Exhibit 10.1

 

U.S. BANCORP

2015 STOCK INCENTIVE PLAN

 

 

TABLE OF CONTENTS

 

SECTION 1.	PURPOSE; EFFECT ON PRIOR PLAN	1
(a)	Purpose	1
(b)	Effect on Prior Plan	1
SECTION 2.	DEFINITIONS	1
SECTION 3.	ADMINISTRATION	5
(a)	Power and Authority of the Committee	5
(b)	Delegation	5
(c)	Power and Authority of the Board	6
(d)	Indemnification	6
SECTION 4.	SHARES AVAILABLE FOR AWARDS	6
(a)	Shares Available	6
(b)	Counting Shares	6
(c)	Adjustments	7
(d)	Award Limitations Under the Plan	8
SECTION 5.	ELIGIBILITY	8
SECTION 6.	AWARDS	8
(a)	Options	8
(b)	Stock Appreciation Rights	8
(c)	Restricted Stock and Restricted Stock Units	9
(d)	Performance Awards	9
(e)	Dividend Equivalents	10
(f)	Stock Awards	10
(g)	Other Stock-Based Awards	10
(h)	General Provisions Relating to Awards	11
SECTION 7.	AMENDMENT AND TERMINATION; CHANGE IN CONTROL; CORRECTIONS	12
(a)	Amendments to the Plan	12
(b)	Amendments to Awards	12
(c)	Change in Control	13
(d)	Vesting upon Termination Following a Change in Control	13
(e)	Correction of Defects, Omissions and Inconsistencies	13
SECTION 8.	INCOME TAX WITHHOLDING	13
SECTION 9.	CLAWBACK OR RECOUPMENT	14
SECTION 10.	GENERAL PROVISIONS	14
(a)	No Rights to Awards	14
(b)	Award Agreements	14
(c)	Plan Provisions Control	14
(d)	No Rights of Stockholders	14
(e)	No Limit on Other Compensation Plans or Arrangements	14
(f)	No Right to Employment or Directorship	14
(g)	Governing Law	15
(h)	Severability	15
(i)	No Trust or Fund Created	15
(j)	Other Benefits	15
(k)	No Fractional Shares	15
(l)	Headings	15
SECTION 11.	EFFECTIVE DATE OF THE PLAN	15
SECTION 12.	TERM OF THE PLAN	15

 

 

U.S. BANCORP

2015 STOCK INCENTIVE PLAN

 

Section 1.               Purpose; Effect on Prior Plan

 

(a)            Purpose.   The purpose of the Plan is to promote the interests of the Company and its stockholders by aiding the Company in attracting and retaining employees, officers and non-employee Directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to compensate such persons through various stock-based and other arrangements and provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s stockholders.

 

(b)            Effect on Prior Plan.   The Plan replaces the Prior Plan for awards granted on or after the Effective Date. Awards may not be granted under the Prior Plan beginning on the Effective Date, but the adoption and effectiveness of the Plan will not affect the terms or conditions of any outstanding awards granted under the Prior Plan or any other plan prior to the Effective Date.

 

Section 2.               Definitions

 

As used in the Plan, the following terms shall have the meanings set forth below:

 

(a)            “Affiliate” shall mean (i) any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has at least a 20% equity interest, in each case as determined by the Committee.

 

(b)            “Announcement Date” means the date of the public announcement of the transaction, event or course of action that results in a Change in Control.

 

(c)            “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, Stock Award or Other Stock-Based Award granted under the Plan.

 

(d)            “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under the Plan (including a document in an electronic medium) executed in accordance with the requirements of Section 10(b).

 

(e)            “Board” shall mean the Board of Directors of the Company.

 

(f)             “Cause” shall mean (except as otherwise provided in an Award Agreement):

 

(i)             the continued failure by a Participant to substantially perform Participant’s duties with the Company or any Affiliate (other than any such failure resulting from the Participant’s Disability) after a demand for substantial performance is delivered to the Participant that specifically identifies the manner in which the Company believes that the Participant has not substantially performed the Participant’s duties, and the Participant has failed to resume substantial performance of the Participant’s duties on a continuous basis;

 

(ii)            gross and willful misconduct during the course of employment (regardless of whether the misconduct occurs on the Company’s premises), including, without limitation, theft, assault, battery, malicious destruction of property, arson, sabotage, embezzlement, harassment, acts or omissions which violate the Company’s rules or policies (such as breaches of confidentiality), or other conduct which demonstrates a willful or reckless disregard of the interests of the Company or its Affiliates; or

 

(iii)           Participant’s conviction of a crime (including, without limitation, a misdemeanor offense) which impairs Participant’s ability substantially to perform Participant’s duties with the Company.

 

(g)            “Change in Control” shall mean:

 

(i)             The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (1) the then outstanding

 

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shares of Common Stock (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this clause (i), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, or (C) any acquisition by a subsidiary of the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or a subsidiary of the Company (a “Company Entity”); or

 

(ii)            Individuals who, as of the date an Award is granted (the “Grant Date”), constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (except as a result of the death, retirement or disability of one or more members of the Incumbent Board); provided, however, that any individual becoming a director subsequent to the Grant Date, whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, (1) any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board, (2) any director designated by or on behalf of a Person who has entered into an agreement with the Company (or which is contemplating entering into an agreement) to effect a Business Combination (as defined in clause (iii) below) with one or more entities that are not Company Entities or (3) any director who serves in connection with the act of the Board of Directors of increasing the number of directors and filling vacancies in connection with, or in contemplation of, any such Business Combination; or

 

(iii)           Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock or the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any Company Entity or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

 

(iv)           Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, an Award Agreement may provide that the definition of Change in Control shall be limited to events described above that also constitute a change in ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, in each case as defined under Section 409A.

 

(h)            “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

 

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(i)             “Committee” shall mean the Compensation and Human Resources Committee of the Board or any such other committee designated by the Board to administer the Plan. The Committee shall be comprised of not less than such number of Directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3, and each member of the Committee shall be a “Non-Employee Director” within the meaning of Rule 16b-3 and an “outside director” within the meaning of Section 162(m).

 

(j)             “Company” shall mean U.S. Bancorp, a Delaware corporation, or any successor corporation.

 

(k)            “Covered Employee” shall mean an Eligible Person who is, or who the Committee reasonably expects may become, a covered employee within the meaning of Section 162(m).

 

(l)             “Director” shall mean a member of the Board.

 

(m)           “Disability” shall mean (except as otherwise provided in an Award Agreement) qualifying for and receiving disability benefits under the Company’s long-term disability programs as in effect from time to time.

 

(n)            “Dividend Equivalent” shall mean any right granted under Section 6(e) of the Plan.

 

(o)            “Effective Date” shall mean the date on which the stockholders of the Company approve the Plan.

 

(p)            “Eligible Person” shall mean any employee, officer or non- employee Director providing services to the Company or any Affiliate who the Committee determines to be an Eligible Person, or any such person to whom an offer of employment or engagement with the Company or any Affiliate is extended.

 

(q)            “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(r)             “Fair Market Value” shall mean, with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. Notwithstanding the foregoing and unless otherwise determined by the Committee, the Fair Market Value of a Share as of a given date shall be, if the Shares are then listed on the New York Stock Exchange, the closing price of one Share as reported on the New York Stock Exchange on such date or, if the New York Stock Exchange is not open for trading on such date, on the most recent preceding date when it was open for trading.

 

(s)             “Notice of Termination” shall mean a written notice which sets forth the date of termination of Participant’s employment.

 

(t)             “Option” shall mean an option to purchase Shares that is not an incentive stock option qualified under section 422 of the Code, and that is granted under Section 6(a) of the Plan.

 

(u)            “Other Stock-Based Award” shall mean any right granted under Section 6(g) of the Plan.

 

(v)            “Participant” shall mean an Eligible Person who is granted an Award under the Plan, provided, however, that with respect to an Award to an Eligible Person to whom an offer of employment or engagement with the Company or an Affiliate has been extended, the Award will become effective, and the Eligible Person will become a Participant, only upon such Eligible Person’s commencement of employment or service with the Company or an Affiliate.

 

(w)           “Performance Award” shall mean any right granted under Section 6(d) of the Plan.

 

(x)            “Performance Goal” shall mean one or more of the following performance goals, either individually, alternatively or in any combination, applied on a corporate, subsidiary, division, business unit or line of business basis: sales, revenue, costs, expenses (including expense efficiency ratios and other expense measures), earnings (including one or more of net profit after tax, gross profit, operating profit, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization and net earnings), earnings per share, earnings per share from continuing operations, operating income, pre-tax income, operating income margin, net income, margins (including one or more of gross, operating and net income margins), returns (including one or more of return on actual or proforma assets, net assets, equity, investment, capital and net capital employed), stockholder return (including total stockholder return relative to an index or peer group), stock price, growth of

 

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loans and deposits, number of customers or households, economic value added, cash generation, cash flow, unit volume, working capital, market share, cost reductions and strategic plan development and implementation. Such goals may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria. Pursuant to rules and conditions adopted by the Committee on or before the 90th day of the applicable performance period (or, if the performance period is less than one year, on or before the date on which 25% of the performance period has elapsed) for which Performance Goals are established, the Committee may appropriately adjust any evaluation of performance under such goals to exclude the effect of certain events, including any of the following events: asset write-downs, litigation or claim judgments or settlements, reorganizations, acquisitions, divestitures, restructurings, discontinued operations, early extinguishment of debt, extraordinary items, and other unusual or non-recurring gains or charges; severance, contract termination and other costs related to exiting certain business activities; changes in tax law, accounting principles or other such laws or provisions affecting reported results; and foreign exchange gains and losses or an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management.

 

(y)            “Person” shall mean any individual or entity, including a corporation, partnership, limited liability company, association, joint venture or trust.

 

(z)            “Plan” shall mean this U.S. Bancorp 2015 Stock Incentive Plan, as amended from time to time.

 

(aa)          “Prior Plan” shall mean the U.S. Bancorp Amended and Restated 2007 Stock Incentive Plan.

 

(bb)          “Qualifying Termination” shall mean (except as otherwise provided in an Award Agreement) a Participant’s termination of employment with the Company and its Affiliates by the Company for any reason other than Cause within 12 months following a Change in Control, provided that such a termination will not be a Qualifying Termination if: (i) the Company has notified Participant in writing more than 30 days prior to the Announcement Date that Participant’s employment is not expected to continue for more than 12 months following the date of such notification, and Participant’s employment is in fact terminated within such 12-month period; or (ii) Participant has announced in writing, prior to the date the Company provides a Notice of Termination to Participant, that Participant intends to terminate his or her employment. Without limiting the generality of the foregoing, a Qualifying Termination may apply to large-scale terminations of employment relating to the disposition or divestiture of business or legal entities or similar circumstances. An Award Agreement may provide that a Qualifying Termination will occur only if the Participant’s termination of employment or service also constitutes a separation from service for purposes of Section 409A. For purposes of this definition, the term Company shall be deemed to include any Person that has assumed a Participant’s Award (or provided a substitute award to a Participant) in connection with a Change in Control.

 

(cc)          “Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan.

 

(dd)          “Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Share (or a cash payment equal to the Fair Market Value of a Share) at some future date.

 

(ee)          “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act or any successor rule or regulation.

 

(ff)           “Section 162(m)” shall mean Section 162(m) of the Code, or any successor provision, and the applicable Treasury Regulations promulgated thereunder.

 

(gg)          “Section 409A” shall mean Section 409A of the Code, or any successor provision, and Treasury Regulations and other applicable guidance thereunder.

 

(hh)          “Share” or “Shares” shall mean a share or shares of common stock, $.01 par value per share, of the Company or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan.

 

(ii)            “Specified Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code and applicable regulations under Section 409A, determined in accordance with procedures established by

 

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the Company and applied uniformly with respect to all plans maintained by the Company that are subject to Section 409A.

 

(jj)            “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan.

 

(kk)          “Stock Award” shall mean any Share granted under Section 6(f) of the Plan.

 

Section 3.               Administration

 

(a)            Power and Authority of the Committee.   The Plan shall be administered by the Committee. Subject to the express provisions of the Plan and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or the method by which payments or other rights are to be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement, including any terms relating to vesting conditions, the forfeiture of any Award, and the forfeiture, recapture or disgorgement of any cash, Shares or other amounts payable with respect to any Award; (v) amend the terms and conditions of any Award or Award Agreement, provided, however, that, except as otherwise permitted in connection with an event as provided under Section 4(c) hereof or in connection with a Change in Control, the Committee shall not, without stockholder approval, (1) reprice, adjust or amend the exercise price of Options or the grant price of Stock Appreciation Rights previously awarded to any Participant, whether through amendment, cancellation and exchange for cash or another Award, a replacement grant, or any other means, (2) authorize the Company to repurchase Options for cash from a Participant if the current Fair Market Value of the Shares underlying the Options is lower than the exercise price per share of the Options, or (3) authorize the Company to repurchase Stock Appreciation Rights for cash from a Participant if the current Fair Market Value of the Shares underlying the Stock Appreciation Rights is lower than the grant date per Share of the Stock Appreciation Rights; (vi) accelerate the exercisability of any Award or waive any restrictions relating to any Award, provided that the Committee’s authority to accelerate exercisability or waive restrictions in circumstances other than a Change in Control, death and Disability may not be delegated; (vii) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended; (viii) determine whether, to what extent and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder of the Award or the Committee, subject to the requirements of Section 409A; (ix) interpret and administer the Plan and any instrument or agreement, including any Award Agreement, relating to the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (xii) adopt such modifications, rules, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of non-U.S. jurisdictions in which the Company or an Affiliate may operate, including, without limitation, establishing any special rules for Affiliates, Eligible Persons or Participants located in any particular country, in order to meet the objectives of the Plan and to ensure the viability of the intended benefits of Awards granted to Participants located in such non-United States jurisdictions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award or Award Agreement, and any employee of the Company or any Affiliate.

 

(b)            Delegation.   Except as otherwise provided in Section 3(a)(vi), the Committee may delegate its powers and duties under the Plan to one or more Directors (including a Director who is also an officer of the Company) or a committee of Directors, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion; provided, however, that the Committee shall not delegate its powers and duties under the Plan (i) with regard to officers or directors of the Company or any Affiliate who are subject to Section 16 of the Exchange Act, or (ii) in such manner as would cause the Plan not to comply with the requirements of Section 162(m). In addition, except as otherwise provided in Section 3(a)(vi), the Committee shall have the right to

 

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delegate to one or more officers of the Company the authority to grant and determine the terms and conditions of Awards granted under the Plan, subject to the requirements of Section 157(c) of the Delaware General Corporation Law (or any successor provision), applicable exchange rules and such other limitations as the Committee shall determine; provided, however, that such officers shall not be authorized to grant Awards to officers or directors of the Company or any Affiliate who are subject to Section 16 of the Exchange Act or who are Covered Employees. The Committee also shall be permitted to delegate responsibility for performing certain ministerial functions under the Plan to any appropriate officer or employee of the Company. In the event that the Committee’s authority is delegated to officers or employees in accordance with the foregoing, all provisions of the Plan relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference to such officer or employee for such purpose. Any action undertaken in accordance with the Committee’s delegation of authority hereunder shall have the same force and effect as if such action were undertaken directly by the Committee and shall be deemed for all purposes of the Plan to have been taken by the Committee.

 

(c)            Power and Authority of the Board.   Notwithstanding anything to the contrary contained herein, the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan, unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of Rule 16b-3, Section 162(m), applicable corporate law or stock exchange listing rules.

 

(d)            Indemnification.   To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates authority under the Plan shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Award made under the Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates authority under the Plan shall be entitled to indemnification by the Company with regard to such actions and determinations. The provisions of this paragraph shall be in addition to such other rights of indemnification as a member of the Board, the Committee or any other person may have by virtue of such person’s position with the Company.

 

Section 4.               Shares Available for Awards

 

(a)            Shares Available.   Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Shares that may be issued under all Awards under the Plan shall equal:

 

(i)             50,000,000 Shares, plus

 

(ii)            any Shares subject to any outstanding award under the Prior Plan that, after December 31, 2014, are not purchased by a Participant or are forfeited or reacquired by the Company (including Shares covered by an award that is settled in cash), or otherwise not delivered to the Participant due to termination or cancellation of such award, less

 

(iii)           any Shares subject to any award granted under the Prior Plan after December 31, 2014.

 

On and after the Effective Date, no awards shall be granted under the Prior Plan.

 

The aggregate number of Shares that may be issued under all Awards under the Plan shall be reduced by Shares subject to Awards granted under the Plan in accordance with the Share counting rules described in Section 4(b) below. Shares to be issued under the Plan will be authorized but unissued Shares or Shares that have been reacquired by the Company and designated as treasury shares.

 

(b)            Counting Shares.   For purposes of this Section 4(b), if an Award entitles the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan. If performance awards granted under the Company’s executive incentive plans are payable in Shares, such Shares may be issued under this Plan and shall be counted against the aggregate number of Shares available for granting Awards under the Plan.

 

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(i)             Shares Added Back to Reserve. Subject to the limitations in (ii) below, if any Shares covered by an Award or to which an Award relates are not purchased or are forfeited or are reacquired by the Company (including Shares covered by an Award that is settled in cash), or if an Award otherwise terminates or is cancelled without delivery of any Shares, then the number of Shares counted against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture, reacquisition by the Company, termination or cancellation, shall again be available for granting Awards under the Plan.

 

(ii)            Shares Not Added Back to Reserve. Notwithstanding anything to the contrary contained in this Section 4, including Section 4(b)(i) above, the following Shares shall not be added to the Shares authorized for grant under Section 4(a) and will not be available for future grants of Awards under the Plan: (A) Shares tendered by a Participant or withheld by the Company in payment of the exercise price of an Option under the Plan, or, after December 31, 2014, in payment of the exercise price of an option under the Prior Plan; (B) Shares tendered by the Participant or withheld by the Company to satisfy any tax withholding obligation with respect to an Award under the Plan, or, after December 31, 2014, to satisfy any tax withholding obligation with respect to an award under the Prior Plan; (C) Shares subject to a Stock Appreciation Right under the Plan, or, after December 31, 2014, a stock appreciation right under the Prior Plan, that are not issued in connection with the stock settlement on exercise thereof; or (D) Shares purchased on the open market with the cash proceeds from the exercise of Options under the Plan, or, after December 31, 2014, from the exercise of options under the Prior Plan.

 

(iii)           Cash-Only Awards. Awards that do not entitle the holder thereof to receive or purchase Shares shall not be counted against the aggregate number of Shares available for Awards under the Plan.

 

(iv)           Substitute Awards Relating to Acquired Entities. Shares issued under Awards granted in substitution for awards previously granted by an entity that is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate number of Shares available for Awards under the Plan.

 

(c)            Adjustments.   In the event that any extraordinary dividend or other distribution (whether in the form of cash, Shares, other securities or other property), stock split or a combination or consolidation of the outstanding Shares into a lesser number of shares, is declared with respect to the Shares, the authorization limits under Sections 4(a) and 4(d) shall be increased or decreased proportionately, and the Shares then subject to each Award shall be increased or decreased proportionately without any change in the aggregate purchase price therefor. In the event the Shares shall be changed into or exchanged for a different number or class of shares of stock or securities of the Company or of another corporation, whether through recapitalization, reorganization, reclassification, merger, consolidation, split-up, spin- off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or any other similar corporate transaction or event affects the Shares such that an equitable adjustment would be required in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the authorization limits under Sections 4(a) and 4(d) shall be adjusted proportionately, and an equitable adjustment shall be made to each Share subject to an Award such that no dilution or enlargement of the benefits or potential benefits occurs. Each such Share then subject to each Award shall be adjusted to the number and class of shares into which each outstanding Share shall be so exchanged such that no dilution or enlargement of the benefits occurs, all without change in the aggregate purchase price for the Shares then subject to each Award. Action by the Committee pursuant to this Section 4(c) may include adjustment to any or all of: (i) the number and type of Shares (or other securities or other property) that thereafter may be made the subject of Awards or be delivered under the Plan; (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards; (iii) the purchase price or exercise price of a Share under any outstanding Award or the measure to be used to determine the amount of the benefit payable on an Award; and (iv) any other adjustments the Committee determines to be equitable.

 

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(d)            Award Limitations Under the Plan.

 

(i)             Section 162(m) Limitation for Awards Denominated in Shares. No Eligible Person may be granted any Stock Options, Stock Appreciation Rights or Performance Awards denominated in Shares, for more than 5,000,000 Shares (subject to adjustment as provided in Section 4(c) of the Plan), in the aggregate in any calendar year. The limitation contained in this Section 4(d)(i) shall apply only with respect to Awards granted under this Plan, and limitations on awards granted under any other stockholder approved executive incentive plan maintained by the Company will be governed solely by the terms of such other plan.

 

(ii)            Limitation on Awards to Non-Employee Directors. No Director who is not also an employee of the Company or an Affiliate may be granted any Award or Awards denominated in Shares that exceed in the aggregate $600,000 (such value computed as of the date of grant in accordance with applicable financial accounting rules) in any calendar year. The foregoing limit shall not apply to any Award made pursuant to any election by the Director to receive an Award in lieu of all or a portion of annual and committee retainers and annual meeting fees that otherwise would be paid in cash.

 

Section 5.               Eligibility

 

Any Eligible Person shall be eligible to be designated a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the Committee, in its discretion, shall deem relevant.

 

Section 6.               Awards

 

(a)            Options.   The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions (including performance-based vesting conditions) not inconsistent with the provisions of the Plan as the Committee shall determine:

 

(i)             Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option, provided, however, the Committee may designate a purchase price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate.

 

(ii)            Option Term. The term of each Option shall be fixed by the Committee but shall not be longer than 10 years from the date of grant.

 

(iii)           Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms (including, without limitation, cash, Shares (actually or by attestation), other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the applicable exercise price) in which payment of the exercise price with respect thereto may be made or deemed to have been made.

 

(iv)           No Reload Options. The Committee shall not have the authority to grant an Option which provides that the Participant shall be granted a new Option (sometimes referred to as a “reload option”) for a number of Shares equal to the number of Shares surrendered by the Participant upon exercise of all or a part of the original Option.

 

(b)      Stock Appreciation Rights.   The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right; provided, however, the

 

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Committee may designate a grant price below Fair Market Value on the date of grant if the Stock Appreciation Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee. The term of each Stock Appreciation Right shall be fixed by the Committee but shall not be longer than 10 years from the date of grant. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right (including performance-based vesting conditions) as it may deem appropriate.

 

(c)            Restricted Stock and Restricted Stock Units.   The Committee is hereby authorized to grant Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions (including performance-based vesting conditions) not inconsistent with the provisions of the Plan as the Committee shall determine:

 

(i)             Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. Notwithstanding the foregoing, rights to dividend or Dividend Equivalent payments shall be subject to the limitations described in Section 6(e).

 

(ii)            Issuance and Delivery of Shares. Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company or held in nominee name by the stock transfer agent or brokerage service selected by the Company to provide such services for the Plan. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares representing Restricted Stock that is no longer subject to restrictions shall be delivered (including by updating the book-entry registration) to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Following the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of the Restricted Stock Units at the time specified in the applicable Award Agreement, or, if applicable, the time designated in a Participant’s timely and properly executed deferral election (made in accordance with all requirements of Section 409A), to the extent that the Committee permits such an election with respect to the Restricted Stock Units.

 

(iii)           Forfeiture. Except as otherwise determined by the Committee, upon a Participant’s termination of employment or resignation or removal as a Director (in either case, as determined under criteria established by the Committee) during the applicable restriction period, all Shares of Restricted Stock and all Restricted Stock Units held by the Participant at such time shall be forfeited and reacquired by the Company.

 

(d)            Performance Awards.   The Committee is hereby authorized to grant Performance Awards to Eligible Persons. Performance Awards are intended to be “qualified performance-based compensation” within the meaning of Section 162(m). Performance Awards granted under the Plan (i) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of one or more objective Performance Goals during such performance periods as the Committee shall establish; and (ii) may be denominated or payable in Shares (including, without limitation, Restricted Stock and Restricted Stock Units), other securities, other Awards or other property. For purposes of this Section 6(d), a Performance Award shall not include Options and Stock Appreciation Rights whose value is determined solely on the basis of an increase in the value of the Shares after the date of grant of such Award or Awards (even if such Options and Stock Appreciation Rights include performance-based vesting conditions). Performance Awards may provide for the adjustment of the number of Shares or Restricted Stock Units earned by a Participant under the Performance Award based on the extent to

 

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which Performance Goals are achieved. Subject to the terms of the Plan, the Performance Goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Committee. Performance Awards shall be conditioned, to the extent required by Section 162(m), solely on the achievement of one or more objective Performance Goals established by the Committee within the time prescribed by Section 162(m), and shall otherwise comply with the requirements of Section 162(m), as described below.

 

(i)             Timing of Designations; Duration of Performance Periods. For each such Performance Award, the Committee shall, not later than 90 days after the beginning of each performance period, or, if the performance period is less than one year, on or before the date on which 25% of the performance period has elapsed, (i) designate all Participants for such performance period and (ii) establish the objective performance factors for each Participant for that performance period on the basis of one or more of the Performance Goals, the outcome of which is substantially uncertain at the time the Committee actually establishes the Performance Goal. The Committee shall have sole discretion to determine the applicable performance period, provided that in the case of a performance period less than 12 months, in no event shall a performance goal be considered to be pre-established if it is established after 25% of the performance period (as scheduled in good faith at the time the Performance Goal is established) has elapsed. To the extent required under Section 162(m), the terms of the objective performance factors must preclude discretion to increase an amount paid in connection with an Award, but may permit discretion to reduce such amount.

 

(ii)            Certification. Following the close of each performance period and prior to payment of compensation to a Participant with respect to a Performance Award, the Committee shall certify in writing that the applicable Performance Goals upon which any payment of compensation to a Participant for that performance period are to be based, were, in fact, achieved or satisfied.

 

Nothing contained herein precludes the Committee from granting to Covered Employees Awards (including Awards with performance conditions) that do not qualify for tax deductibility under Section 162(m.

 

(e)            Dividend Equivalents.   The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding anything to the contrary herein, (i) the Committee may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options, Stock Appreciation Rights or other Awards the value of which is based solely on an increase in the value of the Shares after the date of grant of such Award, and (ii) no dividend or Dividend Equivalent payments shall be made to a Participant with respect to any Performance Award or other Award subject to performance-based vesting conditions unless and until all conditions or restrictions relating to such Award (or portion thereof to which the dividend or Dividend Equivalent relates) have been satisfied. An Award Agreement may provide that Dividend Equivalents will continue to be awarded or credited with respect to outstanding Awards of Participants who have terminated employment or service with the Company and its Affiliates until such time as such Awards are settled or paid out pursuant to the terms of the Award Agreement (and any timely deferral election, to the extent permitted).

 

(f)             Stock Awards.   The Committee is hereby authorized to grant to Eligible Persons Shares without restrictions thereon, as deemed by the Committee to be consistent with the purpose of the Plan. Subject to the terms of the Plan and any applicable Award Agreement, such Stock Awards may have such terms and conditions as the Committee shall determine.

 

(g)            Other Stock-Based Awards.   The Committee is hereby authorized to grant to Eligible Persons such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are

 

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deemed by the Committee to be consistent with the purpose of the Plan. The Committee shall determine the terms and conditions of such Awards, subject to the terms of the Plan and the Award Agreement. No Award issued under this Section 6(g) shall contain a purchase right or an option-like feature.

 

(h)            General Provisions Relating to Awards.

 

(i)             Consideration for Awards. Awards may be granted for no cash consideration or for any cash or other consideration as determined by the Committee or required by applicable law.

 

(ii)            Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

 

(iii)           Forms of Payment under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall determine (including, without limitation, cash, Shares, other securities, other Awards or other property or any combination thereof), and may be made in a single payment or transfer, in installments, or on a deferred basis (consistent with the requirements of Section 409A), in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents with respect to installment or deferred payments.

 

(iv)           Limits on Transfer of Awards. Except as otherwise provided by the Committee in its discretion and subject to such additional terms and conditions as it determines, no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution, and no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate, provided that Awards may be transferable pursuant to a domestic relations order to the extent and in the manner determined by the Committee. If the Committee permits the transfer of an Award (other than fully vested and unrestricted Shares issued pursuant to any Award) other than by the laws of descent and distribution or pursuant to a domestic relations order, such transfer will be for no value. The Committee may also establish procedures as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death.

 

(v)            Restrictions; Securities Exchange Listing. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Shares or other securities covered by an Award unless and until the requirements of any federal or state securities of other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Committee to be applicable are satisfied.

 

(vi)           Section 409A Provisions. Notwithstanding anything in the Plan or any Award Agreement to the contrary, the following rules will apply. To the extent that any amount or benefit that constitutes “deferred compensation” to a Participant under Section 409A of the Code and applicable guidance thereunder is otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by reason of the occurrence of a Change in Control or due to the Participant’s Disability or

 

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“separation from service” (as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such Change in Control, Disability or separation from service meet the definition of a change in ownership or effective control of the Company or in the ownership of a substantial portion of the Company’s assets, disability, or separation from service, as the case may be, under Section 409A(a)(2)(A) of the Code, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment or distribution of deferred compensation that is subject to Section 409A that otherwise would be made to a Participant who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made before the date which is six (6) months after the date of the Specified Employee’s separation from service (or if earlier, upon the Specified Employee’s death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short term deferral exemption or otherwise. It is intended that Awards under the Plan either will be exempt from Section 409A or will comply with Section 409A, and the Plan and Award Agreements will be construed and administered accordingly. Notwithstanding the foregoing, the Company makes no representations as to the specific tax treatment of any Award. Participants are solely responsible for any and all tax consequences resulting from an Award, including taxes due as a result of the grant, vesting or any payment with respect thereto, and the sale or other taxable disposition of the Shares acquired pursuant to the Award. Neither the Company, nor its officers, directors nor employees, shall be responsible for, or have any liability for, any such taxes, penalties and interest.

 

Section 7.               Amendment and Termination; Change in Control; Corrections

 

(a)            Amendments to the Plan.   The Board may amend, alter, suspend, discontinue or terminate the Plan at any time. Any amendment to the Plan is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange. Notwithstanding any other provision of the Plan or any Award Agreement, prior approval of the stockholders of the Company shall be required for any amendment to the Plan that would:

 

(i)             require stockholder approval under the rules or regulations of the Securities and Exchange Commission, the New York Stock Exchange or any other securities exchange that are applicable to the Company;

 

(ii)            increase the number of Shares authorized under the Plan as specified in Section 4(a) of the Plan;

 

(iii)           increase the number of Shares or value subject to the limitations contained in Section 4(d) of the Plan or otherwise cause the Section 162(m) exemption for qualified performance-based compensation to become unavailable with respect to Awards granted under the Plan;

 

(iv)           permit repricing of Options or Stock Appreciation Rights, which is prohibited by Section 3(a)(v) of the Plan;

 

(v)            permit the award of Options or Stock Appreciation Rights at a price less than 100% of the Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Sections 6(a)(i) and 6(b) of the Plan; or

 

(vi)           increase the maximum term permitted for Options and Stock Appreciation Rights as specified in Sections 6(a)(ii) and 6(b) of the Plan.

 

(b)            Amendments to Awards.   Subject to the provisions of the Plan, the Committee may waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively. Except as otherwise provided in the Plan, the Committee may amend, alter, suspend, discontinue or terminate any outstanding Award, prospectively or retroactively, but no such action may materially adversely affect the rights of

 

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the holder of such Award without the consent of the Participant or holder or beneficiary thereof. If any provision of the Plan or an Award Agreement would result in adverse tax consequences under Section 409A, the Committee may amend that provision (or take any other action reasonably necessary) to avoid any adverse tax results and no action taken to comply with Section 409A shall be deemed to impair or otherwise adversely affect the rights of the Participant or any holder of an Award or beneficiary thereof.

 

(c)            Change in Control.   In the event of a Change in Control, the Committee or the Board may, in its sole discretion provide for any of the following to be effective upon the consummation of the event giving rise to the Change in Control (or effective immediately prior to the consummation of such event, provided that the consummation of the event subsequently occurs), and no action taken under this Section 7(c) shall be deemed to impair or otherwise adversely alter the rights of the Participant or any holder of an Award or beneficiary thereof:

 

(i)             either (A) termination of the Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of the Award or realization of the Participant’s rights (and, for the avoidance of doubt, if, as of the date of the occurrence of the transaction or event giving rise to the Change in Control, the Committee or the Board determines in good faith that no amount would have been attained upon the exercise of the Award or realization of the Participant’s rights, then the Award may be terminated by the Company without any payment) or (B) the replacement of the Award with other rights or property selected by the Committee or the Board, in its sole discretion;

 

(ii)            that the Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

 

(iii)           that the Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement; or

 

(iv)           that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of the event.

 

(d)            Vesting upon Termination Following a Change in Control.   Unless otherwise provided in the applicable Award Agreement or pursuant to actions taken by the Committee as authorized under Section 7(c), upon a Qualifying Termination, the time-based vesting conditions related to (A) the exercisability of an Option or Stock Appreciation Right, and (B) the lapse of any restrictions relating to any other Award, automatically shall be waived, and the time-based vesting of such Awards will be accelerated. The Award Agreement governing a Performance Award, or other Award subject to performance-based vesting, shall provide whether, and to what extent, the Shares or Restricted Share Units subject to the Award shall be deemed earned, or the Options or Stock Appreciation Rights shall become exercisable, if a Qualifying Termination occurs during the Award’s performance period. Nothing in this section 7(d) shall be construed to limit the Committee’s authority under Section 7(c).

 

(e)            Correction of Defects, Omissions and Inconsistencies.   The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan.

 

Section 8.               Income Tax Withholding

 

In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. In order to assist a Participant in paying all or a portion of the applicable taxes to be withheld or collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the

 

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Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (but only to the extent necessary to satisfy certain statutory withholding requirements to avoid adverse accounting treatment under ASC 718); (b) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes; or (c) such other process as may be approved by the Committee from time to time. The election, if any, must be made on or before the date that the amount of tax to be withheld is determined.

 

Section 9.               Clawback or Recoupment

 

All Awards under this Plan shall be subject to (a) forfeiture or other penalties under any clawback or recoupment policy of the Company in effect from time to time and (b) such forfeiture or penalty provisions as determined by the Committee and set forth in the applicable Award Agreement.

 

Section 10.             General Provisions

 

(a)            No Rights to Awards.   No Eligible Person, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants.

 

(b)            Award Agreements.   No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through any electronic medium in accordance with procedures established by the Company. An Award agreement need not be signed by a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee.

 

(c)            Plan Provisions Control.   In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control.

 

(d)            No Rights of Stockholders.   Except with respect to Restricted Stock, Stock Awards and certain types of stock-based Performance Awards, neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a stockholder of the Company with respect to any Shares issuable upon the exercise or payment of any Award, in whole or in part, unless and until the Shares have been issued.

 

(e)            No Limit on Other Compensation Plans or Arrangements.   Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally applicable or applicable only in specific cases.

 

(f)             No Right to Employment or Directorship.   The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee of the Company or any Affiliate, or a Director to be retained as a Director, nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, or remove a Director in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment or remove a Director who is a Participant free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be an employee of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or

 

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otherwise. By participating in the Plan, each Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby.

 

(g)            Governing Law.   The internal law, and not the law of conflicts, of the State of Delaware, shall govern all questions concerning the validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award.

 

(h)            Severability.   If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect.

 

(i)             No Trust or Fund Created.   Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

 

(j)             Other Benefits.   No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan.

 

(k)            No Fractional Shares.   No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall be canceled, terminated or otherwise eliminated.

 

(l)             Headings.   Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

 

Section 11.             Effective Date of the Plan

 

The Plan shall be subject to approval by the stockholders of the Company at the annual meeting of stockholders of the Company to be held on April 21, 2015, and the Plan shall be effective as of the date of such stockholder approval.

 

Section 12.             Term of the Plan

 

Awards shall be granted under the Plan only during a 10-year period beginning on the Effective Date, or if the Plan is terminated earlier pursuant to Section 7(a) of the Plan, during the period beginning on the Effective Date and ending on such date of termination of the Plan. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond the termination of the Plan, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board to amend the Plan, shall extend beyond the termination of the Plan.

 

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Exhibit 10.2

 

NOTE:  Restricted stock unit awards made to non-employee directors (“Participants”) of U.S. Bancorp (the “Company”) after April 21, 2015 will have the terms and conditions set forth in each Participant’s award summary (the “Award Summary”), which can be accessed on the Morgan Stanley Website at www.stockplanconnect.com (or the website of any other stock plan administrator selected by the Company in the future).   The Award Summary may be viewed at any time on this Website, and the Award Summary may also be printed out.  In addition to the individual terms and conditions set forth in the Award Summary, each restricted stock unit award will have the terms and conditions set forth in the form of Restricted Stock Unit Award Agreement below.  As a condition to each restricted stock unit award, Participant accepts the terms and conditions of the Award Summary and the Restricted Stock Unit Award Agreement.

 

U.S. BANCORP

RESTRICTED STOCK UNIT AWARD AGREEMENT FOR DIRECTORS

 

THIS AGREEMENT, together with the Award Summary which is incorporated herein by reference (collectively, the “Agreement”), sets forth the terms and conditions of a restricted stock unit award (this “RSU Award”) representing the right to receive shares of Common Stock, par value $0.01 per share (the “Common Stock”), of the Company.  The grant of this RSU Award is pursuant to the Company’s 2015 Stock Incentive Plan, which was approved by shareholders on April 21, 2015 (the “Plan”), and is subject to its terms. Capitalized terms that are not defined in the Agreement shall have the meaning ascribed to such terms in the Plan.

 

The Company and Participant agree as follows:

 

1.                    Award .

 

Subject to the terms and conditions of the Plan and the Agreement, the Company grants to Participant this RSU Award entitling the Participant to the number of restricted stock units (the “Units”) set forth in Participant’s Award Summary.  Each Unit represents the right to receive one share of Common Stock, subject to the vesting requirements and distribution provisions of the Agreement and the terms of the Plan.  The shares of Common Stock distributable with respect to the Units granted hereunder are referred to as the “Shares.”  Participant’s Award Summary sets forth the date of grant of this RSU Award (the “Award Date”).

 

2.                    Vesting and Forfeiture .

 

(a)               Except as otherwise expressly provided in this Agreement, the Units shall be fully vested as of the Award Date.

 

(b)                If Participant is removed as a director by the Company’s shareholders for cause, all Units shall be forfeited as of the date of such removal.  Upon forfeiture, Participant shall have no rights relating to the Units (including, without limitation, any rights to receive a distribution of Shares with respect to the Units pursuant to Section 3 or to receive additional Units pursuant to Section 5).

 

 

3.        Distribution Provisions .  The Company shall deliver to Participant one Share for each vested Unit in accordance with the following provisions of this Section 3:

 

(a)          Separation From Service for Reasons other than Death.  Upon Participant’s Separation From Service (as defined in Section 3(a)(3) below) for reasons other than death, the vested Units will be settled and the Shares will be delivered to Participant as follows:

 

(1)          General Rule.  Unless Participant has made a timely installment election in accordance with Section 3(a)(2), all vested Units will be settled, and the Company shall deliver to Participant one Share for each vested Unit (including Dividend Equivalent Units (as defined in Section 5) received pursuant to Section 5), at the time of Participant’s Separation From Service, or as soon thereafter as administratively feasible, but in no event later than ninety (90) days following the date of Participant’s Separation From Service.  The date of delivery of the Shares is referred to as the “Distribution Date.”

 

(2)          Installment Distribution Election.  If Participant has made a timely written election, in a form acceptable to the Company (which election may be made by electronic communication) and in compliance with the requirements of Section 409A of the Code, to receive distributions of Shares in settlement of all vested Units in ten (10) annual installments, then the distribution of the Shares will occur in ten (10) substantially equal annual distributions.  The number of Shares delivered in each annual distribution will be determined by dividing the total number of Units outstanding under this RSU Award (including Dividend Equivalent Units received pursuant to Section 5) immediately prior to the Installment Distribution Date (as defined below) by the number of remaining installments.  The first distribution will occur as soon as administratively feasible following Participant’s Separation From Service.  The remaining annual distributions will occur on the following nine (9) anniversary dates of Participant’s Separation From Service, or as soon as administratively feasible following such anniversary dates.  The date of delivery of the Shares distributed in each annual distribution is referred to as an “Installment Distribution Date.”  Except as otherwise permitted under Section 409A of the Code, an installment distribution election is irrevocable and must be made by the end of the calendar year prior to the year in which the services giving rise to the award of Units are performed.

 

(3)          Separation from Service.  “Separation from Service” means the first date on which Participant (i) has ceased to serve on the Board of the Company, and (ii) is not providing services as an independent contractor to the Company or to any other entity with which the Company would be considered to be a single employer under Section 414(b) and/or 414(c) of the Code, and the Company does not reasonably anticipate that Participant will provide such services in the future.

 

Notwithstanding the foregoing, if Participant is a Specified Employee (as defined below) at the time of Participant’s Separation from Service, no Shares will be distributed to Participant until the date that is six months and one day after the date of the Separation from Service.

 

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“Specified Employee” means a Participant who is a specified employee for purposes of section 1.409A-1(i) of the U.S. Treasury Regulations and determined pursuant to the rules and procedures set forth in the separate document entitled “U.S. Bank Specified Employee Determination.”

 

(b)          Death.  Notwithstanding the provisions of Section 3(a), if Participant dies before the full distribution of Shares with respect to the Units, all Units (including Dividend Equivalent Units received pursuant to Section 5) that remain outstanding will be settled, and Shares will be delivered to the representatives of Participant or to any Person to whom the Units have been transferred by will or the applicable laws of descent and distribution on the date that is sixty (60) days following Participant’s death.

 

(c)           No Fractional Shares.  In the event that the number of Shares distributable pursuant to this Section 3 is a number that is not a whole number, then the number of Shares distributed shall be rounded down to the nearest whole number.

 

(d)          Ownership of Shares.  Participant shall have no right, title or interest in, or, except as provided in Section 5, no right to receive distributions in respect of, or otherwise be considered the owner of, any of the Shares, unless and until the Shares have been distributed pursuant to Section 3(a) or (b).

 

4.       Restriction on Transfer .

 

Except for transfers by will or the applicable laws of descent and distribution, the Units cannot be sold, assigned, pledged, alienated, attached or otherwise transferred or encumbered, and any purported transfer shall be void and unenforceable against the Company.  No attempt to transfer the Units, whether voluntary or involuntary, by operation of law or otherwise (except by will or laws of descent and distribution) shall vest the purported transferee with any interest or right in or with respect to the Units or the Shares.

 

5.       Dividend Equivalents .

 

To the extent that the Company declares cash dividends on shares of Common Stock after the Award Date and prior to the Distribution Date or an Installment Distribution Date, as applicable, Participant shall be entitled to receive additional Units (“Dividend Equivalent Units”) on each dividend payment date (the “Dividend Payment Date”) (including any dividend declared prior to a Distribution Date or Installment Distribution Date, as applicable, and payable after such date, which, for purposes of this Section 5, shall be deemed paid on the Distribution Date or the Installment Distribution Date, as applicable) having a Fair Market Value on the Dividend Payment Date equal to the amount of cash dividends payable with respect to the number of shares of Common Stock distributable pursuant to the Units.  Dividend Equivalent Units shall be vested as of the Dividend Payment Date.

 

6.       Securities Law Compliance .

 

The delivery of all or any of the Shares in accordance with this RSU Award shall be effective only at such time that the issuance of such Shares will not violate any state or federal securities or other laws.  The Company is under no obligation to effect any registration of the Shares under the

 

3

 

Securities Act of 1933 or to effect any state registration or qualification of the Shares.  The Company may, in its sole discretion, (i) delay the delivery of the Shares; or (ii) place restrictive legends on such Shares in order to ensure that the issuance of any Shares will be in compliance with federal or state securities laws and the rules of the New York Stock Exchange or any other exchange upon which the Company’s Common Stock is traded.

 

7.       Miscellaneous .

 

(a)                The Company shall at all times during the term of this Agreement reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement.

 

(b)                The Award is issued under the Plan and is subject to its terms.  The Plan is available for inspection during business hours at the principal offices of the Company. In addition, the Plan may be viewed on the Morgan Stanley Website at www.stockplanconnect.com (or the website of any other stock plan administrator selected by the Company in the future).

 

(c)                 Participant acknowledges that the grant and vesting of, or any distribution with respect to, this RSU Award, and the sale or other taxable disposition of the Shares issued with respect to the Units hereunder, may have tax consequences pursuant to the Code or under local, state or international tax laws.  It is intended that the Plan, this Agreement and any permitted installment distribution election as described in Section 3(a) shall comply with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, and the provisions of this Agreement shall be construed and administered accordingly.  Any amendment or modification of the Award (to the extent permitted under the terms of the Plan), will be undertaken in a manner intended to comply with Section 409A, to the extent applicable. Notwithstanding the foregoing, there is no guaranty or assurance as to the tax treatment of the Award.  Participant acknowledges that Participant is relying solely and exclusively on Participant’s own professional tax and investment advisors with respect to any and all such tax matters (and is not relying, in any manner, on the Company or any of its employees or representatives).  Participant understands and agrees that any and all tax consequences resulting from this RSU Award and its grant, vesting, amendment or any distribution with respect thereto, and the sale or other taxable disposition of the Shares acquired pursuant to this RSU Award, is solely and exclusively the responsibility of Participant without any expectation or understanding that the Company or any of its employees or representatives will pay or reimburse Participant for such taxes.

 

8.       Venue .

 

Any claim or action brought with respect to this RSU Award shall be brought in a federal or state court located in Minneapolis, Minnesota.

 

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Exhibit 10.3

 

NOTE:  This Performance Restricted Stock Unit Award Agreement is applicable to performance restricted stock unit awards made to members of the Managing Committee (“Participants”) of U.S. Bancorp (the “Company”) on and after April 21, 2015.  These performance restricted stock unit awards have the terms and conditions set forth in (a) each Participant’s award summary (the “Award Summary”), which can be accessed on the Morgan Stanley Website at www.stockplanconnect.com (or the website of any other stock plan administrator selected by the Company in the future), and (b) the form of Exhibit A hereto (which will be completed to include all information called for therein) (the “Completed Exhibit A”) provided to such Participant as soon as administratively feasible following the date on which the award is made.  The Award Summary may be viewed at any time on this Website, and the Award Summary may also be printed out.  In addition to the individual terms and conditions set forth in the Award Summary and the Completed Exhibit A, each performance restricted stock unit award will have the terms and conditions set forth in the form of Performance Restricted Stock Unit Award Agreement below.  As a condition of each performance restricted stock unit award, Participant accepts the terms and conditions of the Performance Restricted Stock Unit Award Agreement, the Award Summary and the Completed Exhibit A.

 

U.S. BANCORP
PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT

 

THIS AGREEMENT , together with the Award Summary and the Completed Exhibit A which are incorporated herein by reference (collectively, the “Agreement”), sets forth the terms and conditions of a performance restricted stock unit award representing the right to receive shares of common stock of the Company, par value $0.01 per share (the “Common Stock”).  The grant of this performance restricted stock unit award is made pursuant to the Company’s 2015 Stock Incentive Plan, which was approved by shareholders on April 21, 2015 (the “Plan”) and is subject to its terms.  Capitalized terms that are not defined in the Agreement shall have the meaning ascribed to such terms in the Plan.

 

The Company and Participant agree as follows:

 

1.              Award

 

Subject to the terms and conditions of the Plan and the Agreement, the Company grants to Participant a performance restricted stock unit award entitling Participant to the number of performance restricted stock units (the “Units”) equal to the “Target Award Number” set forth in Participant’s Award Summary (such number of units, the “Target Award Number”).  The Target Award Number shall be adjusted upward or downward as provided in the Completed Exhibit A.  The number of Units that Participant will receive under the Agreement, after giving effect to such adjustment, is referred to herein as the “Final Award Number.”  Each Unit represents the right to receive one share of Common Stock, subject to the vesting requirements and distribution provisions of the Agreement and the terms of the Plan.  The shares of Common Stock distributable to Participant with respect to the Units granted hereunder are referred to as the “Shares.”  Participant’s Award Summary sets forth the date of grant of this award (the “Grant Date”).  The Completed Exhibit A sets forth (a) the performance period over which the Final Award Number will be determined (the “Performance Period”), and (b) the date on which the Final Award Number will be determined (the “Determination Date”).

 

2.              Vesting; Forfeiture

 

(a)            Time-Based Vesting Conditions .  Subject to the terms and conditions of the Agreement, the Units shall vest in installments on the date or dates set forth in the Participant’s Award Summary (each such date, a “Scheduled Vesting Date”), if the Participant remains continuously employed by the Company or an Affiliate of the Company until the applicable Scheduled Vesting Date.  Except as otherwise provided in the Agreement, if Participant ceases to be an employee of the Company or any Affiliate prior to an applicable Scheduled Vesting Date, all Units that have not become vested previously in accordance with the Award Summary shall be immediately and irrevocably forfeited.

 

 

(b)            Continued Vesting Upon Separation From Service Due to Retirement or Disability .  Notwithstanding Section 2(a), if Participant has a Separation From Service (as defined in Section 10) with the Company or any Affiliate by reason of Disability (as defined in Section 10) or Retirement (as defined in Section 10), the Units shall not be forfeited, but rather, the Final Award Number will be determined in accordance with Section 1 (if not already determined prior to Retirement or Disability), and thereafter the Units shall continue to vest on the Scheduled Vesting Dates in accordance with Participant’s Award Summary, subject to the terms of the Agreement, including Section 2(f) hereof, as though such Separation From Service had never occurred, so long as the Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant.

 

(c)            Acceleration of Vesting Upon Death .  If Participant ceases to be an employee by reason of death, or if Participant dies after a Separation From Service with the Company or an Affiliate due to Disability or Retirement but prior to any Scheduled Vesting Date, then the Units will become vested in accordance with this Section 2(c).  If such death occurs prior to the last day of the Performance Period, a number of Units equal to the Target Award Number will vest upon Participant’s death. If the death occurs on or after the last day of the Performance Period, then a number of Units equal to the Final Award Number will vest upon Participant’s death.  Notwithstanding the foregoing, such accelerated vesting shall occur only if the Participant has at all times since the Grant Date complied with the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant.

 

(d)            Acceleration of Vesting Upon Qualifying Termination .  Notwithstanding the vesting provisions contained in Sections 2(a) through (c) above, but subject to the other terms and conditions of the Agreement, if Participant has been continuously employed by the Company or any Affiliate until the date of a Qualifying Termination (as defined in Section 10), then immediately upon such Qualifying Termination, Participant shall be vested in the number of Units determined in accordance with this Section 2(d).  If the Qualifying Termination occurs prior to the last day of the Performance Period, a number of Units equal to the Target Award Number will vest upon such Qualifying Termination.  If the Qualifying Termination occurs on or after the last day of the Performance Period, a number of Units equal to the Final Award Number will vest upon such Qualifying Termination.

 

(e)            Forfeiture on Termination of Employment for Cause and on Breach of Confidentiality Agreement .  If Participant violates the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and the Participant, all Units that have not been settled (and Shares delivered) previously shall be immediately and irrevocably forfeited.  If Participant’s employment with the Company is terminated for Cause, all Units that have not been settled (and Shares delivered) previously shall be immediately and irrevocably forfeited.  Upon forfeiture, Participant shall have no rights relating to the forfeited Units (including, without limitation, any rights to receive a distribution of Shares with respect to the Units and the right to receive Dividend Equivalents).

 

(f)             S pecial Risk-Related Cancellation Provisions.   Notwithstanding any other provision of the Agreement, if at any time subsequent to the Grant Date the Committee determines, in its sole discretion, that Participant has (i) failed to comply with Company policies and procedures, including the Code of Ethics and Business Conduct, (ii) violated any law or regulation, (iii) engaged in negligent or willful misconduct, or (iv) engaged in activity resulting in a significant or material control deficiency under the Sarbanes-Oxley Act of 2002, and such failure, violation, misconduct or activity (A) demonstrates an Inadequate Sensitivity (as defined below) to the inherent risks of Participant’s business line or functional area, and (B) results in, or is reasonably likely to result in, a material adverse impact (whether financial or reputational) on the Company or Participant’s business line or functional area, all or part of the Units granted under the Agreement that have not been settled (and Shares delivered) at the time of such determination may be cancelled, and, if so cancelled, Participant will have no rights with respect to the Units.  “Inadequate Sensitivity” means Participant has engaged in imprudent activities that subject the Company to risk outcomes in future periods, including risks that may not be apparent at the time the activities are undertaken.

 

3.              Distribution of Shares with Respect to Units

 

Subject to the restrictions in this Section 3, following the vesting of Units and following the payment of any applicable withholding taxes pursuant to Section 7 hereof, the Company shall cause to be issued and delivered to

 

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Participant (including through book entry) Shares registered in the name of Participant or in the name of Participant’s legal representatives, beneficiaries or heirs, as the case may be, as follows:

 

(a)            Scheduled Vesting Date Distributions .  As soon as administratively feasible following each Scheduled Vesting Date (but in no event later than December 31 st  of the year in which such Scheduled Vesting Date occurs), all Shares issuable pursuant to Units that become vested as of such Scheduled Vesting Date (and with respect to which Shares have not been distributed previously) shall be distributed to Participant, or in the event of Participant’s death, to the representatives of Participant or to any Person to whom the Units have been transferred by will or the applicable laws of descent and distribution.

 

(b)            Qualifying Termination Distributions .  As soon as administratively feasible following a Separation From Service in connection with a Qualifying Termination (but in no event later than 60 days following such Separation From Service), all Shares issuable pursuant to Units that become vested as a result of such Qualifying Termination (and with respect to which Shares have not been distributed previously) shall be distributed to Participant.  Notwithstanding the foregoing, any Shares issuable to a Specified Employee (as defined in Section 10) as a result of a Separation From Service in connection with a Qualifying Termination will not be delivered to such Specified Employee until the date that is six months and one day after the date of the Separation From Service.

 

(c)            Distributions Following Retirement or Disability .  If a Participant has a Separation From Service with the Company or its Affiliates due to Retirement or Disability (so long as such Separation From Service is not  in connection with a Qualifying Termination), the distribution of Shares with respect to Units will not be accelerated, and Shares will be distributed as soon as administratively feasible following the applicable Scheduled Vesting Dates (but in no event later than December 31 st  of the year in which such Scheduled Vesting Date occurs).

 

(d)            Distributions Following Death .  As soon as administratively feasible following the death of a Participant (but in no event later than 90 days following such death) all Shares issuable pursuant to Units that become vested pursuant to Section 2(c) (and with respect to which Shares have not been distributed previously) shall be distributed to Participant.

 

In the event that the number of Shares distributable pursuant to this Section 3 is a number that is not a whole number, then the number of Shares distributed shall be rounded down to the nearest whole number.

 

4.              Rights as Shareholder; Dividend Equivalents

 

Prior to the distribution of Shares with respect to Units pursuant to Section 3 above, Participant shall not have ownership or rights of ownership of any Shares underlying the Units; provided , however , that Participant shall be entitled to receive cash Dividend Equivalents on outstanding Units (i.e. Units that have not been forfeited or settled), whether vested or unvested, if cash dividends on the Common Stock are declared by the Board on or after the Grant Date.  Participant shall be entitled to Dividend Equivalents with respect to a number of Units equal to the Final Award Number.  Such Dividend Equivalents will be in an amount of cash per Unit equal to the cash dividend paid with respect to a share of outstanding Common Stock.  The Dividend Equivalents shall be treated as earnings on, and as a separate amount from, the Units for purposes of Section 409A of the Code.  Dividend Equivalents accrued prior to the Determination Date will be paid within 90 days following the last day of the Performance Period, and as a matter of administrative practice will be paid as soon as administratively feasible following the Determination Date.  Dividend Equivalents relating to dividends declared after the Determination Date will be paid to Participant with respect to Units that have not been settled and paid out on the same payment dates as dividends are paid to holders of the Common Stock.  Dividend Equivalents paid with respect to dividends declared before the delivery of the Shares underlying the Units will be treated as compensation income for tax purposes and will be subject to income and payroll tax withholding by the Company.

 

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5.              Restriction on Transfer

 

Except for transfers by will or the applicable laws of descent and distribution, the Units cannot be sold, assigned, transferred, gifted, pledged, or in any manner encumbered, alienated, attached or disposed of, and any purported sale, assignment, transfer, gift, pledge, alienation, attachment or encumbrance shall be void and unenforceable against the Company.  No such attempt to transfer the Units, whether voluntary or involuntary, by operation of law or otherwise (except by will or laws of descent and distribution), shall vest the purported transferee with any interest or right in or with respect to the Units or the Shares issuable with respect to the Units.

 

6.              Securities Law Compliance

 

The delivery of all or any of the Shares in accordance with this Award shall be effective only at such time that the issuance of such Shares will not violate any state or federal securities or other laws.  The Company is under no obligation to effect any registration of the Shares under the Securities Act of 1933 or to effect any state registration or qualification of the Shares.  The Company may, in its sole discretion, delay the delivery of the Shares or place restrictive legends on such Shares in order to ensure that the issuance of any Shares will be in compliance with federal or state securities laws and the rules of the New York Stock Exchange or any other exchange upon which the Company’s Common Stock is traded.

 

7.              Income Tax Withholding

 

In order to comply with all applicable federal, state, local and foreign income and payroll tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable withholding, income or other taxes, which are the sole and absolute responsibility of Participant, are withheld or collected from Participant.  Without limiting the foregoing, the Company may, but is not obligated to, permit or require the satisfaction of tax withholding obligations through net Share settlement at the time of delivery of Shares (i.e. the Company withholds a portion of the Shares otherwise to be delivered with a Fair Market Value, as such term is defined in the Plan, equal to the amount of such taxes, but only to the extent necessary to satisfy certain statutory withholding requirements to avoid adverse accounting treatment under ASC 718) or through an open market sale of Shares otherwise to be delivered, in each case pursuant to such rules and procedures as may be established by the Company.

 

8.              Miscellaneous

 

(a)            The Agreement is issued pursuant to the Plan and is subject to its terms.  The Plan is available for inspection during business hours at the principal office of the Company.  In addition,  the Plan may be viewed on the Morgan Stanley Website at www.stockplanconnect.com (or the website of any other stock plan administrator selected by the Company in the future).

 

(b)            The Agreement shall not confer on Participant any right with respect to continuance of employment with the Company or any Affiliate, nor will it interfere in any way with the right of the Company or any Affiliate to terminate such employment at any time.

 

(c)            Participant acknowledges that the grant, vesting or any payment with respect to this Award, and the sale or other taxable disposition of the Shares issued with respect to the Units hereunder may have tax consequences pursuant to the Code or under local, state or international tax laws. It is intended that the Award shall comply with Section 409A of the Code, and the provisions of the Agreement and the Plan shall be construed and administered accordingly.  Any amendment or modification of the Award (to the extent permitted under the terms of the Plan), will be undertaken in a manner intended to comply with Section 409A, to the extent applicable. Notwithstanding the foregoing, there is no guaranty or assurance as to the tax treatment of the Award.  Participant acknowledges that Participant is relying solely and exclusively on Participant’s own professional tax and investment advisors with respect to any and all such matters (and is not relying, in any manner, on the Company or any of its employees or representatives).  Participant understands and agrees that any and all tax consequences resulting from the Award and its grant, vesting, amendment, or any payment with respect thereto, and the sale or other taxable disposition of the Shares acquired pursuant to the Award, is solely and exclusively the responsibility of Participant without any expectation or understanding that the Company or any of its employees or representatives will pay or reimburse Participant for such taxes or other items.

 

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9.              Venue

 

Any claim or action brought with respect to this Award shall be brought in a federal or state court located in Minneapolis, Minnesota.

 

10.           Definitions

 

For purposes of the Agreement, the following terms shall have the definitions as set forth below:

 

(a)            “Change in Control” shall have the meaning ascribed to it in the Plan, but only if the event or circumstances constituting such change in control also constitute a change in ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, within the meaning of Section 409A of the Code.

 

(b)            “Disability” means leaving active employment and qualifying for and receiving disability benefits under the Company’s long-term disability programs as in effect from time to time.

 

(c)            “Qualifying Termination” means:

 

(A)           Participant’s Separation From Service with the Company and its Affiliates as a result of the Company’s termination of Participant’s employment for any reason other than Cause within 12 months following a Change in Control, provided that such a termination will not be a Qualifying Termination if: i) the Company has notified the Participant in writing more than 30 days prior to the Announcement Date that Participant’s employment is not expected to continue for more than 12 months following the date of such notification, and Participant’s employment is in fact terminated within such 12 month period; or ii) Participant has announced in writing, prior to the date the Company provides a Notice of Termination to Participant, that Participant intends to terminate his or her employment;

 

(B)           Participant’s Separation From Service with the Company and its Affiliates as a result of Disability within 12 months following a Change in Control; or

 

(C)           Participant’s Separation From Service with the Company and its Affiliates (other than as a result of Participant’s termination of employment by the Company for Cause) within 12 months following a Change in Control, if, at the time of such Separation From Service, Participant is age 59 1/2 or older and has had 10 or more years of employment with the Company or its Affiliates following such Participant’s most recent date of hire by the Company or its Affiliates.

 

For purposes of this definition, the term Company shall be deemed to include any Person that has assumed this Award (or provided a substitute award to Participant) in connection with a Change in Control.

 

(i)             “Retirement” means a Separation From Service with the Company and its affiliates (other than for Cause) by a Participant who is age 59 1/2 or older and has had 10 or more years of employment with the Company or its Affiliates following such Participant’s most recent date of hire by the Company or its Affiliates.

 

(j)             “Separation From Service” means a Participant’s separation from service with the Company and its affiliates, as determined under Treasury Regulation section 1.409A-1(h)(1), provided, that the term “affiliate” shall mean a business entity which is affiliated in ownership with the Company and that is treated as a single employer under the rules of section 414(b) and (c) of the Code (applying the eighty percent common ownership standard).

 

(k)            “Specified Employee” shall mean any Participant who is a specified employee for purposes of section 1.409A-1(i) of the U.S. Treasury Regulations, determined in accordance with the rules set forth in the separate document entitled “U.S. Bank Specified Employee Determination.”

 

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EXHIBIT A

 

TO

 

PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT

 

This Exhibit A to the Performance Restricted Stock Unit Award Agreement sets forth the manner in which the Final Award Number will be determined for each Participant.

 

Definitions

 

Capitalized terms used but not defined herein shall have the same meanings assigned to them in the Plan, the Performance Restricted Stock Unit Award Agreement and Participant’s Award Summary.  The following terms used in the text of this Exhibit A and in the ROE Performance Matrix shall have the meanings set forth below:

 

“ Company ROE Maximum ” means          %.

 

“ Company ROE Minimum ” means         %.

 

“ Company ROE Result ” means the ROE achieved by the Company during the Performance Period.

 

“ Company ROE Target ” means         %.

 

“ Determination Date ” means the date on which the Final Award Number is determined, which date shall not be later than 45 days after the last day of the Performance Period.

 

“ Final Award Number ” means the “Final Award Number” determined in accordance with this Exhibit A.

 

“ Peer Group Companies ” means the following companies:                                                                          .

 

“ Peer Group ROE Ranking Maximum ” means the          percentile.

 

“ Peer Group ROE Ranking Minimum ” means the          percentile.

 

“ Peer Group ROE Ranking Target ” means the          percentile.

 

“ Peer Group ROE ” means the ROE achieved by the Peer Group Companies during the Performance Period.

 

“ Peer Group ROE Ranking ” means the percentile rank of the Company ROE Result relative to Peer Group ROE.

 

“ Performance Period ” means the year ending December 31,         .

 

“ ROE ” means (a) net income applicable to the common shareholders of a company during the Performance Period, divided by (b) that company’s average common shareholders’ equity during the Performance Period.

 

“ ROE Performance Matrix ” means the ROE Performance Matrix set forth in this Exhibit A.

 

“ Target Award Number ” means the “Target Award Number” set forth in a Participant’s Award Summary.

 

A-1

 

“ Target Award Number Percentage ” means the “Target Award Number Percentage” determined in accordance with the ROE Performance Matrix and the related rules set forth in this Exhibit A.

 

Determination of Final Award Number

 

Each Participant has been granted a number of Units equal to the Target Award Number.  The Target Award Number will be adjusted upward or downward depending on (a) whether the Company ROE Result is greater or less than the Company ROE Target, and (b) the Peer Group ROE Ranking.  The Final Award Number for each Participant will be determined by multiplying (i) the Target Award Number Percentage by (ii) the Target Award Number.  The Target Award Number Percentage will be determined in accordance with the following ROE Performance Matrix and the related rules below:

 

ROE PERFORMANCE MATRIX

 

				Target Award Number Percentage
Company ROE Result (Vertical Axis)		Company ROE Maximum (    %) or more		75%		112.5%		125%
		Company ROE Target (      %)		50%		100%		112.5%
		Company ROE Minimum (      %) or less (but greater than zero)		25%		50%		75%
		Company ROE is 0% or less		0%		0%		0%
				Peer Group ROE Ranking Minimum or below		Peer Group ROE Ranking Target		Peer Group ROE Ranking Maximum or above
				Peer Group ROE Ranking (Horizontal Axis)

 

In determining the Target Award Number Percentage in accordance with the ROE Performance Matrix, the following rules will apply:

 

·       If the Company ROE Result is greater than the Company ROE Minimum and less than the Company ROE Target, the Target Award Number Percentage on the vertical axis will be determined by interpolation of the Company ROE Result between the Company ROE Minimum and the Company ROE Target.

 

·       If the Company ROE Result is greater than the Company ROE Target and less than the Company ROE Maximum, the Target Award Number Percentage on the vertical axis will be determined by interpolation of the Company ROE Result between the Company ROE Target and the Company ROE Maximum.

 

·       If the Peer Group ROE Ranking is greater than the Peer Group ROE Ranking Minimum and less than the Peer Group ROE Ranking Target, the Target Award Number Percentage on the horizontal axis will be determined by interpolation of the Peer Group ROE Ranking between the Peer Group ROE Minimum and the Peer Group ROE Target.

 

·       If the Peer Group ROE Ranking is greater than the Peer ROE Group Ranking Target and less than the Peer Group ROE Ranking Maximum, the Target Award Number Percentage on the horizontal axis will be determined by interpolation of the Peer Group ROE Ranking between the Peer Group ROE Target and the Peer Group ROE Maximum.

 

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·       After the Target Award Number Percentage on each of the vertical axis and horizontal axis has been determined, the actual Target Award Number Percentage will be determined by interpolation of the data points ( i.e. , the percentages) set forth in the ROE Performance Matrix.

 

·       In no event shall the Target Award Number Percentage be greater than 125.0%.

 

The Final Award Number for each Participant shall be determined by the Committee on the Determination Date.  The Award Summary of each Participant shall be amended to reflect the Final Award Number as soon as administratively feasible after the Final Award Number for such Participant is determined.

 

Committee Determinations

 

The Committee shall make all determinations necessary to arrive at the Final Award Number for each Participant.  The Committee shall determine the Company ROE Result by reference to the Company’s audited financial statements as of and for the year ending on the last day of the Performance Period.  The Committee shall determine the Peer Group ROE Ranking by reference to publicly available financial information regarding the Peer Companies.  Any determination by the Committee pursuant to this Exhibit A will be binding upon each Participant and the Company.

 

No Fractional Units

 

In the event the Final Award Number is a number of Units that is not a whole number, then the Final Award Number shall be rounded down to the nearest whole number.

 

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Exhibit 10.4

 

NOTE:  Stock options granted to members of the Managing Committee (“Optionees”) of U.S. Bancorp (the “Company”) on and after April 21, 2015 will have the terms and conditions set forth in each Optionee’s grant summary (the “Grant Summary”), which can be accessed on the Morgan Stanley Website at www.stockplanconnect.com (or the website of any other stock plan administrator selected by the Company in the future).  The Grant Summary may be viewed at any time on this Website, and the Grant Summary may also be printed out.  In addition to the individual terms and conditions set forth in the Grant Summary, each stock option will have the terms and conditions set forth in the form of Non-Qualified Stock Option Agreement below.  As a condition to each stock option grant, Optionee accepts the terms and conditions of the Grant Summary and the Non-Qualified Stock Option Agreement.

 

U.S. BANCORP

 

NON-QUALIFIED STOCK OPTION AGREEMENT

 

THIS AGREEMENT, together with the Grant Summary which is incorporated herein by reference (collectively, the “Agreement”), sets forth the terms and conditions of a stock option for the purchase of common stock of the Company, par value $0.01 per share (the “Common Stock”), granted to Optionee by the Company.  The grant of the Option is pursuant to the Company’s 2015 Stock Incentive Plan, which was approved by shareholders on April 21, 2015 (the “Plan”), and is subject to its terms.  Capitalized terms not defined in the Agreement shall have the meaning ascribed to such terms in the Plan.

 

The Company and Optionee agree as follows:

 

1.              Grant of Option

 

Subject to the terms and conditions of the Plan and the Agreement, the Company grants Optionee the right and option (the “Option”) to purchase all or any part of an aggregate of the number of shares of Common Stock set forth in Optionee’s Grant Summary at the exercise price per share set forth in the Grant Summary.  The date of grant of the Option (the “Grant Date”) and the expiration date of the Option (the “Expiration Date”) also are set forth in Optionee’s Grant Summary.  The Option is not intended to be an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.

 

2.                                       Vesting of Exercise Rights; Forfeiture; Expiration

 

(a)            Time-Based Vesting Conditions; Expiration .  Subject to the terms and conditions of the Agreement, the Option (or a portion thereof) shall vest and may be exercised on or after the date or dates set forth in Optionee’s Grant Summary (each such date, a “Scheduled Vesting Date”) if Optionee remains continuously employed by the Company or an Affiliate of the Company until the applicable Scheduled Vesting Date.  Except as otherwise provided in the Agreement, if Optionee ceases to be an employee of the Company or any Affiliate prior to an applicable Scheduled Vesting Date, any portion of the Option that has not previously become vested in accordance with the Grant Summary shall be immediately and irrevocably forfeited.  Vested Options shall terminate and shall no longer be exercisable at the close of business on the Expiration Date, or on such earlier date as provided in this Section 2.

 

 

(b)            Accelerated Vesting of Exercise Rights Upon Death .  Notwithstanding the vesting provisions contained in Section 2(a), and subject to the other terms and conditions of the Agreement, if Optionee dies while in the employ of the Company or any Affiliate, then the vesting of the Option will accelerate upon the death of Optionee, and the Option will be fully exercisable in whole or in part at any time up to the earlier of (i) the last day of the three-year period commencing on the date of Optionee’s death and (ii) the Expiration Date of the Option.  The Option may be exercised by the personal representatives or administrators of Optionee or by any Person or Persons to whom the Option has been transferred by will or the applicable laws of descent and distribution.

 

(c)            Continued Vesting of Exercise Rights Upon Retirement or Disability . Notwithstanding the vesting provisions contained in Section 2(a), and subject to the other terms and conditions of the Agreement, upon the Retirement (as defined in Section 9) or Disability (as defined in Section 9) of Optionee, the unvested portion of the Option at the time of such Retirement or Disability shall not be forfeited, and instead will become exercisable in accordance with the terms of the Agreement as though such Retirement or Disability had never occurred.  Notwithstanding the foregoing, if Optionee shall die following Disability or Retirement (but prior to the Expiration Date of the Option), then the unvested portion of the Option at the time of Optionee’s death, if any, will become exercisable in its entirety immediately upon Optionee’s death, and the Option will be exercisable in whole or in part by the personal representatives or administrators of Optionee, or by any Person or Persons to whom the Option has been transferred by will or the applicable laws of descent and distribution, at any time up to the earlier of (i) the last day of the three-year period commencing on the date of Optionee’s death and (ii) the Expiration Date of the Option.

 

(d)            Extended Period to Exercise Option Following Early Retirement .  If Optionee’s employment is terminated by reason of Early Retirement (as defined in Section 9), Optionee may exercise the portion of the Option that was vested on the date of such termination of employment at any time up to the earlier of (i) the last day of the three-year period commencing on the date of such termination of employment and (ii) the Expiration Date of the Option.  If Optionee shall die following Early Retirement (but prior to the termination or expiration of the Option as determined in accordance with the immediately prior sentence), the personal representatives or administrators of Optionee, or the Person or Persons to whom the Option has been transferred by will or the applicable laws of descent and distribution, may exercise the Option in accordance with the provisions of this Section 2(d).

 

(e)            Accelerated Vesting of Exercise Rights Upon Qualifying Termination .  Notwithstanding the vesting provision contained in Section 2(a), and subject to the other terms and conditions of the Agreement, if Optionee’s employment is terminated pursuant to a Qualifying Termination (as defined in Section 9), the vesting of the Option will be accelerated and the Option may be exercised in full immediately upon such Qualifying Termination.  Further, upon a Qualifying Termination, Optionee shall have the right to exercise the Option for a period of one year following such Qualifying Termination; provided , however , that no provision of this Section 2(e) shall shorten the period in which the Option may be exercised in the event of death, Disability, Retirement or Early Retirement as provided herein; and, provided further , that no Option shall be exercisable after the Expiration Date of the Option.

 

(f)             Termination for Cause .  If Optionee’s employment is terminated for Cause, the Option shall be terminated in its entirety and shall not be exercisable at any time on or after the date of the misconduct.

 

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(g)            Exercise of Option Following Termination of Employment for any Reason other than Cause, Death, Disability, Retirement, Early Retirement or Qualifying Termination .  If Optionee’s employment shall be terminated for any reason other than Cause, death, Disability, Retirement, Early Retirement or a Qualifying Termination, Optionee may exercise the Option, to the extent that the Option was exercisable by Optionee on the date of the termination of employment, at any time up to the earlier of (i) 90 days after such termination and (ii) the Expiration Date of the Option.

 

(h)            Forfeiture upon Violation of Confidentiality and Non-solicitation Agreement .  Notwithstanding any other provisions in this Agreement, if Optionee violates the terms of any confidentiality and non-solicitation agreement between the Company or an Affiliate and Participant, the Option shall terminate in its entirety and may no longer be exercised by Optionee (or by any representative or administrator of Optionee or any transferee of the Optionee by will or the applicable laws of decent and distribution) at any time on or after the occurrence of any such violation.

 

3.              S pecial Risk-Related Cancellation Provisions

 

Notwithstanding any other provision of the Agreement, if at any time subsequent to the Grant Date the Committee determines, in its sole discretion, that Optionee has, (i) failed to comply with Company policies and procedures, including its Code of Ethics and Business Conduct, (ii) violated any law or regulation, (iii) engaged in negligent or willful misconduct, or (iv) engaged in activity resulting in a significant or material control deficiency under the Sarbanes-Oxley Act of 2002, and such failure, violation, misconduct or activity (A) demonstrates an Inadequate Sensitivity (as defined below) to the inherent risks of Optionee’s business line or functional area, and (B) results in, or is reasonably likely to result in, a material adverse impact (whether financial or reputational) on the Company or Optionee’s business line or functional area, all or part of the Option granted under the Agreement that has not yet become vested (i.e. the portion that has not yet become exercisable) at the time of such determination may be cancelled, and, if so cancelled, all or such part of the Option will not become exercisable.  “Inadequate Sensitivity” means Optionee has engaged in imprudent activities that subject the Company to risk outcomes in future periods, including risks that may not be apparent at the time the activities are undertaken.

 

4.              Securities Law Compliance

 

The exercise of all or any portion of this Option shall only be effective at such time that the sale of Common Stock issued pursuant to such exercise will not violate any state or federal securities or other laws.  The Company is under no obligation to effect any registration of the stock subject to the Option under the Securities Act of 1933 or to effect any state registration or qualification of such Common Stock.  The Company may, in its sole discretion, defer the effectiveness of any full or partial exercise of the Option in order to ensure that the issuance of stock upon exercise will be in compliance with federal or state securities laws and the rules of the New York Stock Exchange or any other exchange upon which the Company’s Common Stock is traded.

 

5.              Method of Exercise of Option

 

Subject to the foregoing, the Option may be exercised in whole or part from time to time by contacting Morgan Stanley (or any other stock plan administrator selected by the Company in the future) in accordance with procedures established by the Company.  Information about exercising the Option can be accessed at USBnet (HRConnection) or www.USBankHR.com, or

 

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such other resource as established by the Company.  When exercising the Option, the number of shares as to which the Option is being exercised must be specified, and the purchase price (together with all federal, state, local, and foreign taxes required to be withheld) must be paid.  To the extent permitted under the option exercise procedures established by the Company and in effect at the time of exercise, Optionee may pay the purchase price (i) by check or other authorized money transfer; (ii) by delivery (through attestation) of already-owned Shares having a Fair Market Value on the exercise date equal to the applicable exercise price, which Shares are owned free and clear of any liens, claims, encumbrances or security interests; or (iii) such other means as permitted under the procedures established by the Company and in effect at the time of exercise.  For this purpose, already-owned Shares must have been owned by Optionee for a minimum of six months prior to the date of exercise of the Option.

 

6.              Income Tax Withholding

 

In order to comply with all applicable federal, state, local and foreign income and payroll tax laws or regulations, the Company or an Affiliate may take such action as it deems appropriate to ensure that all required withholdings with respect to taxes, which are the sole and absolute responsibility of Optionee, are withheld or collected from Optionee.  By acceptance and exercise of the Option, Optionee authorizes the Company or an Affiliate to take such actions, which may include, but are not limited to: (i) withholding from proceeds of the sale of Shares acquired upon exercise of the Option, or withholding a portion of the Shares otherwise to be delivered upon exercise of the Option, in each case such Shares having a Fair Market Value equal to the amount of such taxes (but only to the extent necessary to satisfy certain statutory withholding requirements to avoid adverse accounting treatment under ASC 718); (ii) withholding from Optionee’s wages or other cash compensation paid to Optionee by the Company or an Affiliate; and (iii) permitting Optionee to deliver shares of Common Stock (other than the Shares issuable upon exercise of the Option) having a Fair Market Value equal to the amount of tax required to be withheld, which shares must have been owned by Optionee for a minimum of six months prior to the date of exercise of the Option.

 

7.              Miscellaneous

 

(a)            The Agreement shall not give Optionee any right with respect to continuance of employment with the Company or any Affiliate, nor will it interfere in any way with the right of the Company or any Affiliate to terminate such employment at any time.  In addition, the Company or any Affiliate may at any time dismiss Optionee from employment, free from any liability or claim under the Plan.  The holder of the Option will not be deemed to be the holder of any shares subject to the Option unless and until the Option has been exercised and the purchase price of the shares purchased has been paid.

 

(b)            The Option may not be transferred, other than by will or the laws of descent and distribution and during Optionee’s lifetime the Option is exercisable only by Optionee (or by Optionee’s guardian or legal representative in the case of disability).

 

(c)            The Company shall at all times during the term of the Option reserve and keep available such number of shares of the Company’s Common Stock as will be sufficient to satisfy the requirements of the Agreement.

 

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(d)            The Option is issued pursuant to the Plan and is subject to its terms.  The Plan is available for inspection during business hours at the principal office of the Company.  In addition, the Plan can be accessed on the Morgan Stanley Website at www.stockplanconnect.com (or the website of any other stock plan administrator selected by the Company in the future).

 

(e)            Optionee acknowledges that the grant, vesting, exercise or amendment of the Option, and the sale or other taxable disposition of the Shares issued with respect to the Option, may have tax consequences pursuant to the Code or under local, state or international tax laws.  It is intended that the Option shall be exempt from Section 409A of the Code and the provisions of the Agreement and the Plan shall be construed and administered accordingly.  Any amendment or modification of the Option (to the extent permitted under the terms of the Plan), will be undertaken in a manner intended to comply with Section 409A, to the extent applicable. Notwithstanding the foregoing, there is no guaranty or assurance as to the tax treatment of the Option.  Optionee acknowledges that Optionee is relying solely and exclusively on Optionee’s own professional tax and investment advisors with respect to any and all such matters (and is not relying, in any manner, on the Company or any of its employees or representatives).  Optionee understands and agrees that any and all tax consequences resulting from the Option and its grant, vesting, exercise, amendment or any payment with respect thereto, and the sale or other taxable disposition of the Shares acquired pursuant to the Option, is solely and exclusively the responsibility of Optionee without any expectation or understanding that the Company or any of its employees or representatives will pay or reimburse Optionee for such taxes or other items.

 

8.              Venue

 

Any claim or action brought with respect to this Award shall be brought in a federal or state court located in Minneapolis, Minnesota.

 

9.              Definitions

 

(a)            “Disability” means qualifying for and receiving disability benefits under the Company’s long-term disability programs as in effect from time to time.

 

(b)            “Early Retirement” means termination of employment (other than for Cause) by a Person who is age 55 or older and has had 10 or more years of employment with the Company or its Affiliates following such Person’s most recent date of hire by the Company or its Affiliates.

 

(c)            “Qualifying Termination” means a termination of Optionee’s employment with the Company or its Affiliates by the Company for any reason other than Cause within 12 months following a Change in Control, provided that such a termination will not be a Qualifying Termination if:

 

(A)                    the Company has notified Optionee in writing more than 30 days prior to the Announcement Date that Optionee’s employment is not expected to continue for more than 12 months following the date of such notification, and Optionee’s employment is in fact terminated within such 12-month period; or

 

(B)                    Optionee has announced in writing, prior to the date the Company provides a Notice of Termination to Optionee, that Optionee intends to terminate his or her employment.

 

For purposes of this definition, the term Company shall be deemed to include any Person that has assumed the Option (or provided a substitute award to Optionee) in connection with a Change in Control.

 

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(d)            “Retirement” means the termination of employment (other than for Cause) by a Person who is age 59 1/2 or older and has had 10 or more years of employment with the Company or its Affiliates following such Person’s most recent date of hire by the Company or its Affiliates.

 

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