. You further acknowledge and agree that this Agreement, the Plan, the transactions contemplated hereunder and the vesting schedule set forth herein or any covenant of good faith and fair dealing that may be found implicit in any of them do not constitute an express or implied promise of continued engagement as an employee or consultant for the term of this Agreement, for any period, or at all, and shall not interfere in any way with the Company’s right to terminate your Continuous Service at any time, with or without your cause or notice, or to conduct a reorganization.
11.    WITHHOLDING OBLIGATION.
(a)    On each vesting date, and on or before the time you receive a distribution of the shares of Common Stock in respect of your Restricted Stock Units, and at any other time as reasonably requested by the Company in accordance with applicable tax laws, you hereby authorize any required withholding from the Common Stock issuable to you and/or otherwise agree to make adequate provision, including in cash, for any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or any Affiliate that arise in connection with your Award (the “Withholding Obligation”).  
(b)    By accepting this Award, you acknowledge and agree that the Company or any Affiliate may, in its sole discretion, satisfy all or any portion of the Withholding Obligation relating to your Restricted Stock Units by any of the following means or by a combination of such means: (i) causing you to pay any portion of the Withholding Obligation in cash; (ii) withholding from any compensation otherwise payable to you by the Company; (iii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to you in connection with the Award with a Fair Market Value (measured as of the date shares of Common Stock are issued pursuant to Section 6) equal to the amount of such Withholding Obligation; provided, however, that the number of such shares of Common Stock so withheld will not exceed the amount necessary to satisfy the Withholding Obligation using the maximum statutory withholding rates for federal, state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income; and provided, further, that to the extent necessary to qualify for an exemption from application of Section 16(b) of the Exchange Act, if applicable, such share withholding procedure will be subject to the express prior approval of the Board or the Company’s Compensation Committee; and/or (iv) permitting or requiring you to enter into a “same day sale” commitment, if applicable, with a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “FINRA Dealer”), pursuant to this authorization and without further consent,  whereby you irrevocably elect to sell a portion of the shares to be delivered in connection with your Restricted Stock Units to satisfy the Withholding Obligation and whereby the FINRA Dealer irrevocably commits to forward the proceeds necessary to satisfy the Withholding Obligation directly to the Company and/or its Affiliates. Unless the Withholding Obligation is satisfied, the Company shall have no obligation to deliver to you any Common Stock or any other consideration pursuant to this Award.
(c)    In the event the Withholding Obligation arises prior to the delivery to you of Common Stock or it is determined after the delivery of Common Stock to you that the amount of the Withholding Obligation was greater than the amount withheld by the Company, you agree to indemnify and hold the Company harmless from any failure by the Company to withhold the proper amount.
12.    TAX CONSEQUENCES.  The Company has no duty or obligation to minimize the tax consequences to you of this Award and shall not be liable to you for any adverse tax consequences to you arising in connection with this Award. You are hereby advised to consult with your own personal tax, financial and/or legal advisors regarding the tax consequences of this Award and by signing the Grant Notice, you have agreed that you have done so or knowingly and voluntarily declined to do so. You understand that you (and not the Company) shall be responsible for your own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. 
13.    UNSECURED OBLIGATION.  Your Award is unfunded, and as a holder of a vested Award, you shall be considered an unsecured creditor of the Company with respect to the Company’s obligation, if any, to issue shares or other property pursuant to this Agreement. You shall not have voting or any other rights as a stockholder of the Company with respect to the shares to be issued pursuant to this Agreement until such shares are issued to you pursuant to Section 6 of this Agreement. Upon such issuance, you will obtain full voting and other rights as a stockholder of the Company. Nothing contained in this Agreement, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person. 
14.    NOTICES.  Any notice or request required or permitted hereunder shall be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this Award by electronic means or to request your consent to participate in the Plan by electronic means. By accepting this Award, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
15.    HEADINGS.  The headings of the Sections in this Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Agreement or to affect the meaning of this Agreement.
16.    MISCELLANEOUS.
(a)    The rights and obligations of the Company under your Award shall be transferable by the Company to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by, the Company’s successors and assigns. 
(b)    You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Award.
(c)    You acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Award and fully understand all provisions of your Award.
(d)    This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
(e)    All obligations of the Company under the Plan and this Agreement shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
17.    GOVERNING PLAN DOCUMENT.  Your Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Award, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. Your Award (and any compensation paid or shares issued under your Award) is subject to recoupment in accordance with The Dodd–Frank Wall Street Reform and Consumer Protection Act and any implementing regulations thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwise required by applicable law. No recovery of compensation under such a clawback policy will be an event giving rise to a right to voluntarily terminate employment upon a resignation for “good reason,” or for a “constructive termination” or any similar term under any plan of or agreement with the Company.
18.    EFFECT ON OTHER EMPLOYEE BENEFIT PLANS.  The value of the Award subject to this Agreement shall not be included as compensation, earnings, salaries, or other similar terms used when calculating benefits under any employee benefit plan (other than the Plan) sponsored by the Company or any Affiliate except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any or all of the employee benefit plans of the Company or any Affiliate.
19.    SEVERABILITY.  If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
20.    OTHER DOCUMENTS. You hereby acknowledge receipt or the right to receive a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act. In addition, you acknowledge receipt of the Company’s policy permitting certain individuals to sell shares only during certain "window" periods and the Company's insider trading policy, in effect from time to time. 
21.    AMENDMENT.  This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by you and by a duly authorized representative of the Company. Notwithstanding the foregoing, this Agreement may be amended solely by the Board by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to you, and provided that, except as otherwise expressly provided in the Plan, no such amendment materially adversely affecting your rights hereunder may be made without your written consent. Without limiting the foregoing, the Board reserves the right to change, by written notice to you, the provisions of this Agreement in any way it may deem necessary or advisable to carry out the purpose of the Award as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that any such change shall be applicable only to rights relating to that portion of the Award which is then subject to restrictions as provided herein. 
22.    COMPLIANCE WITH SECTION 409A OF THE CODE.  This Award is intended to be exempt from the application of Section 409A of the Code, including but not limited to by reason of complying with the “short-term deferral” rule set forth in Treasury Regulation Section 1.409A-1(b)(4) and any ambiguities herein shall be interpreted accordingly.  Notwithstanding the foregoing, if it is determined that the Award fails to satisfy the requirements of the short-term deferral rule and is otherwise not exempt from, and determined to be deferred compensation subject to Section 409A of the Code, this Award shall comply with Section 409A to the extent necessary to avoid adverse personal tax consequences and any ambiguities herein shall be interpreted accordingly.  If it is determined that the Award is deferred compensation subject to Section 409A and you are a “Specified Employee” (within the meaning set forth in Section 409A(a)(2)(B)(i) of the Code) as of the date of your  “Separation from Service” (as defined in Section 409A), then the issuance of any shares that would otherwise be made upon the date of your Separation from Service or within the first six (6) months thereafter will not be made on the originally scheduled date(s) and will instead be issued in a lump sum on the date that is six (6) months and one day after the date of the Separation from Service, with the balance of the shares issued thereafter in accordance with the original vesting and issuance schedule set forth above, but if and only if such delay in the issuance of the shares is necessary to avoid the imposition of adverse taxation on you in respect of the shares under Section 409A of the Code. Each installment of shares that vests is intended to constitute a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2). 
* * * * * 

This Restricted Stock Unit Award Agreement shall be deemed to be signed by the Company and the Participant upon the signing by the Participant of the Restricted Stock Unit Grant Notice to which it is attached.

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