Di Ferdinando v. Intrexon Corporation et al

MOTION to Dismiss for Failure to State a Claim

S.D. Cal.January 10, 2017

T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145522v1 INTREXON CORPORATION’S NOTICE OF MOTION AND MOTION TO DISMISS 3:16-CV-01826-BTM-JMA Wendy Sugg, Bar No. 223335 wendy.sugg@troutmansanders.com TROUTMAN SANDERS LLP 5 Park Plaza, Suite 1400 Irvine, CA 92614-2545 Telephone: 949.622.2700 Facsimile: 949.622.2739 Attorney for Defendant INTREXON CORPORATION UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA DANA M. DI FERDINANDO, Plaintiff, v. INTREXON CORPORATION, and DOES 1-100, Defendants. Case No. 3:16-CV-01826-BTM-JMA INTREXON CORPORATION’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT [Filed concurrently with: Memorandum of Points and Authorities and Declaration of Donald Lehr] Date: February 24, 2017 Time: 11:00 a.m. Place: Courtroom 15B Judge: Hon. Barry Ted Moskowitz PER CHAMBERS NO ORAL ARGUMENT UNLESS DIRECTED BY THE COURT Case 3:16-cv-01826-BTM-JMA Document 12 Filed 01/10/17 Page 1 of 2 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145522v1 - 1 - INTREXON CORPORATION’S NOTICE OF MOTION AND MOTION TO DISMISS 3:16-CV-01826-BTM-JMA TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on February 24, 2017, at 11:00 a.m., or as soon thereafter as the matter can be heard, in Courtroom 15B, before the Honorable Barry T. Moskowitz, United States District Judge, located at: 221 West Broadway, San Diego, CA 92101, Defendant Intrexon Corporation will move and hereby does move this Court for an order dismissing Plaintiff Dana M. Di Ferdinando’s claims pursuant to Federal Rules of Civil Procedure 9 and 12(b)(6) on the following grounds: 1. Plaintiff’s first cause of action for breach of the implied covenant of good faith and fair dealing fails because it seeks to impose a duty that conflicts with the express terms of the agreements signed by Plaintiff and the alleged fraudulent concealment is not actionable. 2. Plaintiff’s second cause of action for fraud lacks the required specificity and is based on alleged misrepresentations or omissions of fact that were known to her already and that cannot serve as a basis for justifiable reliance. Moreover, Plaintiff cannot demonstrate any harm from the alleged misrepresentation or omissions. Intrexon’s motion is based on this Notice of Motion and Motion, the Memorandum of Points and Authorities in Support of the Motion, and the Declaration of Donald Lehr, and the pleadings and papers on file in this action. Dated: January 10, 2017 TROUTMAN SANDERS LLP By: /s/ Wendy Sugg Wendy Sugg Attorney for Defendant INTREXON CORPORATION Case 3:16-cv-01826-BTM-JMA Document 12 Filed 01/10/17 Page 2 of 2 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA Wendy Sugg, Bar No. 223335 wendy.sugg@troutmansanders.com TROUTMAN SANDERS LLP 5 Park Plaza, Suite 1400 Irvine, CA 92614-2545 Telephone: 949.622.2700 Facsimile: 949.622.2739 Attorney for Defendant INTREXON CORPORATION UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA DANA M. DI FERDINANDO, Plaintiff, v. INTREXON CORPORATION, and DOES 1-100, Defendants. Case No. 3:16-cv-01826-BTM-JMA INTREXON CORPORATION’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS FIRST AMENDED COMPLAINT [Filed concurrently with: Notice of Motion and Motion and Declaration of Donald Lehr Date: February 24, 2017 Time: 11:00 a.m. Place: Courtroom 15B Judge: Hon. Barry Ted Moskowitz PER CHAMBERS NO ORAL ARGUMENT UNLESS DIRECTED BY THE COURT Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 1 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page Active 30145606v1 - i - TABLE OF CONTENTS 3:16-CV-01826-BTM-JMA I. INTRODUCTION........................................................................................... 1 II. PROCEDURAL HISTORY............................................................................ 2 III. FACTUAL ALLEGATIONS.......................................................................... 4 IV. FRCP 12(B)(6) REQUIRES ALLEGATIONS SUPPORTING A PLAUSIBLE CLAIM FOR RELIEF .............................................................. 8 V. PLAINTIFF FAILS TO STATE A VALID CAUSE OF ACTION UNDER FRCP 12(B)(6) ...............................................................................10 A. Plaintiff’s Allegations Lack Any Indicia of Fraud .............................11 B. There Can Be No Breach Of The Implied Covenant Of Good Faith And Fair Dealing Where Intrexon Acted As Allowed By The Agreements And Plaintiff Understood The Terms......................15 1. Intrexon’s Actions Matched The Spirit And Letter Of The Agreements ...............................................................................16 2. Lack Of Information Does Not Provide An Actionable Basis For A Claim of Breach Of The Implied Covenant .........19 VI. CONCLUSION .............................................................................................20 Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 2 of 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases Page(s) Active 30145606v1 - ii - TABLE OF AUTHORITIES 3:16-CV-01826-BTM-JMA Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937 (2009) ............................................................9, 10 Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 103 S. Ct. 897 (1983) ..................................................................10 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007) .................................................................. 9 Boschma v. Home Loan Center, Inc., 198 Cal.App.4th 230, 248 (2011).......................................................................11 Carma Developers (Cal.), Inc. v. Marathon Development California, Inc., 2 Cal. 4th 342 (1992)..........................................................................................16 Cruz v. Beto, 405 U.S. 319, 92 S. Ct. 1079 (1972) .................................................................... 9 Foley v. Interactive Data Corp., 47 Cal. 3d 654.....................................................................................................18 Guz v. Bechtel National, Inc. 24 Cal. 4th 317 (2000)........................................................................................16 Hill v. Wrather, 158 Cal. App. 2d 818 (1958) .......................................................12,13, 14, 15, 19 In re Stac Elec. Litig., 89 F.3d 1399 (9th Cir. 1996) ..............................................................................11 Lazar v. Superior Court, 12 Cal. 4th 631 (1996)........................................................................................11 Lee v. City of Los Angeles, 250 F.3d 668 (9th Cir. 2001) ................................................................................ 5 Mir v. Little Co. of Mary Hosp., 844 F.2d 646 (9th Cir. 1988) ................................................................................ 9 Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 3 of 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases Page(s) Active 30145606v1 - iii - TABLE OF AUTHORITIES 3:16-CV-01826-BTM-JMA Osanitsch v. Macaroni PLC, 2009 U.S. Dist. LEXIS 118332 (N.D. Cal. Dec. 21, 2009) ...............................18 Racine & Laramie, Ltd. v. Dept of Parks & Recreation 11 Cal. App. 4th 1026 (1992).............................................................................16 Retail Clerks Int’l Ass’n v. Schermerhorn, 373 U.S. 746, 83 S. Ct. 1461 (1963) .................................................................... 9 Roddenberry v. Roddenberry, 44 Cal.App.4th 634 (1996)...........................................................................12, 14 Service by Medallion, Inc. v. Clorox Co., 44 Cal. App. 4th 1807 (1996).............................................................................12 U.S. v. Alexander, 106 F.3d 874 (9th Cir. 1997) ................................................................................ 7 United States ex rel. Chunie v. Ringrose, 788 F.2d 638 (9th Cir. 1986) ................................................................................ 9 Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 4 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA I. INTRODUCTION The Amended Complaint of Plaintiff Dana M. DiFerdinando is now limited to claims for breach of the duty of good faith and fair dealing and fraud, but it still suffers from the same defects as those in her original Complaint. Plaintiff insists her rights were violated when her employer, Intrexon Corporation, requested that she agree to sign an amended stock option agreement that removed a provision for accelerated vesting of stock options upon termination. Yet, the option plan at issue expressly allowed for amendment of the agreement upon consent and Plaintiff completely understood the import of the amendment, i.e., that she would lose her unvested stock options if she were terminated. Plaintiff also understood that if she refused to consent, she would likely be terminated. Thus, Plaintiff was aware of all material facts at the time she signed the amended stock option agreement. Despite Plaintiff’s concessions that she signed the amended stock options agreement with full knowledge of the terms of the amendment sought and the impact it would have on her unvested options if she were terminated, Plaintiff continues to press her claims of fraud and breach of the covenant of good faith and fair dealing. Neither of these claims is legally viable based on the allegations in the Amended Complaint. To the contrary, Plaintiff’s claims are based on the allegation that Intrexon falsely told her that the original stock option agreement she signed was based on an “incorrect form” because it allowed for vesting upon termination without cause. Plaintiff asserts that this statement was somehow false and that Intrexon concealed the truth, which was that it wanted its agreement to “be free of any provisions which would dilute undistributed shares” and possibly “dissuade investors and funding sources” from investing in the Company. As explained below, Plaintiff’s allegations in no way rise to the level of stating a claim for proving fraudulent concealment. Plaintiff’s allegations do not state claims upon which relief can be granted. As an initial matter, Intrexon had no duty to explain to Plaintiff the purpose behind Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 5 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 2 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA why it wanted to amend the stock option agreement. Second, Intrexon’s alleged explanation that the original form was “incorrect” is consistent with the notion that the offending language required removal to avoid dissuading potential investors. Third, the purpose for the amendment is not material. The only thing material here was the language of the amendment itself and its impact. Plaintiff was fully aware of all these facts. Thus, despite Plaintiff’s attempt to recast her allegations to support claims for breach of the implied covenant of good faith and fair dealing and fraud, the Amended Complaint adds only inconsequential facts that do not sustain those claims. Plaintiff was informed that she had been given a stock option agreement with language unacceptable to Intrexon, and it requested that she agree to sign a new one. Plaintiff was aware of and understood all material facts necessary to make the decision as to whether the sign the amendment. As a result, there is no basis for a claim of fraud or for breach of the duty of good faith and fair dealing. Because both her fraud claim and claim for breach of the implied covenant of good faith and fair dealing rest on the false premise that she was misled about facts that would have resulted in a different outcome, Plaintiff’s claims should be dismissed with prejudice. II. PROCEDURAL HISTORY Plaintiff Dana DiFerdinando originally filed this action in San Diego Superior Court on March 22, 2016. Intrexon removed the action to this Court on July 15, 2016, pursuant to 28 U.S.C. § 1332(a). The initial Complaint included causes of action for: (1) breach of the implied covenant of good faith and fair dealing; (2) common counts; (3) wrongful termination; (4) fraud; and (5) tortious breach of the implied covenant of good faith and fair dealing. Plaintiff’s allegations were based on a theory that she had been wrongfully terminated after agreeing to an amendment of her stock option Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 6 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 3 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA agreement that removed a provision for accelerated vesting in the event of her termination.1 Plaintiff alleged that the amendment had been procured by duress, was made without consideration, and that she had somehow been misled regarding continuation of her employment after the amendment, despite the language of the controlling agreements that specified she was an at-will employee. Intrexon moved to dismiss all of Plaintiff’s causes of action on the basis that she was an at-will employee, was given adequate consideration in the form of continued employment for her agreement to the amendment, was not subjected to duress, and failed to adequately plead fraud. On November 28, 2016, this Court dismissed each of Plaintiff’s causes of action, allowing leave to amend only her claims for breach of the implied covenant of good faith and fair dealing and fraud (the Court’s decision is referred to herein as the “Opinion”). With regard to Plaintiff’s cause of action for breach of the implied covenant of good faith and fair dealing, this Court held that her continued employment sufficed as consideration for the amended stock option agreement and that she voluntarily consented to the modification, though allowed leave to amend. Opinion at 11-12. Plaintiff was also allowed leave to amend her fraud claim, as the lack of any actionable allegations rendered the claim insufficient to withstand the motion to dismiss. Opinion at 13- 14. As detailed below, Plaintiff has attempted to correct these failings through the assertion of just one additional fact: that Intrexon was not fully forthcoming in its reasons for seeking the amendment and that she would not have agreed had she known those reasons. As this allegation provides no grounds for a finding of wrongdoing, Plaintiff’s amended claims of fraud and breach of the implied covenant should be dismissed. 1 The pertinent allegations for this motion are set forth below in Section III. Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 7 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 4 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA III. FACTUAL ALLEGATIONS Plaintiff’s first Amended Complaint is a highly convoluted document filled with inappropriate legal argument, case citations, and a confusing factual narrative. Much like Plaintiff’s original Complaint, the facts alleged are scarce, and once the irrelevant and duplicative allegations and case citations are stripped from the pleading there is no actionable claim. Accepting the factual allegations presented by Plaintiff as true solely for purposes of this motion, though Intrexon denies such events took place, it is apparent that Intrexon at all times abided by the terms of the parties’ various agreements and the law. There was no duty or obligation on the part of Intrexon to announce every possible reason for seeking amendment of the original stock option agreement and the allegedly omitted facts are not material to the terms of the amendment. Indeed, Plaintiff was aware of every material fact - i.e., the terms of the amendment and its effect - at the time she agreed to the amendment. Plaintiff began working for Intrexon in November 2013. Her employment terms were set forth in an offer letter (the “Offer Letter”), dated October 3, 2013, that set her salary and benefits and defined the employment relationship as “at-will” and terminable by either party at any time. 2 Am. Compl. Ex. A at pp. 1-2. The Offer Letter provided that Plaintiff would be hired as the “Chief Information Officer,” with a start date of November 18, 2013. Am. Compl. Ex. A at p. 1. Plaintiff was provided a salary of $300,000, plus potential bonus. Id. The Offer Letter also stated that she was “eligible for a stock option grant of 65,000 shares of Intrexon’s common stock,” which was “subject to the execution of a Stock Option Agreement” that would be provided to her after she began employment. Am. Compl. Ex. A at p. 1. The Offer Letter made clear that 2 Plaintiff’s claim for wrongful termination was dismissed by the Court, see Opinion at 4-7, and she has made clear that she is not pursuing any claim based on her termination. Am. Compl. at 8:3-7. Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 8 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 5 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA “Intrexon retains and reserves the right…to modify any of its policies, practices or programs at its sole discretion and with or without advance notice.” Id. The Offer Letter did not set forth any information concerning whether the stock options would be subject to immediate vesting if Plaintiff’s employment was terminated prior to the four-year vesting period. On December 17, 2013, Plaintiff was provided and she executed an “Incentive Stock Option Agreement” (“2013 Stock Option Agreement”), which was “made pursuant and subject to the provisions of the Company’s 2013 Omnibus Incentive Plan.” Am. Compl. at 3:19- 23, Ex. B at p. 1.3 The 2013 Stock Option Agreement granted to Plaintiff, “subject to the terms and conditions of the Plan and subject further to the terms and conditions set forth herein, the right and option to purchase” up to 65,000 shares of common stock of Intrexon. Am. Compl. Ex. B at p. 1. This grant was an “Award” under the Plan, also referred to as an “Option,” and vested over a period of four years in equal amounts of 25% per year, commencing with Plaintiff’s first anniversary of employment on November 18, 2014. Am. Compl. Ex. B at p. 1; Option Plan at p. 1. This vesting schedule is consistent with the language in the Offer Letter. Am. Compl. Ex. A. The 2013 Stock Option Agreement also provided that the “Option” became “exercisable in full” in the event of a termination without “Cause.” Am. Compl. Ex. B at p. 2. The 2013 Stock Option Agreement reiterated that nothing 3 A full copy of the 2013 Omnibus Incentive Plan (“Option Plan”) is attached as Exhibit 1 to the Declaration of Donald Lehr (“Lehr Dec.”). See Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (a court may consider documents not attached to the Complaint on a motion to dismiss when the plaintiff relies on such documents as a basis for her claim). Here, the Option Plan is expressly referenced and incorporated into the 2013 Stock Option Agreement, which is integral to Plaintiff’s claim. Moreover, Plaintiff has attached one page of the Option Plan to her first Amended Complaint as Exhibit C. Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 9 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 6 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA therein or in the Option Plan created any right of continued employment. Am. Compl. Ex. B at p. 4. The Option Plan also stated that any “Awards,” such as the award of options granted to Plaintiff, could be amended at any time. Option Plan, § 21.02 at p. 30. In particular, Section 21.02 of the Option Plan provided that Intrexon could “amend any outstanding Awards to the extent it deems appropriate; provided, however, that no amendment to an outstanding Award may adversely impair the rights of a Participant without the Participant’s consent.” Option Plan, § 21.02 at p. 30. The Option Plan also reiterated that the participant (Plaintiff) was an employee at will. Option Plan, § 19.01 at p. 35. On March 28, 2014, Intrexon provided Plaintiff with a letter stating that the 2013 Stock Option Agreement had been issued “using an incorrect form of agreement” and requested that she sign an amended agreement. Am. Compl. at 5-6, Exs. D-E. Plaintiff objected to the proposed amendment and initially refused to sign it. Am. Compl. at 5:20-24, 6:16-19. Indeed, Plaintiff alleges that she “protested vehemently to the CEO and CLO.” Am. Compl. at 5:20-24. Plaintiff admits that she understood that the proposed amended stock option agreement removed the provision that provided for immediate vesting of stock options in the event of a termination of her employment without cause and that this represented a change to the 2013 Stock Option Agreement which impaired her rights. Am. Compl. at 5:4-14. Plaintiff was informed by Intrexon that her failure to sign the amended stock option agreement may result in termination of her employment. Am. Compl. at 10:2-4.4 4 In her original Complaint, Plaintiff alleges that she was told she had no choice but to sign the amended stock option agreement or lose her job, and that this was economic duress that vitiated her consent. The Court rejected this argument in its Order granting Intrexon’s motion to dismiss, holding that such facts were not sufficient to support a claim of economic duress. Opinion at 11-12. To the extent Plaintiff continues to imply that she did not voluntarily consent to the amended Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 10 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 7 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA Following these discussions, Plaintiff signed and agreed to be bound by the proposed amended “Incentive Stock Option Agreement” dated March 28, 2014 (the “2014 Stock Option Agreement”), which amended and superseded the prior award, i.e. the 2013 Stock Option Agreement. Am. Compl. Ex. D. The 2014 Stock Option Agreement amended the 2013 Stock Option Agreement by deleting the provision in Section 2(b)(iv) allowing for accelerated vesting of options upon a termination without cause. Cf. Am. Compl. Ex. B at p. 2 with Ex. D at p. 2. The 2014 Stock Option Agreement instead permitted accelerated vesting only in the event of a change in control, death or disability. Am. Compl. Ex. D at pp. 1-2. Intrexon’s Option Plan remained in effect and also governed the 2014 Stock Option Agreement. Lehr Dec. at ¶ 5. Plaintiff concedes that she knew at the time she signed the amendment that the 2014 Stock Option Agreement represented a material change to her award of shares. As Plaintiff alleged at p. 7 of the Amended Complaint: The modified stock option agreement, even though it still provided for the grant and vesting of 65,000 shares of stock, it had a major and material change in the terms and conditions of the original stock option agreement in that, it did not allow for any accelerated vesting upon termination of Plaintiff, “without cause” as did the original stock option agreement did. This was, and is, a material change in the agreement between the parties. Am. Compl. at 7:1-6 (emphasis added and in original). Nevertheless, Plaintiff expressly consented to the modifications in the 2014 Stock Option Agreement and stock option agreement, the Court has rejected this argument, which is now the law of the case. U.S. v. Alexander, 106 F.3d 874, 876 (9th Cir. 1997) (“Under the ‘law of the case’ doctrine, ‘a court is generally precluded from reconsidering an issue that has already been decided by the same court.’”) Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 11 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 8 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA “agree[d] to be bound by” the “terms and conditions” thereof. Am. Compl. Ex D at p. 3. On or about July 12, 2015, after approximately 20 months of employment and 16 months after she signed the 2014 Stock Option Agreement, Plaintiff’s employment was terminated without cause. Am. Compl. at 9:7. Upon termination, Plaintiff had no right to exercise her options with regard to any unvested shares. Am. Compl. Ex. D at p. 2 § 5. However, prior to termination of her employment and after execution of the 2014 Stock Option Agreement, 25% of Plaintiff’s 65,000 options vested in November 2014, pursuant to the terms of the 2014 Stock Option Agreement. Am. Compl. Ex. D. Plaintiff alleges that after July 21, 2015, the date of her termination, she was informed by Intrexon’s Chief Legal Officer, Don Lehr, that the company had sought the amendment of her 2013 Stock Option Agreement because the original agreement was not looked upon favorably by prospective lenders and/or investors and therefore was not acceptable. Am. Compl. at 9:17-21. Plaintiff further avers, without any explanation whatsoever, that had she known “the true reasons,” she would not have signed the 2014 Stock Option Agreement. Am. Compl. at 11:6-9. Based upon these allegations, which have no connection whatsoever to her alleged damages, i.e., the loss of her unvested shares, Plaintiff has filed her Amended Complaint asserting claims for (1) a breach of the implied covenant of good faith and fair dealing and (2) fraud. IV. FRCP 12(B)(6) REQUIRES ALLEGATIONS SUPPORTING A PLAUSIBLE CLAIM FOR RELIEF This Court dismissed with prejudice three of Plaintiff’s five original causes of action, but she was provided another opportunity to state claims for breach of the implied covenant of good faith and fair dealing and fraud. Yet, Plaintiff’s Amended Complaint still misses the mark and both of these causes of action should be dismissed. Pursuant to Federal Rule of Civil Procedure 8(a)(2), a pleading must Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 12 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 9 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009). The Complaint must therefore “give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955 (2007) (internal quotations omitted). In determining the propriety of dismissal under Federal Rule of Civil Procedure 12(b)(6), a Complaint must contain either direct or inferential allegations respecting all material elements necessary to sustain recovery under some viable legal theory. Id. at 562. In ruling upon a motion to dismiss, a Court may consider, among other things, the Complaint, any exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988). On a motion to dismiss, the factual allegations of the Complaint must be accepted as true, see Cruz v. Beto, 405 U.S. 319, 322, 92 S. Ct. 1079 (1972), giving plaintiff the benefit of every reasonable inference to be drawn from the “well- pleaded” allegations of the complaint.5 Retail Clerks Int’l Ass’n v. Schermerhorn, 373 U.S. 746, 753 n. 6, 83 S. Ct. 1461 (1963). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. Nevertheless, the court “need not assume the truth of legal conclusions cast in the form of factual allegations.” United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n. 2 (9th Cir. 1986). A pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. Additionally, it is inappropriate to assume that the plaintiff “can prove facts that it has not alleged or that the defendants have violated 5 Though Intrexon has treated Plaintiff’s allegations as true for purposes of this motion, Intrexon denies any allegations concerning alleged misrepresentations or omissions. Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 13 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 10 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA the…laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526, 103 S. Ct. 897 (1983). While Federal Rule of Civil Procedure 8(a) does not require detailed factual allegations, “it demands more than an unadorned, the-defendant-unlawfully- harmed-me accusation.” Iqbal, 556 U.S. at 678. Application of these principles to the Amended Complaint demonstrates that Plaintiff’s claims are not viable and do not provide a basis for relief. V. PLAINTIFF FAILS TO STATE A VALID CAUSE OF ACTION UNDER FRCP 12(B)(6) Plaintiff’s first Amended Complaint rests entirely on the theory that Intrexon did not provide her with a full explanation of the reasons why it considered the 2013 Stock Option Agreement to be “an incorrect form of agreement,” and why Intrexon felt there was a need for the 2014 Stock Option Agreement. See Am. Compl. Ex. E (March 28, 2014 letter from Intrexon stating that “In reviewing our internal files, we found that a number of stock options were inadvertently issued using an incorrect form of agreement.”). Plaintiff does not, however, dispute that she understood the terms of the 2014 Stock Option Agreement and how it would affect her interests. Plaintiff only claims that she was not told the “true motivation” for the amendment, which she alleges was to have the stock option agreements “free of any provisions which would dilute undistributed shares or would require further payout reserves,” but this purpose could not have been more obvious. Am. Compl. at 5:27-28, 6:1-3. Removal of accelerated vesting provisions from a stock option agreement will necessarily reduce potential dilutive impact. Moreover, Plaintiff does not allege how receiving more information about the purpose behind the amendment would have had any effect on her decision. Indeed, this allegation is not plausible, particularly in light of the inconsequential nature of the additional facts alleged and her concession that she did not want to sign the amendment, but did so only because she “had no choice” or she would lose her job. Am. Compl. at Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 14 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 11 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA 6:21. In light of all of these allegations, Plaintiffs claims cannot survive. A. Plaintiff’s Allegations Lack Any Indicia of Fraud The revised fraud claim boils down to a simple premise: In March 2014 Intrexon informed Plaintiff that her 2013 Stock Option Agreement had been issued on an “incorrect form,” that she was one of a few holdouts, and that she could lose her job if she refused to sign an amended agreement. Am. Compl. at 6. Plaintiff, aware of the impact on her unvested options should her employment be terminated before the full four-year vesting period, complained “vehemently” to Intrexon about the proposed change and initially refused to sign the agreement, but eventually acquiesced because she “had no choice.” Am. Compl. at 5. When Plaintiff’s employment was terminated nearly a year and a half later, she was unable to exercise the unvested portion of her stock option grant. Plaintiff now alleges that the “true” reason for the amendment was that Intrexon wanted its stock option agreement to be “free of any provisions which would dilute undistributed shares: and therefore “dissuade investors and funding sources” from investing in Intrexon. Am. Compl. at 5:27-6:3. Plaintiff claims that had she known the true reason for the amendment, she would not have signed the 2014 Stock Option Agreement. Am. Compl. at 11:8-9. Not one of these facts supports a claim for fraud. In order to establish a prima facie case for fraud, Plaintiff’s allegations must show: (1) a misrepresentation, (2) scienter, (3) intent to defraud, (4) justifiable reliance, and (5) damages. Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). Rule 9(b) of the Federal Rules of Civil Procedure requires that, in all averments of fraud, the circumstances constituting fraud be pleaded with particularity. See In re Stac Elec. Litig., 89 F.3d 1399, 1405 (9th Cir. 1996). In a fraud action based on concealment, the plaintiff must demonstrate the concealment of a material fact. Boschma v. Home Loan Center, Inc., 198 Cal.App.4th 230, 248 (2011). While Plaintiff has added one additional fact to her allegations that was not Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 15 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 12 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA in her original Complaint - that Intrexon failed to reveal the true purpose of the amendment - this additional fact does not satisfy the pleading requirements for a cause of action for fraud. There is no viable claim based on Intrexon’s alleged failure to disclose its intention when there was no misrepresentation as to the terms and effect of the amendment. The effect of the proposed amendment (reduction of provisions that may dilute shares) was known at the time Plaintiff agreed to the amendment as she understood that it eliminated accelerated vesting upon termination of employment, so it cannot serve to demonstrate concealment of a material fact. Am. Compl. at 7:1-6 Nor can Plaintiff demonstrate that she was harmed by any alleged concealment. Plaintiff claims that knowing that the provisions of the 2013 Stock Option Agreement were disfavored by potential investors and/or lenders would have changed how she acted and she was therefore harmed by the omission. A non-disclosure claim arises when the defendant makes representations but fails to disclose additional facts which materially qualify the facts disclosed, or which render the disclosure likely to mislead. Roddenberry v. Roddenberry, 44 Cal.App.4th 634, 666 (1996) (internal citations omitted.) An allegation of deception or false statements without a resulting loss is not actionable fraud. “Whatever form it takes, the injury or damage must not only be distinctly alleged but its causal connection with the reliance on the representations must be shown.” Service by Medallion, Inc. v. Clorox Co., 44 Cal. App. 4th 1807, 1818 (1996) (citing 5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 680, p. 131)). Viewed in terms of materiality, “[a] false representation which cannot possibly affect the intrinsic merits of a business transaction must necessarily be immaterial because reliance upon it could not produce injury in a legal sense.” Hill v. Wrather, 158 Cal. App. 2d 818, 824-825 (1958); see also Service by Medallion, Inc., 44 Cal. App. 4th at 1818. Much like Plaintiff’s allegations in this action, the defendant in Hill v. Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 16 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 13 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA Wrather alleged by cross-complaint for fraud that facts omitted from a transaction involving the purchase of shares in a television station would have changed the decision to purchase those shares and the separate decision to grant additional shares to a station employee. 158 Cal. App. 2d 818. The seller of the shares, Hill, allegedly failed to inform the buyers that he was the husband of the station manager, Alvarez, who was also a shareholder. The transaction between buyers and Hill called for the purchase of Hill’s 150 shares in the corporation for $400,000, while a separate agreement between the buyers and Alvarez provided that Alvarez’s holdings in the company would increase from 15% to 50% in consideration of her agreement to continue in the management of the television station. Id. at 822. Upon learning of the marital relationship between Hill and Alvarez, the buyers failed to pay the balance due in connection with the stock sale and filed a cross-complaint for fraud after Hill sued on the promissory note. Id. at 823. The essence of the buyers’ charge of fraud was that they were induced to enter into the transactions in reliance upon an alleged representation that Hill and Alvarez were not married to each other. The buyers further alleged that had they known the true relationship between Hill and Alvarez, they would not have agreed to pay Hill $400,000 for his stock; neither would they have agreed to give Alvarez an additional 35 percent interest in the business in return for her agreement to manage the business. Id. at 824. The court held that that the allegedly concealed and misrepresented relationship between Hill and Alvarez must be regarded as “wholly collateral and immaterial since it had no bearing upon the value of either the property or the services which defendants bargained for.” Id. at 824. The court further noted that the buyers made no allegation that the value of the stock they acquired was less than they paid for it or that Alvarez failed in any respect to perform faithfully and competently the services that she was expected to perform in the management of Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 17 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 14 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA the business. Id. As a result, the buyers “received all that they expected to receive” and the allegations were insufficient to support a cause of action for fraud. Id. at 825. “It is fundamental, of course, that no matter what the nature of the fraud or deceit, unless detriment has been occasioned thereby, plaintiff has no cause of action.” Id. at 825 (citing cases). “It must be shown in the pleading that the damage claimed was sustained by reason of [the] fraud and should show the relation between the fraud and the damage alleged; that is, it must appear that the fraud and the damage sustain to each other the relation of cause and effect.” Id. (quoting Woodson v. Winchester, 16 Cal. App. 472, 476 (1911). The parallels between the Hill case and Plaintiff’s allegations against Intrexon are striking. Plaintiff admits to understanding the terms of the 2014 Stock Option Agreement and its effect on her interests. Nevertheless, Plaintiff now asserts (for the very first time) that Intrexon engaged in fraud because it failed to disclose that the true purpose of the amendment was to have an option agreement that may be more attractive to outside lenders or investors. Plaintiff’s claim fails because the alleged failure to disclose this information did not materially qualify the facts disclosed, nor did it render them misleading. Roddenberry, 44 Cal. App. 4th at 666. Moreover, as in Hill, the failure to disclose this information was not plausibly material to Plaintiff’s decision concerning whether to sign the amended option agreement, nor is it connected in any way to the damages Plaintiff suffered, which is the loss of her unvested options at termination. Here, there was nothing fraudulent about Intrexon’s failure to detail the reasons why it was seeking the amendment. Plaintiff was neither misled nor harmed because, among other things:  The purpose behind the amendment was obvious. Plaintiff alleges that the purpose was to render the option agreement “free of any provisions which would dilute undistributed shares.” Am. Compl. at 5-6. Removal of an accelerated vesting provision decreases the potential Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 18 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 15 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA number of outstanding shares and therefore decreases potential dilution. This was an obvious consequence of the amendment and Plaintiff cannot allege she was misled.  As Plaintiff concedes in her Amended Complaint, the amendment was “a major and material change in the terms and conditions” of the 2013 Stock Option Agreement. Am. Compl. at 7. Thus, Plaintiff had all of the material information she needed to make her decision and the purpose behind the amendment was inconsequential.  As Plaintiff also concedes, she signed the amendment because she “had no choice,” so the purpose behind the amendment is not plausibly material. Plaintiff’s own allegations defeat her conclusions despite her assertions that she would not have signed had she known.  As in Hill, Plaintiff’s allegations that she did not known the true purpose behind the amendment have no relation to the damages allegedly suffered. Plaintiff’s damages are that she lost her unvested options when she was terminated. This was precisely what she complained of when presented with the amendment and Plaintiff cannot now claim that she was defrauded. In sum, when Plaintiff signed the 2014 Stock Option Agreement, she knew what she was giving up - the right to accelerated vesting upon termination. In exchange, Plaintiff continued to be employed and remained employed for 16 more months. Plaintiff’s allegations of fraud do not present a viable cause of action and should be dismissed with prejudice. B. There Can Be No Breach Of The Implied Covenant Of Good Faith And Fair Dealing Where Intrexon Acted As Allowed By The Agreements And Plaintiff Understood The Terms Plaintiff’s cause of action for breach of the implied covenant of good faith and fair dealing must fail because Intrexon acted as allowed by the Option Plan, Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 19 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 16 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA which permits amendment upon consent. Plaintiff alleges that the implied covenant was breached because her consent to the 2014 Stock Option Agreement was not freely given as she did not fully understand Intrexon’s motivation for requesting the amendment, though she admits she understood the terms of the amendment and its effect on her options in the event of a termination. See Am. Compl. at 15:14-15; 11:5-6. Plaintiff alleges that Intrexon was obligated to disclose to her the reason for the requested amendment, though she does not allege any facts showing that knowing the reason behind the amendment had any effect on the outcome. 1. Intrexon’s Actions Matched The Spirit And Letter Of The Agreements The covenant of good faith and fair dealing is implied in every contract to prevent one party from unfairly frustrating the other party’s rights to the benefits of the agreement. All of the following elements must exist to state a claim for breach of the duty of good faith and fair dealing in a contract action: (1) a contractual relationship between the parties; (2) a plaintiff’s performance, or excuse from performance, of the obligations under the contract; (3) an allegation that the defendant unfairly prevented the plaintiff from receiving the benefits that the plaintiff was entitled to receive under the contract; and (4) an allegation that defendant’s conduct resulted in harm to the plaintiff. Guz v. Bechtel National, Inc. 24 Cal. 4th 317, 349-50 (2000). The implied covenant of good faith and fair dealing, however, cannot create or impose obligations that are inconsistent with the terms of the contract. Racine & Laramie, Ltd. v. Dept of Parks & Recreation 11 Cal. App. 4th 1026, 1032 (1992) (“the implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated in the contract.”). Accordingly, if a party acts in a manner that is permitted by the terms of the contract, there can be no breach of the implied covenant of good faith and fair dealing. Id.; see also Carma Developers (Cal.), Inc. v. Marathon Development Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 20 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 17 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA California, Inc., 2 Cal. 4th 342, 374 (1992) (“We are aware of no reported case in which a court has held the covenant of good faith may be read to prohibit a party from doing that which is expressly permitted by an agreement. On the contrary, as a general matter, implied terms should never be read to vary express terms. ‘The general rule [regarding the covenant of good faith] is plainly subject to the exception that the parties may, by express provisions of the contract, grant the right to engage in the very acts and conduct which would otherwise have been forbidden by an implied covenant of good faith and fair dealing….As to acts and conduct authorized by the express provisions of the contract, no covenant of good faith and fair dealing can be implied which forbids such acts and conduct. And if defendants were given the right to do what they did by the express provisions of the contract there can be no breach.’”) (quoting VTR, Inc. v. Goodyear Tire & Rubber Co., 303 F.Supp. 773, 777-778 (S.D.N.Y. 1969)). Though Plaintiff claims Intrexon acted “unfairly” in seeking the amendment, she admits that Intrexon’s actions were permitted by the terms of the Option Plan. Am. Compl. at 12:3-7. Plaintiff appears to argue that Intrexon could only seek amendment if it offered her something more than continued employment, asserting that it is “absurd” to hold her to the signing of the 2014 Stock Option Agreement “when she had no choice but to sign it in order to maintain her employment, even if it was at-will.” Am. Compl. at 11-14. As this Court previously found, however, no separate consideration was required beyond “the availability of continued employment,” which Plaintiff received. Opinion at 9-11. Moreover, the Option Plan, which was incorporated into both the 2013 and 2014 Stock Option Agreements, provides that the option award can be amended by consent, even to the detriment of the participant. Option Plan, § 21.02 at p. 30. By attaching Exhibit D to the Complaint, Plaintiff has demonstrated that she consented to the new, modified agreement, and that Intrexon, by obtaining her consent to the modifications, complied with the terms of the 2013 Stock Option Agreement and Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 21 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 18 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA the Option Plan. No separate consideration was required. See Opinion at 9-11. The signed 2014 Stock Option Agreement evinces Plaintiff’s consent to amend and modify the 2013 Stock Option Agreement, including the removal of her right to accelerate vesting of all options upon a termination without cause. The Option Plan expressly allowed such a modification. The fact that Plaintiff may have had to choose among several options that she did not find optimal and may not have known all of the reasons for Intrexon’s decision to seek amendment does not vitiate her consent. Plaintiff could have refused to sign the modified stock option agreement, been terminated without cause as a result, and she would have received accelerated vesting of all her options, just as expressly permitted under the Offer Letter and the 2013 Stock Option Agreement. See Foley v. Interactive Data Corp., 47 Cal. 3d 654, 698 n.39 (“the implied covenant protects only the parties’ right to receive the benefit of their agreement”). Instead, Plaintiff chose to sign the modified agreement, maintain her employment, and accept the benefits of the 2014 Stock Option Agreement, including the 25% of the options (16,250 options) that vested on November 18, 2014. Compl. Ex. D at p. 1 (reflecting in Section 2(b)(i) that options vested at the rate of 25% per year commencing November 18, 2014). Plaintiff has alleged no facts that would allow the Court to infer that her consent, as expressed by her signature on the 2014 Stock Option Agreement and her explicit acceptance of its terms, was involuntarily given. The Court has already found that she voluntarily consented to the 2014 Stock Option Agreement. See Opinion at 11-12. That Plaintiff was allegedly faced with a choice between losing her job (and collecting under the terms of the 2013 Option Agreement) or amending her award is insufficient to support a claim for duress or other coercion sufficient to void her consent. Id.; see, e.g., Osanitsch v. Macaroni PLC, 2009 U.S. Dist. LEXIS 118332, *15 (N.D. Cal. Dec. 21, 2009) (economic duress applies only in circumstances where a “wrongful act” has been committed that left a reasonably prudent person “no reasonable alternative” and holding that “the fact that a plaintiff Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 22 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 19 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA feels economic pressure to sign an agreement does not raise any inferences about a defendant’s conduct, much less their wrongful conduct”). 2. Lack Of Information Does Not Provide An Actionable Basis For A Claim of Breach Of The Implied Covenant As detailed above in Section V.A., Plaintiff’s admissions that she was not “deceived” by the initial communication regarding the effect of the amendment and that she was damaged in precisely the way she feared when she signed the amendment serve to bar any claim of breach of the implied covenant based on fraud or deceit. Hill, 158 Cal. App. 2d at 824. Plaintiff states that upon receiving the request to sign the amended agreement, she contacted Intrexon’s Chief Financial Officer and Chief Legal Officer and refused to sign the amendment due to the elimination of accelerated vesting. However, once she understood that may lose her job if she refused to sign, she signed the amended agreement. Am. Compl. at 11:5-8. These facts demonstrate that Plaintiff’s voluntary consent was not the product of fraud or deceit. She understood the impact of the amendment and recognized Intrexon was authorized by the Option Plan to seek the amendment. Am. Compl. at 14:1-2. The requested amendment complied with the terms of the controlling agreements and Plaintiff was fully informed as to the terms of the amendment. Therefore, there was no breach of the covenant of good faith and fair dealing as Intrexon acted within the express terms of the agreement and Plaintiff consented to the amendment knowing exactly what the risks were. As neither economic duress nor the alleged withholding of the “true” reason for seeking the amendment can form the basis for a claim for breach of the implied covenant of good faith and fair dealing, this claim must fail. It was only after Plaintiff’s employment was terminated did she regret her choice and that fact, while unfortunate, is insufficient to form the basis for a cause of action for relief. Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 23 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30145606v1 - 20 - MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA VI. CONCLUSION Plaintiff seeks through her Amended Complaint to regain that which she contractually agreed to give up: full vesting of the remainder of her share options. Plaintiff’s belief that she was treated unfairly because immaterial information was allegedly withheld from her is insufficient grounds for any claims of breach or fraud. Intrexon abided by all of the terms of the parties’ agreements, causing no wrongful harm to Plaintiff. Accordingly, Plaintiff’s Amended Complaint should be dismissed in its entirety. Dated: January 10, 2017 TROUTMAN SANDERS LLP By: /s/ Wendy Sugg Wendy Sugg Attorney for Defendant INTREXON CORPORATION Case 3:16-cv-01826-BTM-JMA Document 12-1 Filed 01/10/17 Page 24 of 24 T R O U T M A N S A N D E R S L L P 5 P A R K P L A Z A S U IT E 1 4 0 0 IR V IN E , C A 9 2 6 1 4 -2 5 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Active 30143546v1 DECLARATION OF DONALD LEHR IN SUPPORT OF MOTION TO DISMISS 3:16-CV-01826-BTM-JMA Wendy Sugg, Bar No. 223335 wendy.sugg@troutmansanders.com TROUTMAN SANDERS LLP 5 Park Plaza, Suite 1400 Irvine, CA 92614-2545 Telephone: 949.622.2700 Facsimile: 949.622.2739 Attorney for Defendant INTREXON CORPORATION UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA DANA M. DI FERDINANDO, Plaintiff, v. INTREXON CORPORATION, and DOES 1-100, Defendants. Case No. 3:16-CV-01826-BTM-JMA DECLARATION OF DONALD LEHR IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT [Filed concurrently with: Notice of Motion and Motion; and Memorandum of Points and Authorities] Date: February 24, 2017 Time: 11:00 a.m. Place: Courtroom 15B Judge: Hon. Barry Ted Moskowitz PER CHAMBERS NO ORAL ARGUMENT UNLESS DIRECTED BY THE COURT Case 3:16-cv-01826-BTM-JMA Document 12-2 Filed 01/10/17 Page 1 of 65 Case 3:16-cv-01826-BTM-JMA Document 12-2 Filed 01/10/17 Page 2 of 65 TABLE OF CONTENTS - EXHIBITS TO DECLARATION OF DONALD LEHR Exhibit Page Ex. 1 - Intrexon's 2013 Omnibus Incentive Plan 4 Case 3:16-cv-01826-BTM-JMA Document 12-2 Filed 01/10/17 Page 3 of 65 EXHIBIT 1 Case 3:16-cv-01826-BTM-JMA Document 12-2 Filed 01/10/17 Page 4 of 65 EX-10.2 9 d551077dex102.htm EX-10.2 EXHIBIT 10.2 INTREXON CORPORATION 2013 OMNIBUS INCENTIVE PLAN EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 1 of 61 7/20/2016 4:34 PM Ex. 1 Page 05 Case 3:16-cv-01826-BTM-JMA Document 12-2 Filed 01/10/17 Page 5 of 65 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS 1 1.01 409A Award 1 1.02 Affiliate 1 1.03 Agreement 1 1.04 Award 1 1.05 Board 1 1.06 Cash Award 1 1.07 Cause 1 1.08 Change in Control 2 1.09 Code 4 1.10 Committee 4 1.11 Common Stock 4 1.12 Company 4 1.13 Control Change Date 4 1.14 Corresponding SAR 4 1.15 Disability 5 1.16 Dividend Equivalent 5 1.17 Exchange Act 5 1.18 Fair Market Value 5 1.19 Full Value Award 5 1.20 Incentive Award 5 1.21 Incumbent Board 6 1.22 Initial Value 6 1.23 Named Executive Officer 6 1.24 Non-409A Award 6 1.25 Option 6 1.26 Other Stock-Based Award 7 1.27 Participant 7 1.28 Plan 7 1.29 Person 7 1.30 Prior Incentive Plan 7 1.31 Restricted Stock Award 7 1.32 Restricted Stock Unit 7 1.33 Retirement 8 1.34 SAR 8 1.35 Ten Percent Shareholder 8 1.36 Termination Date 8 ARTICLE II PURPOSES 8 ARTICLE III TYPES OF AWARDS 8 i EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 2 of 61 7/20/2016 4:34 PM Ex. 1 Page 06 Case 3:16-cv-01826-BTM-JMA Document 12-2 Filed 01/10/17 Page 6 of 65 ARTICLE IV ADMINISTRATION 9 4.01 General Administration 9 4.02 Delegation of Authority 9 4.03 Indemnification of Committee 10 ARTICLE V ELIGIBILITY 10 ARTICLE VI COMMON STOCK SUBJECT TO PLAN 11 6.01 Common Stock Issued 11 6.02 Aggregate Limit 11 6.03 Individual Limit 12 6.04 Share Counting 13 ARTICLE VII OPTIONS 13 7.01 Grant 13 7.02 Option Price 13 7.03 Maximum Term of Option 14 7.04 Exercise 14 7.05 Payment 14 7.06 Stockholder Rights 15 7.07 Disposition of Shares 15 7.08 No Liability of Company 15 ARTICLE VIII SARS 15 8.01 Grant 15 8.02 Maximum Term of SAR 15 8.03 Exercise 16 8.04 Settlement 16 8.05 Stockholder Rights 16 ARTICLE IX RESTRICTED STOCK AWARDS 16 9.01 Award 16 9.02 Payment 16 9.03 Vesting 17 9.04 Maximum Restriction Period 17 9.05 Stockholder Rights 17 ARTICLE X RESTRICTED STOCK UNITS 18 10.01 Grant 18 10.02 Earning the Award 18 10.03 Maximum Restricted Stock Unit Award Period 19 10.04 Payment 19 10.05 Stockholder Rights 19 ARTICLE XI INCENTIVE AWARDS 20 11.01 Grant 20 ii EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 3 of 61 7/20/2016 4:34 PM Ex. 1 Page 07 Case 3:16-cv-01826-BTM-JMA Document 12-2 Filed 01/10/17 Page 7 of 65 11.02 Earning the Award 20 11.03 Maximum Incentive Award Period 20 11.04 Payment 20 11.05 Stockholder Rights 20 ARTICLE XII OTHER STOCK-BASED AWARDS 21 12.01 Other Stock-Based Awards 21 12.02 Bonus Stock and Awards in Lieu of Other Obligations 21 ARTICLE XIII DIVIDEND EQUIVALENTS AND CASH AWARDS 22 13.01 Dividend Equivalents 22 13.02 Cash Awards 22 ARTICLE XIV TERMS APPLICABLE TO ALL AWARDS 22 14.01 Written Agreement 22 14.02 Nontransferability 23 14.03 Transferable Awards 23 14.04 Participant Status 23 14.05 Change in Control 24 14.06 Stand-Alone, Additional, Tandem and Substitute Awards 25 14.07 Form and Timing of Payment; Deferrals 26 14.08 Time and Method of Exercise 26 14.09 Effect of Termination Date on Options, SARs and Other Stock-Based Awards in the Nature of Purchase Rights 27 14.10 Non U. S. Participants 29 ARTICLE XV QUALIFIED PERFORMANCE-BASED COMPENSATION 29 15.01 Performance Conditions 29 15.02 Establishing the Amount of the Award 30 15.03 Earning the Award 30 15.04 Performance Awards 31 ARTICLE XVI ADJUSTMENT UPON CHANGE IN COMMON STOCK 31 16.01 General Adjustments 31 16.02 No Adjustments 32 16.03 Substitute Awards 32 16.04 Limitation on Adjustments 32 ARTICLE XVII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES 33 17.01 Compliance 33 17.02 Postponement of Exercise or Payment 33 17.03 Forfeiture or Reimbursement 34 iii EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 4 of 61 7/20/2016 4:34 PM Ex. 1 Page 08 Case 3:16-cv-01826-BTM-JMA Document 12-2 Filed 01/10/17 Page 8 of 65 ARTICLE XVIII LIMITATION ON BENEFITS 34 ARTICLE XIX GENERAL PROVISIONS 35 19.01 Effect on Employment and Service 35 19.02 Unfunded Plan 35 19.03 Rules of Construction 36 19.04 Tax Withholding and Reporting 36 19.05 Code Section 83(b) Election 36 19.06 Reservation of Shares 36 19.07 Governing Law 37 19.08 Other Actions 37 19.09 Repurchase of Common Stock 37 19.10 Other Conditions 37 19.11 Forfeiture Provisions 38 19.12 Legends; Payment of Expenses 38 19.13 Repricing of Awards 38 19.14 Right of Setoff 39 19.15 Fractional Shares 39 ARTICLE XX CLAIMS PROCEDURES 39 20.01 Initial Claim 39 20.02 Appeal of Claim 39 20.03 Time to File Suit 40 ARTICLE XXI AMENDMENT 40 21.01 Amendment of Plan 40 21.02 Amendment of Awards 40 ARTICLE XXII SECTION 409A PROVISION 41 22.01 Intent of Awards 41 22.02 409A Awards 41 22.03 Election Requirements 41 22.04 Time of Payment 42 22.05 Acceleration or Deferral 42 22.06 Distribution Requirements 43 22.07 Key Employee Rule 43 22.08 Distributions Upon Vesting 43 22.09 Scope and Application of this Provision 43 ARTICLE XXIII EFFECTIVE DATE OF PLAN 44 ARTICLE XXIV DURATION OF PLAN 44 iv EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 5 of 61 7/20/2016 4:34 PM Ex. 1 Page 09 Case 3:16-cv-01826-BTM-JMA Document 12-2 Filed 01/10/17 Page 9 of 65 ARTICLE I DEFINITIONS 1.01 409A Award 409A Award means an Award that is intended to be subject to Section 409A of the Code. 1.02 Affiliate Affiliate, as it relates to any limitations or requirements with respect to incentive stock options, means any “subsidiary” or “parent” corporation (as such terms are defined in Code Section 424) of the Company. Affiliate otherwise means any entity that is part of a controlled group of corporations or is under common control with the Company within the meaning of Code Sections 1563(a), 414(b) or 414(c), except that, in making any such determination, fifty percent (50%) shall be substituted for eighty percent (80%) under such Code Sections and the related regulations. 1.03 Agreement Agreement means a written or electronic agreement (including any amendment or supplement thereto) between the Company and a Participant specifying the terms and conditions of an Award granted to such Participant. 1.04 Award Award means an Option, SAR, Restricted Stock Award, Restricted Stock Unit, Incentive Award, Other Stock-Based Award, Dividend Equivalent or Cash Award granted under this Plan. 1.05 Board Board means the Board of Directors of the Company. 1.06 Cash Award Cash Award means an Award stated with reference to a specified dollar amount which, subject to such terms and conditions as may be prescribed by the Committee, entitles the Participant to receive cash from the Company or an Affiliate. 1.07 Cause Cause means “Cause” as such term is defined in any employment or service agreement between the Company or any Affiliate and the Participant except as otherwise determined by the Committee and set forth in the applicable Agreement. If no such employment or service agreement exists or if such employment or service agreement does not contain any such definition, except as otherwise determined by the Committee and set forth in the applicable Agreement, “Cause” means (i) the Participant’s willful and continued failure to comply with the lawful directives of the Board or any supervisory personnel of the Participant; (ii) any criminal -1- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 6 of 61 7/20/2016 4:34 PM Ex. 1 Page 10 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 10 of 65 act or act of dishonesty or willful misconduct by the Participant that has a material adverse effect on the property, operations, business or reputation of the Company or any Affiliate (willful for purposes of this definition, shall mean done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company or any Affiliate); (iii) the material breach by the Participant of the terms of any confidentiality, non-competition, non-solicitation or other agreement that the Participant has with the Company or any Affiliate or of any duty the Participant owes the Company or any Affiliate, (iv) acts by the Participant of willful malfeasance or gross negligence in a matter of material importance to the Company or any Affiliate, (v) any act of fraud, embezzlement, theft, misappropriation or misuse by the Participant of the funds or property of the Company or any Affiliate, (vi) any falsification by the Participant of any record or report in connection with the Participant’s duties and obligations to the Company or any Affiliate, (vii) the Participant’s sexual harassment of any other employees of the Company or any Affiliate, (viii) the breach by the Participant of any fiduciary duty against the Company or any Affiliate, (ix) the Participant being indicted for a felony that has a material adverse effect on the property, operations, business or reputation of the Company or any Affiliate or being convicted of any other felony or plea of guilty or nolo contendre to any other felony or (x) any other action that may damage the image of the Company’s or an Affiliate’s business or their or its standing in the industry, including but not limited to the possession, use or sale of illegal drugs, the abuse of alcohol or prescribed medication, or any other act or omission which the Company or an Affiliate considers to be a violation of Federal, state or local law or regulations other than a simple traffic violation. For purposes of the Plan, other than where the definition of Cause is determined under any employment or service agreement between the Company or any Affiliate and the Participant, in which case such employment or service agreement shall control, in no event shall any termination of employment or service be deemed for Cause unless the Company’s Chief Executive Officer concludes that the situation warrants a determination that the Participant’s employment or service terminated for Cause; in the case of the Chief Executive Officer or any member of the Board, any determination that the Chief Executive Officer’s employment or the Board member’s service terminated for Cause shall be made by the Board acting without the Chief Executive Officer or the Board member, as applicable. 1.08 Change in Control Change in Control means the occurrence of any of the following events except as otherwise determined by the Committee and set forth in the applicable Agreement: (a) The accumulation in any number of related or unrelated transactions by any Person of beneficial ownership (as such term is used in Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of the combined voting power of the Company’s voting stock; provided that for purposes of this subsection (a), a Change in Control will not be deemed to have occurred if the accumulation of more than fifty percent (50%) of the voting power of the Company’s voting stock results from any acquisition of voting stock (i) directly from the Company that is approved by the Incumbent Board, (ii) by the Company, (iii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate, or (iv) by any Person pursuant to a merger, consolidation, reorganization or other transaction (a “Business Combination”) that would not cause a Change in Control under subsections (b), (c) or (d) below; or -2- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 7 of 61 7/20/2016 4:34 PM Ex. 1 Page 11 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 1 of 65 (b) Consummation of a Business Combination, unless, immediately following that Business Combination, (i) all or substantially all of the Persons who were the beneficial owners of the voting stock of the Company immediately prior to that Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and more than fifty percent (50%) of the combined voting power of the then outstanding voting stock entitled to vote generally in the election of directors of the entity resulting from that Business Combination (including, without limitation, an entity that as a result of that Business Combination 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 relative to each other as their ownership, immediately prior to that Business Combination, of the voting stock of the Company, or (c) A sale or other disposition of all or substantially all of the assets of the Company, except pursuant to a Business Combination that would not cause a Change in Control under subsections (b) above or (d) below; or (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that would not cause a Change in Control under subsections (b) and (c) above; or (e) The acquisition by any Person, directly or indirectly, of the power to direct or cause the direction of the management and policies of the Company (i) through the ownership of securities which provide the holder with such power, excluding voting rights attendant with such securities, or (ii) by contract; provided that a Change in Control will not be deemed to have occurred if such power was acquired (x) directly from the Company in a transaction approved by the Incumbent Board, (y) by an employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate or (z) by any person pursuant to a Business Combination that would not cause a Change in Control under subsections (b), (c) or (d) above; or (f) During any period of two consecutive years, the Incumbent Board ceases to constitute a majority of the Board. Notwithstanding the foregoing, a Change in Control shall not include any accumulation of beneficial ownership or any Business Combination pursuant to which more than fifty percent (50%) of the beneficial ownership of the combined voting power of the Company’s voting stock is owned by (i) Randal J. Kirk, his spouse, his descendants and the spouses of his descendants, (ii) trusts and other entities established generally for the benefit of Randal J. Kirk, his spouse, his descendants and the spouses of his descendants, (iii) NEWVA Capital Partners, LP, New River Management IV, LP., New River Management V, LP, Kirkfield, L.L.C., RJK, L.L.C., Third Security Staff 2001 LLC and any related funds, investors or entities, and/or (iv) any entities established by any of the foregoing. Notwithstanding the foregoing, a Change in Control shall only be deemed to have occurred with respect to a Participant in connection with the time or form of payment of the Participant’s 409A Award (or as otherwise required for the 409A Award to be in compliance with Section 409A of the Code) if the Change in Control otherwise constitutes a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of -3- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 8 of 61 7/20/2016 4:34 PM Ex. 1 Page 12 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 12 of 65 the assets of the Company, within the meaning of Section 409A of the Code (otherwise, with respect to vesting of the 409A Award and any other terms of the 409A Award that do not require a Change in Control to comply with its meaning under Section 409A of the Code for the 409A Award to be in compliance with Section 409A of the Code, Change in Control shall have the same meaning as described above). 1.09 Code Code means the Internal Revenue Code of 1986 and any amendments thereto. 1.10 Committee Committee means the Compensation Committee of the Board or such other Committee as the Board may appoint from time to time to administer the Plan, or the Board itself if no Compensation Committee or other appointed Committee exists. If such Compensation Committee or other Committee exists, if and to the extent deemed necessary by the Board, such Committee shall consist of two or more directors, all of whom are (i) “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act, (ii) “outside directors” within the meaning of Code Section 162(m) and (iii) independent directors under the rules of the principal stock exchange on which the Company’s securities are then traded. 1.11 Common Stock Common Stock means the common stock of the Company, no par value per share, or such other class or kind of shares or other securities resulting from the application of Article XVI, as applicable. 1.12 Company Company means Intrexon Corporation, a Virginia corporation, and any successor thereto. 1.13 Control Change Date Control Change Date means the date on which a Change in Control occurs. If a Change in Control occurs on account of a series of transactions, the “Control Change Date” is the date of the last of such transactions. 1.14 Corresponding SAR Corresponding SAR means a SAR that is granted in relation to a particular Option and that can be exercised only upon the surrender to the Company, unexercised, of that portion of the Option to which the SAR relates. -4- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 9 of 61 7/20/2016 4:34 PM Ex. 1 Page 13 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 13 of 65 1.15 Disability Disability means, for purposes of an incentive stock option, a physical, mental or other impairment within the meaning of Section 22(e)(3) of the Code and, for all other purposes, any physical or mental condition that would qualify the Participant for a disability under any long-term disability plan maintained by the Company or any Affiliate that is applicable to such Participant, except as otherwise determined by the Committee and set forth in the applicable Agreement. Notwithstanding the foregoing, however, to the extent necessary for any 409A Award to be in compliance with Section 409A of the Code, Disability, with respect to the time or form of payment of a Participant’s 409A Award (or as otherwise required for the 409A Award to be in compliance with Section 409A of the Code), means the Participant is Disabled within the meaning of Section 409A of the Code. 1.16 Dividend Equivalent Dividend Equivalent means the right, granted under the Plan, to receive cash, shares of Common Stock, other Awards or other property equal in value to all or a specified portion of dividends paid with respect to a specified number of shares of Common Stock. 1.17 Exchange Act Exchange Act means the Securities Exchange Act of 1934, as amended. 1.18 Fair Market Value Fair Market Value of a share of Common Stock means, on any given date, the fair market value of a share of Common Stock as the Committee, in its discretion, shall determine; provided, however, that the Committee shall determine Fair Market Value without regard to any restriction other than a restriction which, by its terms, will never lapse and, if the shares of Common Stock are traded on any national stock exchange or quotation system, the Fair Market Value of a share of Common Stock shall be the closing price of a share of Common Stock as reported on such stock exchange or quotation system on such date, or if the shares of Common Stock are not traded on such stock exchange or quotation system on such date, then on the next preceding day that the shares of Common Stock were traded on such stock exchange or quotation system, all as reported by such source as the Committee shall select. The Fair Market Value that the Committee determines shall be final, binding and conclusive on the Company, any Affiliate and each Participant. Fair Market Value relating to the exercise price, Initial Value, or purchase price of any Non-409A Award that is an Option, SAR or Other Stock-Based Award in the nature of purchase rights shall conform to the requirements for exempt stock rights under Section 409A of the Code. 1.19 Full Value Award Full Value Award means an Award other than an Option, SAR or Other Stock-Based Award in the nature of purchase rights. 1.20 Incentive Award Incentive Award means an Award stated with reference to a specified dollar amount or number of shares of Common Stock which, subject to such terms and conditions as may be prescribed by the Committee, entitles the Participant to receive shares of Common Stock, cash or a combination thereof from the Company or an Affiliate. -5- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 10 of 61 7/20/2016 4:34 PM Ex. 1 Page 14 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 14 of 65 1.21 Incumbent Board Incumbent Board means a Board of Directors at least a majority of whom consist of individuals who either are (a) members of the Company’s Board at the beginning of any period of two consecutive years or (b) members who become members of the Company’s Board subsequent to such time whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which that person is named as a nominee for director, without objection to that nomination), but excluding, for that purpose, any individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) 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 Board of Directors. 1.22 Initial Value Initial Value means, with respect to a Corresponding SAR, the Option price per share of the related Option and, with respect to a SAR granted independently of an Option, the amount determined by the Committee on the date of grant which shall not be less than the Fair Market Value of one share of Common Stock on the date of grant, subject to Sections 14.06 and 16.03 with respect to substitute Awards 1.23 Named Executive Officer Named Executive Officer means a Participant who, as of the last day of a taxable year, is the Chief Executive Officer of the Company (or is acting in such capacity) or one of the three highest compensated officers of the Company (other than the Chief Executive Officer or the Chief Financial Officer) or is otherwise one of the group of “covered employees,” as defined in the regulations promulgated under Code Section 162(m). 1.24 Non-409A Award Non-409A Award means an Award that is not intended to be subject to Section 409A of the Code. 1.25 Option Option means a stock option that entitles the holder to purchase from the Company a stated number of shares of Common Stock at the price set forth in an Agreement. -6- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 11 of 61 7/20/2016 4:34 PM Ex. 1 Page 15 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 15 of 65 1.26 Other Stock-Based Award Other Stock-Based Award means an Award granted to the Participant under Article XII of the Plan. 1.27 Participant Participant means an employee of the Company or an Affiliate, a member of the Board or Board of Directors of an Affiliate (whether or not an employee), a Person who provides services to the Company or an Affiliate and any entity which is a wholly-owned alter ego of such employee, member of the Board or Board of Directors of an Affiliate or Person who provides services and who satisfies the requirements of Article V and is selected by the Committee to receive an Award. 1.28 Plan Plan means this Intrexon Corporation 2013 Omnibus Incentive Plan, in its current form and as hereafter amended. 1.29 Person Person means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or any other entity of any kind. 1.30 Prior Incentive Plan Prior Incentive Plan means the Company’s Amended and Restated 2008 Equity Incentive Plan. 1.31 Restricted Stock Award Restricted Stock Award means shares of Common Stock granted to a Participant under Article IX. 1.32 Restricted Stock Unit Restricted Stock Unit means an Award, stated with respect to a specified number of shares of Common Stock, that entitles the Participant to receive one share of Common Stock (or, as otherwise determined by the Committee and set forth in the applicable Agreement, the equivalent Fair Market Value of one share of Common Stock in cash) with respect to each Restricted Stock Unit that becomes payable under the terms and conditions of the Plan and the applicable Agreement. -7- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 12 of 61 7/20/2016 4:34 PM Ex. 1 Page 16 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 16 of 65 1.33 Retirement Retirement means the termination of Participant’s employment or service with the Company and its Affiliates on or after (i) attaining age sixty-five (65) or (ii) attaining age fifty-five (55) and accumulating ten (10) years of service, except as otherwise determined by the Committee and set forth in the applicable Agreement. For this purpose, years of service shall be determined in accordance with the Company’s written policies as determined by the Committee. 1.34 SAR SAR means a stock appreciation right that in accordance with the terms of an Agreement entitles the holder to receive cash or a number of shares of Common Stock, as determined by the Committee and set forth in the applicable Agreement, based on the increase in the Fair Market Value of the shares underlying the stock appreciation right during a stated period specified by the Committee over the Initial Value. References to “SARs” include both Corresponding SARs and SARs granted independently of Options, unless the context requires otherwise. 1.35 Ten Percent Shareholder Ten Percent Shareholder means any individual who (considering the stock attribution rules described in Code Section 424(d)) owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate. 1.36 Termination Date Termination Date means the day on which a Participant’s employment or service with the Company and its Affiliates terminates or is terminated. ARTICLE II PURPOSES The Plan is intended to assist the Company and its Affiliates in recruiting and retaining individuals with ability and initiative by enabling such Persons to participate in the future success of the Company and its Affiliates by aligning their interests with those of the Company and its stockholders. ARTICLE III TYPES OF AWARDS The Plan is intended to permit the grant of Options qualifying under Code Section 422 (“incentive stock options”) and Options not so qualifying, SARs, Restricted Stock Awards, Restricted Stock Units, Incentive Awards, Other Stock-Based Awards, Dividend Equivalents and Cash Awards in accordance with the Plan and procedures that may be established by the Committee. No Option that is intended to be an incentive stock option shall be invalid for failure to qualify as an incentive stock option. The proceeds received by the Company from the sale of shares of Common Stock pursuant to this Plan may be used for general corporate purposes. -8- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 13 of 61 7/20/2016 4:34 PM Ex. 1 Page 17 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 17 of 65 ARTICLE IV ADMINISTRATION 4.01 General Administration The Plan shall be administered by the Committee. The Committee shall have authority to grant Awards upon such terms (not inconsistent with the provisions of this Plan) as the Committee may consider appropriate. Such terms may include conditions (in addition to those contained in this Plan) on the grant, exercisability, transferability, settlement and forfeitability of all or any part of an Award, among other terms. Notwithstanding any such conditions, the Committee may, in its discretion, accelerate the time at which any Award may be exercised, become transferable or nonforfeitable or be earned and settled including, without limitation, (i) in the event of the Participant’s death, Disability, Retirement or involuntary termination of employment or service (including a voluntary termination of employment or service for good reason) or (ii) in connection with a Change in Control. In addition, the Committee shall have complete authority to interpret all provisions of this Plan including, without limitation, the discretion to interpret any terms used in the Plan that are not defined herein; to prescribe the form of Agreements; to adopt, amend and rescind rules and regulations pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee. Any decision made, or action taken, by the Committee in connection with the administration of this Plan shall be final and conclusive. The members of the Committee shall not be liable for any act done in good faith with respect to this Plan or any Agreement or Award. Unless otherwise provided by the Bylaws of the Company, by resolution of the Board or applicable law, a majority of the members of the Committee shall constitute a quorum, and acts of the majority of the members present at any meeting at which a quorum is present, and any acts approved in writing by all members of the Committee without a meeting, shall be the acts of the Committee. 4.02 Delegation of Authority The Committee may act through subcommittees, in which case the subcommittee shall be subject to and have the authority hereunder applicable to the Committee, and the acts of the subcommittee shall be deemed to be the acts of the Committee hereunder. Additionally, to the extent applicable law so permits, the Committee, in its discretion, may delegate to one or more officers of the Company all or part of the Committee’s authority and duties with respect to Awards to be granted to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act and who are not members of the Board or the Board of Directors of an Affiliate. The Committee may revoke or amend the terms of any delegation at any time but such action shall not invalidate any prior actions of the Committee’s delegate or delegates that were consistent with the terms of the Plan and the Committee’s prior delegation. Notwithstanding the foregoing, however, if and to the extent deemed necessary by the Board, (a) all Awards granted to any individual who is subject to the reporting and other provisions of Section 16 of the Exchange Act shall be made by a Committee comprised solely of two or more directors, all of whom are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act, to the extent necessary to exempt the Award from the short-swing profit rules of -9- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 14 of 61 7/20/2016 4:34 PM Ex. 1 Page 18 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 18 of 65 Section 16(b) of the Exchange Act and (b) all Awards granted to an individual who is a Named Executive Officer shall be made by a Committee comprised solely of two or more directors, all of whom are “outside directors” within the meaning of Code Section 162(m), to the extent necessary to preserve any deduction under Section 162(m) of the Code. However, (a) any Awards granted to any individual who is subject to the reporting and other provisions of Section 16 of the Exchange Act shall not fail to be valid if made other than by a committee comprised solely of two or more directors, all of whom are “non-employee directors” within the meaning of Rule 16(b)-3 under the Exchange Act, and (b) any Awards granted to an individual who is a Named Executive Officer shall not fail to be valid if made other than by a committee comprised solely of two or more directors, all of whom are “outside directors” within the meaning of Code Section 162(m). An Award granted to an individual who is a member of the Committee may be approved by the Committee in accordance with the applicable Committee charters then in effect and other applicable law except that the Committee member must abstain from any action with respect to the Committee member’s own Awards. 4.03 Indemnification of Committee The Company shall bear all expenses of administering this Plan. The Company shall indemnify and hold harmless each Person who is or shall have been a member of the Committee acting as administrator of the Plan, or any delegate of such, against and from any cost, liability, loss or expense that may be imposed upon or reasonably incurred by such Person in connection with or resulting from any action, claim, suit or proceeding to which such Person may be a party or in which such Person may be involved by reason of any action taken or not taken under the Plan and against and from any and all amounts paid by such Person in settlement thereof, with the Company’s approval, or paid by such Person in satisfaction of any judgment in any such action, suit or proceeding against such Person, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. Notwithstanding the foregoing, the Company shall not indemnify and hold harmless any such Person if applicable law or the Company’s Certificate of Incorporation or Bylaws prohibit such indemnification. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such Persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law or otherwise, or under any other power that the Company may have to indemnify such Person or hold him or her harmless. The provisions of the foregoing indemnity shall survive indefinitely the term of this Plan. ARTICLE V ELIGIBILITY Any employee of the Company or an Affiliate (including an entity that becomes an Affiliate after the adoption of this Plan), a member of the Board or the Board of Directors of an Affiliate (including an entity that becomes an Affiliate after the adoption of the Plan) (whether or not such Board or Board of Directors member is an employee), any Person who provides services to the Company or an Affiliate (including an entity that becomes an Affiliate after the adoption of the Plan) and any entity which is a wholly-owned alter ego of such employee, member of the Board or Board of Directors of an Affiliate or other Person who provides services -10- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 15 of 61 7/20/2016 4:34 PM Ex. 1 Page 19 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 19 of 65 is eligible to participate in this Plan if the Committee, in its sole discretion, determines that such Person or entity has contributed significantly or can be expected to contribute significantly to the profits or growth of the Company or any Affiliate or if it is otherwise in the best interest of the Company or any Affiliate for such Person or entity to participate in this Plan. With respect to any Board member who is (i) designated or nominated to serve as a Board member by a stockholder of the Company and (ii) an employee of such stockholder of the Company, then, at the irrevocable election of the employing stockholder, the Person or entity who shall be eligible to participate in this Plan on behalf of the service of the respective Board member shall be the employing stockholder (or one of its Affiliates). To the extent such election is made, the respective Board member shall have no rights hereunder as a Participant with respect to such Board member’s participation in this Plan. An Award may be granted to a Person or entity who has been offered employment or service by the Company or an Affiliate and who would otherwise qualify as eligible to receive the Award to the extent that Person or entity commences employment or service with the Company or an Affiliate, provided that such Person or entity may not receive any payment or exercise any right relating to the Award, and the grant of the Award will be contingent, until such Person or entity has commenced employment or service with the Company or an Affiliate. ARTICLE VI COMMON STOCK SUBJECT TO PLAN 6.01 Common Stock Issued Upon the issuance of shares of Common Stock pursuant to an Award, the Company may deliver to the Participant (or the Participant’s broker if the Participant so directs) shares of Common Stock from its authorized but unissued Common Stock, treasury shares or reacquired shares, whether reacquired on the open market or otherwise. 6.02 Aggregate Limit The maximum aggregate number (the “Maximum Aggregate Number”) of shares of Common Stock which may be subject to Awards under this Plan is 7,000,000 shares of Common Stock. The Maximum Aggregate Number of shares of Common Stock that may be subject to Awards under the Plan may be subject to Options. To the extent shares of Common Stock not issued under an Option must be counted against this limit as a condition to satisfying the rules applicable to incentive stock options, such rule shall apply to the limit on Options granted under the Plan. The Maximum Aggregate Number of shares of Common Stock that may be subject to Awards under the Plan and the maximum number of shares of Common Stock that may be subject to Options under the Plan shall, in each instance, be subject to adjustment as provided in Article XVI, provided, however, that (i) substitute Awards granted under Section 16.03 shall not reduce the Maximum Aggregate Number of shares of Common Stock that may be subject to Awards under the Plan (to the extent permitted by applicable stock exchange rules) and (ii) available shares of stock under a stockholder-approved plan of an acquired company (as -11- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 16 of 61 7/20/2016 4:34 PM Ex. 1 Page 20 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 20 of 65 appropriately adjusted to reflect the transaction) also may be used for Awards under the Plan and shall not reduce the Maximum Aggregate Number of shares of Common Stock that may be subject to Awards under the Plan (subject to applicable stock exchange requirements). No further Awards shall be granted under the Company’s Prior Incentive Plan on and after the effective date of the Plan. 6.03 Individual Limit The maximum number of shares of Common Stock that may be covered by Options, SARs or Other Stock-Based Awards in the nature of purchase rights granted to any one Participant during any calendar year shall be 1,000,000 shares of Common Stock; provided, however, that (i) if the Options, SARs or Other Stock-Based Awards in the nature of purchase rights are denominated in shares of Common Stock but an equivalent amount of cash is delivered in lieu of delivery of shares of Common Stock, the foregoing limit shall be applied based on the methodology used by the Committee to convert the number of shares of Common Stock into cash and (ii) any adjustment in the number of shares of Common Stock or amount of cash delivered to reflect actual or deemed investment experience shall be disregarded. For purposes of the foregoing limit, an Option and its corresponding SAR shall be treated as a single Award. For Full Value Awards that are intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code, no more than 1,000,000 shares of Common Stock may be subject to any such Full Value Awards granted to any one Participant during any calendar year (regardless of whether settlement of the Award is to occur prior to, at the time of, or after the time of vesting); provided, however, that (i) if the Full Value Award is denominated in shares of Common Stock but an equivalent amount of cash is delivered in lieu of delivery of shares of Common Stock, the foregoing limit shall be applied based on the methodology used by the Committee to convert the number of shares of Common Stock into cash and (ii) any adjustment in the number of shares of Common Stock or amount of the cash delivered to reflect actual or deemed investment experience shall be disregarded. For any Awards that are intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and are stated with reference to a specified dollar limit, the maximum amount that may be earned and become payable to any one Participant with respect to any twelve (12)-month performance period shall equal $5,000,000 (pro rated up or down for performance periods that are greater or lesser than twelve (12) months); provided, however, that (i) if the Award is denominated in cash but an equivalent amount of shares of Common Stock are delivered in lieu of delivery of cash, the foregoing limit shall be applied to the cash based on the methodology used by the Committee to convert the cash into shares of Common Stock and (ii) any adjustment in the number of shares of Common Stock or the amount of cash delivered to reflect actual or deemed investment experience shall be disregarded. For any Cash Awards that are intended to constitute annual incentive awards, the maximum amount that may be earned and become payable to any one Participant with respect to any twelve (12)-month period shall equal $5,000,000; provided, however, that (i) if the Cash Award is denominated in cash but an equivalent amount of shares of Common Stock are delivered in lieu of delivery of cash, the foregoing limit shall be applied to the cash based on the methodology used by the Committee to convert the cash into shares of Common Stock and (ii) any adjustment in the number of shares of Common Stock or the amount of cash delivered to reflect actual or -12- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 17 of 61 7/20/2016 4:34 PM Ex. 1 Page 21 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 2 of 65 deemed investment experience shall be disregarded. If an Award that a Participant holds is cancelled or subject to a repricing within the meaning of the regulations under Code Section 162(m) (after shareholder approval as required herein), the cancelled Award shall continue to be counted against the maximum number of shares of Common Stock for which Awards may be granted to the Participant in any calendar year as required under Code Section 162(m). The maximum number of shares that may be granted in any consecutive rolling thirty-six (36)-month period to any Participant shall be subject to adjustment as provided in Article XVI. 6.04 Share Counting Except as set forth below, a share of Common Stock subject to any Award under this Plan shall reduce the Maximum Aggregate Number of shares of Common Stock available for Awards under this Plan, and the maximum number of shares of Common Stock available for Options under this Plan, by one. Except as otherwise provided herein, (i) any shares of Common Stock subject to an Award granted under this Plan which terminates by expiration, forfeiture, cancellation or otherwise, which is settled in cash in lieu of Common Stock or which is exchanged, with the Committee’s permission, for Awards granted under this Plan not involving shares of Common Stock, (ii) shares of Common Stock not issued or delivered as a result of the net exercise or settlement of an outstanding Award granted under this Plan, (iii) shares of Common Stock tendered to pay the exercise or purchase price or withholding taxes relating to an outstanding Award granted under this Plan, (iv) shares of Common Stock repurchased on the open market with the proceeds of the exercise or purchase price of an Award granted under this Plan, and (v) shares of Common Stock under a stock-settled SAR that are not actually issued in connection with settlement of the stock-settled SAR, shall all again be available for Awards under the Plan. ARTICLE VII OPTIONS 7.01 Grant Subject to the eligibility provisions of Article V, the Committee will designate each individual or entity to whom an Option is to be granted and will specify the number of shares of Common Stock covered by such grant and whether the Option is an incentive stock option or a nonqualified stock option. Notwithstanding any other provision of the Plan or any Agreement, the Committee may only grant an incentive stock option to an individual who is an employee of the Company or an Affiliate. An Option may be granted with or without a Corresponding SAR. 7.02 Option Price The price per share of Common Stock purchased on the exercise of an Option shall be determined by the Committee on the date of grant, but shall not be less than the Fair Market Value of a share of Common Stock on the date the Option is granted, subject to Sections 14.06 and 16.03 with respect to substitute Awards. However, if at the time of grant of an Option that is intended to be an incentive stock option, the Participant is a Ten Percent Shareholder, the price per share of Common Stock purchased on the exercise of such Option shall not be less than one hundred ten percent (110%) of the Fair Market Value of a share of Common Stock on the date the Option is granted. -13- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 18 of 61 7/20/2016 4:34 PM Ex. 1 Page 22 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 22 of 65 7.03 Maximum Term of Option The maximum time period in which an Option may be exercised shall be determined by the Committee on the date of grant, except that no Option shall be exercisable after the expiration of ten (10) years from the date such Option was granted (or five (5) years from the date such Option was granted in the event of an incentive stock option granted to a Ten Percent Shareholder). 7.04 Exercise Subject to the provisions of this Plan and the applicable Agreement, an Option may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as the Committee shall determine; provided, however, that incentive stock options (granted under the Plan and all plans of the Company and its Affiliates) may not be first exercisable in a calendar year for shares of Common Stock having a Fair Market Value (determined as of the date the Option is granted) exceeding the limit set forth under Code Section 422(d) (currently $100,000). If the limitation is exceeded, the Options that cause the limitation to be exceeded shall be treated as nonqualified stock options. An Option granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the Option could be exercised. A partial exercise of an Option shall not affect the right to exercise the Option from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the Option. The exercise of an Option shall result in the termination of the Corresponding SAR to the extent of the number of shares with respect to which the Option is exercised. 7.05 Payment Subject to rules established by the Committee and unless otherwise provided in an Agreement, payment of all or part of the Option price shall be made in cash or cash equivalent acceptable to the Committee. If the Agreement so provides, the Committee, in its discretion and provided applicable law so permits, may allow a Participant to pay all or part of the Option price (a) by surrendering (actually or by attestation) shares of Common Stock to the Company that the Participant already owns; (b) by a cashless exercise through a broker; (c) by means of a “net exercise” procedure by the surrender of shares of Common Stock to which the Participant is otherwise entitled under the Option; (d) by such other medium of payment as the Committee, in its discretion, shall authorize; or (e) by any combination of the aforementioned methods of payment. If shares of Common Stock are used to pay all or part of the Option price, the sum of the cash and cash equivalent and the Fair Market Value (determined as of the day preceding the date of exercise) of the shares surrendered must not be less than the Option price of the shares for which the Option is being exercised. -14- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 19 of 61 7/20/2016 4:34 PM Ex. 1 Page 23 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 23 of 65 7.06 Stockholder Rights No Participant shall have any rights as a stockholder with respect to shares subject to his or her Option until the date of exercise of such Option and the issuance of the shares of Common Stock. 7.07 Disposition of Shares A Participant shall notify the Company of any sale or other disposition of shares of Common Stock acquired pursuant to an Option that was designated an incentive stock option if such sale or disposition occurs (a) within two (2) years of the grant of an Option or (b) within one (1) year of the issuance of shares of Common Stock to the Participant (subject to any changes in such time periods as set forth in Code Section 422(a)). Such notice shall be in writing and directed to the Secretary of the Company. 7.08 No Liability of Company The Company shall not be liable to any Participant or any other Person if the Internal Revenue Service or any court or other authority having jurisdiction over such matter determines for any reason that an Option intended to be an incentive stock option and granted hereunder does not qualify as an incentive stock option. ARTICLE VIII SARS 8.01 Grant Subject to the eligibility provisions of Article V, the Committee will designate each individual or entity to whom SARs are to be granted and will specify the number of shares of Common Stock covered by such grant. In addition, no Participant may be granted Corresponding SARs (under this Plan and all other incentive stock option plans of the Company and its Affiliates) that are related to incentive stock options which are first exercisable in any calendar year for shares of Common Stock having an aggregate Fair Market Value (determined as of the date the related Option is granted) that exceeds $100,000. 8.02 Maximum Term of SAR The maximum term of a SAR shall be determined by the Committee on the date of grant, except that no SAR shall have a term of more than ten (10) years from the date such SAR was granted (or five (5) years for a Corresponding SAR that is related to an incentive stock option and that is granted to a Ten Percent Shareholder). No Corresponding SAR shall be exercisable or continue in existence after the expiration of the Option to which the Corresponding SAR relates. -15- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 20 of 61 7/20/2016 4:34 PM Ex. 1 Page 24 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 24 of 65 8.03 Exercise Subject to the provisions of this Plan and the applicable Agreement, a SAR may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as the Committee shall determine; provided, however, that a SAR may be exercised only when the Fair Market Value of the Common Stock that is subject to the exercise exceeds the Initial Value of the SAR and a Corresponding SAR may be exercised only to the extent that the related Option is exercisable. A SAR granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the SAR could be exercised. A partial exercise of a SAR shall not affect the right to exercise the SAR from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the SAR. The exercise of a Corresponding SAR shall result in the termination of the related Option to the extent of the number of shares with respect to which the SAR is exercised. 8.04 Settlement The amount payable to the Participant by the Company as a result of the exercise of a SAR shall be settled in cash, by the issuance of shares of Common Stock or by a combination thereof, as the Committee, in its sole discretion, determines and sets forth in the applicable Agreement. No fractional share will be deliverable upon the exercise of a SAR but a cash payment will be made in lieu thereof. 8.05 Stockholder Rights No Participant shall, as a result of receiving a SAR, have any rights as a stockholder of the Company or any Affiliate until the date that the SAR is exercised and then only to the extent that the SAR is settled by the issuance of Common Stock. ARTICLE IX RESTRICTED STOCK AWARDS 9.01 Award Subject to the eligibility provisions of Article V, the Committee will designate each individual or entity to whom a Restricted Stock Award is to be granted, and will specify the number of shares of Common Stock covered by such grant and the price, if any, to be paid for each share of Common Stock covered by the grant. 9.02 Payment Unless the Agreement provides otherwise, if the Participant must pay for a Restricted Stock Award, payment of the Award shall be made in cash or cash equivalent acceptable to the Committee. If the Agreement so provides, the Committee, in its discretion and provided applicable law so permits, may allow a Participant to pay all or part of the purchase price (i) by surrendering (actually or by attestation) shares of Common Stock to the Company the Participant already owns and, if necessary to avoid adverse accounting consequences, has held for at least -16- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 21 of 61 7/20/2016 4:34 PM Ex. 1 Page 25 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 25 of 65 six months, (ii) by means of a “net exercise procedure” by the surrender of shares of Common Stock to which the Participant is otherwise entitled under the Restricted Stock Award, (iii) by such other medium of payment as the Committee in its discretion shall authorize or (iv) by any combination of the foregoing methods of payment. If Common Stock is used to pay all or part of the purchase price, the sum of cash and cash equivalent and other payments and the Fair Market Value (determined as of the day preceding the date of purchase) of the Common Stock surrendered must not be less than the purchase price of the Restricted Stock Award. A Participant’s rights in a Restricted Stock Award may be subject to repurchase upon specified events as determined by the Committee and set forth in the Agreement. 9.03 Vesting The Committee, on the date of grant of the Restricted Stock Award, shall prescribe that the Restricted Stock Award will become nonforfeitable and transferable subject to such conditions as are set forth in the Agreement. Notwithstanding any provision herein to the contrary, the Committee, in its sole discretion, may grant Restricted Stock Awards that are nonforfeitable and transferable immediately upon grant, including without limitation Restricted Stock Awards granted in payment of earned performance awards or other incentive compensation under the Plan or any other plans or compensatory arrangements of the Company or any Affiliate. By way of example and not of limitation, the Committee may prescribe that a Participant’s rights in a Restricted Stock Award shall be forfeitable and nontransferable subject to (a) the attainment of objectively determinable performance conditions based on the criteria described in Article XV, (b) the Participant’s completion of a specified period of employment or service with the Company or an Affiliate, (c) the Participant’s death, Disability or Retirement or (d) satisfaction of a combination of any of the foregoing factors. Notwithstanding the preceding sentences, if and to the extent deemed necessary by the Committee, Restricted Stock Awards granted to Named Executive Officers shall be forfeitable and nontransferable subject to attainment of objectively determinable performance conditions based on the criteria described in Article XV and shall be subject to the other requirements set forth in Article XV so as to enable such Restricted Stock Award to qualify as “qualified performance-based compensation” under the regulations promulgated under Code Section 162(m). A Restricted Stock Award can only become nonforfeitable and transferable during the Participant’s lifetime in the hands of the Participant. 9.04 Maximum Restriction Period To the extent the Participant’s rights in a Restricted Stock Award are forfeitable and nontransferable for a period of time, the Committee on the date of grant shall determine the maximum period over which the rights may become nonforfeitable and transferable, except that such period shall not exceed ten (10) years from the date of grant. 9.05 Stockholder Rights Prior to their forfeiture (in accordance with the applicable Agreement and while the shares of Common Stock granted pursuant to the Restricted Stock Award may be forfeited and are nontransferable), a Participant will have all rights of a stockholder with respect to a Restricted Stock Award, including the right to receive dividends and vote the shares; provided, -17- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 22 of 61 7/20/2016 4:34 PM Ex. 1 Page 26 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 26 of 65 however, that during such period (a) a Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of shares granted pursuant to a Restricted Stock Award, (b) the Company shall retain custody of any certificates evidencing shares granted pursuant to a Restricted Stock Award and (c) the Participant will deliver to the Company a stock power, endorsed in blank, with respect to each Restricted Stock Award. In lieu of retaining custody of the certificates evidencing shares granted pursuant to a Restricted Stock Award, the shares of Common Stock granted pursuant to the Restricted Stock Award may, in the Committee’s discretion, be held in escrow by the Company or recorded as outstanding by notation on the stock records of the Company until the Participant’s interest in such shares of Common Stock vest. Notwithstanding the preceding sentences, but subject to Section 14.07 below, if and to the extent deemed necessary by the Committee, dividends payable with respect to Restricted Stock Awards may accumulate (without interest) and become payable in cash or in shares of Common Stock to the Participant at the time, and only to the extent that, the portion of the Restricted Stock Award to which the dividends relate has become transferable and nonforfeitable. The limitations set forth in the preceding sentences shall not apply after the shares granted under the Restricted Stock Award are transferable and are no longer forfeitable. ARTICLE X RESTRICTED STOCK UNITS 10.01 Grant Subject to the eligibility provisions of Article V, the Committee will designate each individual or entity to whom a grant of Restricted Stock Units is to be made and will specify the number of shares covered by such grant. 10.02 Earning the Award The Committee, on the date of grant of the Restricted Stock Units, shall prescribe that the Restricted Stock Units will be earned and become payable subject to such conditions as are set forth in the Agreement. Notwithstanding any provision herein to the contrary, the Committee, in its sole discretion, may grant Restricted Stock Units in payment of earned performance awards or other incentive Compensation under the Plan or any other plans or Compensatory arrangements of the Company or any Affiliate. By way of example and not of limitation, the Committee may prescribe that the Restricted Stock Units will be earned and become payable upon (a) the satisfaction of objectively determinable performance conditions based on the criteria described in Article XV, (b) the Participant’s completion of a specified period of employment or service with the Company or an Affiliate, (c) the Participant’s death, Disability or Retirement or (d) satisfaction of a combination of any of the foregoing factors. If and to the extent deemed necessary by the Committee, Restricted Stock Units granted to Named Executive Officers shall become payable upon the satisfaction of objectively determinable performance conditions based on the criteria described in Article XV and shall be subject to the other requirements set forth in Article XV so as to enable such Restricted Stock Units to qualify as “qualified performance-based compensation” under the regulations promulgated under Code Section 162(m). Notwithstanding any provision herein to the contrary, the Committee, in its sole discretion, may grant Restricted Stock Units that are earned and payable immediately upon grant. -18- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 23 of 61 7/20/2016 4:34 PM Ex. 1 Page 27 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 27 of 65 10.03 Maximum Restricted Stock Unit Award Period The Committee, on the date of grant, shall determine the maximum period over which Restricted Stock Units may be earned, except that such period shall not exceed ten (10) years from the date of grant. 10.04 Payment The amount payable to the Participant by the Company when an Award of Restricted Stock Units is earned shall be settled by the issuance of one share of Common Stock (or, as otherwise determined by the Committee and set forth in the applicable Agreement, the equivalent Fair Market Value of one share of Common Stock in cash) for each Restricted Stock Unit that is earned. A fractional share of Common Stock shall not be deliverable when an Award of Restricted Stock Units is earned, but a cash payment will be made in lieu thereof. 10.05 Stockholder Rights No Participant shall, as a result of receiving a grant of Restricted Stock Units, have any rights as a stockholder until and then only to the extent that the Restricted Stock Units are earned and settled in shares of Common Stock, nor shall any participant receive Dividend Equivalents solely as a result of receiving a grant of Restricted Stock Units. However, notwithstanding the foregoing, the Committee, in its sole discretion, may grant Dividend Equivalents in the Agreement in connection with a grant of Restricted Stock Units. By way of example and not limitation, such Dividend Equivalents may provide that, for so long as the Participant holds any Restricted Stock Units, if the Company pays any cash dividends on its Common Stock, then (a) the Company may pay the Participant in cash for each outstanding Restricted Stock Unit covered by the Agreement as of the record date of such dividend, less any required withholdings, the per share amount of such dividend or (b) the number of outstanding Restricted Stock Units covered by the Agreement may be increased by the number of Restricted Stock Units, rounded down to the nearest whole number, equal to (i) the product of the number of the Participant’s outstanding Restricted Stock Units as of the record date for such dividend multiplied by the per share amount of the dividend divided by (ii) the Fair Market Value of a share of Common Stock on the payment date of such dividend. In the event additional Restricted Stock Units are awarded, such Restricted Stock Units shall be subject to the same terms and conditions set forth in the Plan and the Agreement as the outstanding Restricted Stock Units with respect to which they were granted. Notwithstanding the preceding sentences, but subject to Section 14.07 below, if and to the extent deemed necessary to the Committee, Dividend Equivalents payable with respect to Restricted Stock Units may accumulate (without interest) and become payable to the Participant at the time, and only to the extent that, the portion of the Restricted Stock Units to which the Dividend Equivalents relate has become earned and payable. The limitations set forth in the preceding sentences shall not apply after the Restricted Stock Units become earned and payable and shares are issued thereunder. -19- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 24 of 61 7/20/2016 4:34 PM Ex. 1 Page 28 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 28 of 65 ARTICLE XI INCENTIVE AWARDS 11.01 Grant Subject to the eligibility provisions of Article V, the Committee will designate each individual or entity to whom Incentive Awards are to be granted. All Incentive Awards shall be determined exclusively by the Committee under the procedures established by the Committee. 11.02 Earning the Award Subject to the Plan, the Committee, on the date of grant of an Incentive Award, shall specify in the applicable Agreement the terms and conditions which govern the grant, including, without limitation, whether the Participant to be entitled to payment must be employed or providing services to the Company or an Affiliate at the time the Incentive Award is to be paid. By way of example and not of limitation, the Committee may prescribe that the Incentive Award shall be earned and payable upon (a) the satisfaction of objectively determinable performance conditions based on the criteria described in Article XV, (b) the Participant’s completion of a specified period of employment or service with the Company or an Affiliate, (c) the Participant’s death, Disability or Retirement or (d) satisfaction of a combination of any of the foregoing factors. If and to the extent deemed necessary by the Committee, Incentive Awards granted to Named Executive Officers shall be earned and become payable upon the satisfaction of objectively determinable performance conditions based on the criteria described in Article XV and shall be subject to the other requirements set forth in Article XV so as to enable the Incentive Awards to qualify as “qualified performance-based compensation” under the regulations promulgated under Code Section 162(m). 11.03 Maximum Incentive Award Period The Committee, at the time an Incentive Award is made, shall determine the maximum period over which the Incentive Award may be earned, except that such period shall not exceed ten (10) years from the date of grant. 11.04 Payment The amount payable to the Participant by the Company when an Incentive Award is earned may be settled in cash, by the issuance of shares of Common Stock or by a combination thereof, as the Committee, in its sole discretion, determines and sets forth in the applicable Agreement. A fractional share of Common Stock shall not be deliverable when an Incentive Award is earned, but a cash payment will be made in lieu thereof. 11.05 Stockholder Rights No Participant shall, as a result of receiving an Incentive Award, have any rights as a stockholder of the Company or any Affiliate on account of such Incentive Award, unless and then only to the extent that the Incentive Award is earned and settled in shares of Common Stock. -20- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 25 of 61 7/20/2016 4:34 PM Ex. 1 Page 29 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 29 of 65 ARTICLE XII OTHER STOCK-BASED AWARDS 12.01 Other Stock-Based Awards The Committee is authorized, subject to limitations under applicable law, to grant to a Participant such other Awards that may be denominated or payable in, valued in whole or in part by reference to or otherwise based on shares of Common Stock, including, without limitation, convertible or exchangeable securities, and other rights convertible or exchangeable into shares of Common Stock or the cash value of shares of Common Stock. The Committee shall determine the terms and conditions of any such Other Stock-Based Awards. Unless the Committee or the Agreement provides otherwise, Other Stock-Based Awards shall be vested, exercisable or earned and payable upon the date of grant. Common Stock delivered pursuant to an Other Stock-Based Award in the nature of purchase rights (“Purchase Right Award”) shall be purchased for such consideration not less than the Fair Market Value of the shares of Common Stock as of the date the Other Stock-Based Award is granted (subject to Sections 14.06 and 16.03 with respect to substitute Awards), and may be paid for at such times, by such methods, and in such forms, including, without limitation, cash, shares of Common Stock, other Awards, notes or other property, as the Committee shall determine. The maximum time period in which an Other Stock-Based Award in the nature of purchase rights may be exercised shall be determined by the Committee on the date of grant, except that no Other Stock-Based Award in the nature of purchase rights shall be exercisable after the expiration of ten (10) years from the date such Other Stock-Based Award was granted. 12.02 Bonus Stock and Awards in Lieu of Other Obligations The Committee also is authorized (i) to grant to a Participant shares of Common Stock as a bonus, (ii) to grant shares of Common Stock or other Awards in lieu of other obligations of the Company or any Affiliate to pay cash or to deliver other property under this Plan or under any other plans or compensatory arrangements of the Company or any Affiliate, (iii) to use available shares of Common Stock as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Company or an Affiliate, and (iv) subject to Section 19.13 below, to grant as alternatives to or replacements of Awards granted or outstanding under the Plan or any other plan or arrangement of the Company or any Affiliate, subject to such terms as shall be determined by the Committee and the overall limitation on the number of shares of Common Stock that may be issued under the Plan. Notwithstanding any other provision hereof, shares of Common Stock or other securities delivered to a Participant pursuant to a purchase right granted under this Plan shall be purchased for consideration, the Fair Market Value of which shall not be less than the Fair Market Value of such shares of Common Stock or other securities as of the date such purchase right is granted. -21- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 26 of 61 7/20/2016 4:34 PM Ex. 1 Page 30 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 30 of 65 ARTICLE XIII DIVIDEND EQUIVALENTS AND CASH AWARDS 13.01 Dividend Equivalents The Committee is authorized to grant Dividend Equivalents to a Participant which may be awarded on a free-standing basis or in connection with another Award. Subject to Section 14.07 below, the Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional shares of Common Stock, other Awards or other investment vehicles, subject to restrictions on transferability, risk of forfeiture and such other terms as the Committee may specify and set forth in the applicable Agreement. Notwithstanding the foregoing, no Dividend Equivalents may be awarded in connection with an Option, SAR or Other Stock-Based Award in the nature of purchase rights. 13.02 Cash Awards The Committee is authorized to grant to a Participant Cash Awards. The Committee shall determine the terms and conditions of any such Cash Awards. Cash Awards may be granted as an element of or a supplement to any other Award under the Plan or as a stand-alone Cash Award. The Committee, on the date of grant of Cash Awards, may prescribe that the Cash Awards will be earned and become payable subject to such conditions as are set forth in the Agreement. By way of example and not of limitation, the Committee may prescribe that Cash Awards will be earned and become payable upon (a) the satisfaction of objectively determinable performance conditions based on the criteria described in Article XV, (b) the Participant’s completion of a specified period of employment or service with the Company or an Affiliate, (c) the Participant’s death, Disability or Retirement or (d) satisfaction of a combination of any of the foregoing factors. If and to the extent deemed necessary by the Committee, Cash Awards granted to Named Executive Officers shall become payable upon the satisfaction of objectively determinable performance conditions based on the criteria described in Article XV and shall be subject to the other requirements set forth in Article XV so as to enable such Cash Awards to qualify as “qualified performance-based compensation” under the regulations promulgated under Code Section 162(m). Notwithstanding any provision herein to the contrary, the Committee, in its sole discretion, may grant Cash Awards in payment of earned performance awards and other incentive compensation payable under the Plan or any other plans or compensatory arrangements of the Company or any Affiliate. Unless the Committee or the Agreement provides otherwise, Cash Awards shall be vested and payable upon the date of grant. ARTICLE XIV TERMS APPLICABLE TO ALL AWARDS 14.01 Written Agreement Each Award shall be evidenced by a written or electronic Agreement (including any amendment or supplement thereto) between the Company and the Participant specifying the terms and conditions of the Award granted to such Participant. Each Agreement should specify whether the Award is intended to be a Non-409A Award or a 409A Award. -22- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 27 of 61 7/20/2016 4:34 PM Ex. 1 Page 31 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 3 of 65 14.02 Nontransferability Except as provided in Section 14.03 below, each Award granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution or pursuant to the terms of a valid qualified domestic relations order. In the event of any transfer of an Option or Corresponding SAR (by the Participant or his transferee), the Option and Corresponding SAR that relates to such Option must be transferred to the same Person or Persons or entity or entities. Except as provided in Section 14.03 below, during the lifetime of the Participant to whom the Option or SAR is granted, the Option or SAR may be exercised only by the Participant. No right or interest of a Participant in any Award shall be liable for, or subject to, any lien, obligation, or liability of such Participant or his transferee. 14.03 Transferable Awards Section 14.02 to the contrary notwithstanding, if the Agreement so provides, an Award that is not an incentive stock option or a Corresponding SAR that relates to an incentive stock option may be transferred by a Participant to immediate family members or trusts or other entities on behalf of the Participant and/or immediate family members or for charitable donations. Any such transfer will be permitted only if (a) the Participant does not receive any consideration for the transfer and (b) the Committee expressly approves the transfer. The holder of the Award transferred pursuant to this Section shall be bound by the same terms and conditions that governed the Award during the period that it was held by the Participant; provided, however, that such transferee may not transfer the Award except by will or the laws of descent and distribution. Unless transferred as provided in Section 9.05, a Restricted Stock Award may not be transferred prior to becoming non-forfeitable and transferable. 14.04 Participant Status If the terms of any Award provide that it may be exercised or paid only during employment or continued service or within a specified period of time after termination of employment or continued service, the Committee may decide to what extent leaves of absence for governmental or military service, illness, temporary disability or other reasons shall not be deemed interruptions of continuous employment or service. For purposes of the Plan, employment and continued service shall be deemed to exist between the Participant and the Company and/or an Affiliate if, at the time of the determination, the Participant is a director, officer, employee, consultant or advisor of the Company or an Affiliate. A Participant on military leave, sick leave or other bona fide leave of absence shall continue to be considered an employee for purposes of the Plan during such leave if the period of leave does not exceed three (3) months, or, if longer, so long as the individual’s right to re-employment with the Company or any of its Affiliates is guaranteed either by statute or by contract. If the period of leave exceeds three (3) months, and the individual’s right to re-employment is not guaranteed by statute or by contract, the employment shall be deemed to be terminated on the first day after the end of such three (3) month period. Except as may otherwise be expressly provided in an Agreement, Awards granted to a director, officer, employee, consultant or advisor shall not be affected by any change in the status of the Participant so long as the Participant continues to be a director, officer, employee, consultant or advisor to the Company or any of its Affiliates (regardless of having changed from one to the other or having been transferred from one entity to another). -23- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 28 of 61 7/20/2016 4:34 PM Ex. 1 Page 32 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 32 of 65 The Participant’s employment or continued service shall not be considered interrupted in the event the Committee, in its discretion, and as specified at or prior to such occurrence, determines there is no interruption in the case of a spin-off, sale or disposition of the Participant’s employer from the Company or an Affiliate, except that if the Committee does not otherwise specify such at or such prior to such occurrence, the Participant will be deemed to have a termination of employment or continuous service to the extent the Affiliate that employs the Participant is no longer the Company or an entity that qualifies as an Affiliate. The foregoing provisions apply to a 409A Award only to the extent Section 409A of the Code does not otherwise treat the Participant as continuing in service or employment or as having a separation from service at an earlier time. 14.05 Change in Control Notwithstanding any provision of any Agreement, in the event of a Change in Control, the Committee in its discretion may (i) declare that some or all outstanding Options, SARs and Other Stock-Based Awards in the nature of purchase rights previously granted under the Plan, whether or not then exercisable, shall terminate on the Control Change Date without any payment to the holder of the Options, SARs and Other Stock-Based Awards in the nature of purchase rights, provided the Committee gives prior written notice to the holders of such termination and gives such holders the right to exercise their outstanding Options, SARs and Other Stock-Based Awards in the nature of purchase rights for at least seven (7) days before such date to the extent then exercisable (or to the extent such Options, SARs or Other Stock-Based Awards in the nature of purchase rights would have become exercisable as of the Control Change Date), (ii) terminate on the Control Change Date outstanding Restricted Stock Awards, Restricted Stock Units, Incentive Awards, Other Stock-Based Awards not in the nature of purchase rights and Dividend Equivalents previously granted under the Plan that are not then nonforfeitable and transferable or earned and payable (and that will not become nonforfeitable and transferable or earned and payable as of the Control Change Date) without any payment to the holder of the Restricted Stock Award, Restricted Stock Units, Incentive Awards, Other Stock-Based Awards not in the nature of purchase rights and Dividend Equivalents, other than the return, if any, of the purchase price of any such Awards, (iii) terminate on the Control Change Date some or all outstanding Options, SARs and Other Stock-Based Awards in the nature of purchase rights previously granted under the Plan, whether or not then exercisable, in consideration of payment to the holder of the Options, SARs and Other Stock-Based Awards in the nature of purchase rights, with respect to each share of Common Stock for which the Options, SARs and Other Stock-Based Awards in the nature of purchase rights are then exercisable (or that will become exercisable as of the Control Change Date), of the excess, if any, of the Fair Market Value on such date of the Common Stock subject to such portion of the Options, SARs and Other Stock-Based Awards in the nature of purchase rights over the purchase price or Initial Value, as applicable (provided that any portion of such Options, SARs and Other Stock-Based Awards in the nature of purchase rights that are not then exercisable and will not become exercisable on the Control Change Date, and Options, SARs and Other Stock-Based Awards in the nature of purchase rights with respect to which the Fair Market Value of the Common Stock subject to the Options, SARs and Other Stock-Based Awards in the nature of purchase rights does not exceed the purchase price or Initial Value, as applicable, shall be cancelled without any payment therefor), (iv) terminate on the Control Change Date outstanding -24- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 29 of 61 7/20/2016 4:34 PM Ex. 1 Page 33 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 33 of 65 Restricted Stock Awards, Restricted Stock Units, Incentive Awards, Other Stock-Based Awards not in the nature of purchase rights and Divided Equivalents previously granted under the Plan that will become nonforfeitable and transferable or earned and payable as of the Control Change Date (or that previously became nonforfeitable and transferable or earned and payable but have not yet been settled as of the Control Change Date) in exchange for a payment equal to the excess of the Fair Market Value of the shares of Common Stock subject to such Awards, or the amount of cash payable under the Awards, over any unpaid purchase price, if any, for such Awards (provided that any portion of such Awards that are not then nonforfeitable and transferable or earned and payable as of the Control Change Date (and that will not become nonforfeitable and transferable or earned and payable as of the Control Change Date) shall be cancelled without any payment therefor), or (v) take such other actions as the Committee determines to be reasonable under the circumstances to permit the Participant to realize the value of the outstanding Awards (which Fair Market Value for purposes of Awards that are not then exercisable, nonforfeitable and transferable or earned and payable as of the Control Change Date (and that will not become exercisable, nonforfeitable and transferable or earned and payable as of the Control Change Date) or with respect to which the Fair Market Value of the Common Stock subject to the Awards does not exceed the purchase price or Initial Value, as applicable, shall be deemed to be zero). The payments described above may be made in any manner the Committee determines, including in cash, stock or other property. The Committee may take the actions described above with respect to Awards that are not then exercisable, nonforfeitable and transferable or earned and payable or with respect to which the Fair Market Value of the Common Stock subject to the Awards does not exceed the purchase price or Initial Value, as applicable, whether or not the Participant will receive any payments therefor. The Committee in its discretion may take any of the actions described in this Section 14.05 contingent on consummation of the Change in Control and with respect to some or all outstanding Awards, whether or not then exercisable, nonforfeitable and transferable or earned and payable or on an Award-by-Award basis, which actions need not be uniform with respect to all outstanding Awards or Participants. However, outstanding Awards shall not be terminated to the extent that written provision is made for their continuance, assumption or substitution by the Company or a successor employer or its parent or subsidiary in connection with the Change in Control except as otherwise provided in the applicable Agreement. 14.06 Stand-Alone, Additional, Tandem and Substitute Awards Subject to Section 19.13 below, Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution or exchange for, any other Award or any Award granted under another plan of the Company or any Affiliate or any entity acquired by the Company or any Affiliate or any other right of a Participant to receive payment from the Company or any Affiliate; provided, however, that a 409A Award may not be granted in tandem with a Non-409A Award. Awards granted in addition to or in tandem with another Award or Awards may be granted either at the same time as or at a different time from the grant of such other Award or Awards. Subject to applicable law and the restrictions on 409A Awards and repricings in Section 19.13 below, the Committee may determine that, in granting a new Award, the in-the-money value or Fair Market Value of any surrendered Award or Awards or the value of any other right to payment surrendered by the Participant may be applied, or otherwise taken into account with respect, to any other new Award or Awards. -25- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 30 of 61 7/20/2016 4:34 PM Ex. 1 Page 34 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 34 of 65 14.07 Form and Timing of Payment; Deferrals Subject to the terms of the Plan and any applicable Agreement, payments to be made by the Company or an Affiliate upon the exercise of an Option, SAR or Other Stock-Based Award in the nature of purchase rights or settlement of any other Award may be made in such form as the Committee may determine and set forth in the applicable Agreement, including, without limitation, cash, shares of Common Stock, other Awards or other property and may be made in a single payment or transfer, in installments or on a deferred basis. The settlement of an Award may be accelerated, and cash paid in lieu of shares of Common Stock in connection with such settlement, in the discretion of the Committee or upon the occurrence of one or more specified events set forth in the applicable Agreement (and to the extent permitted by the Plan and Section 409A of the Code). Subject to the Plan, installment or deferred payments may be required by the Committee or permitted at the election of the Participant on the terms and conditions established by the Committee. Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installments or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in shares of Common Stock. In the case of any 409A Award that is vested and no longer subject to a substantial risk of forfeiture (within the meaning of Sections 83 and 409A of the Code), such Award may be distributed to the Participant, upon application of the Participant to the Committee, if the Participant has an unforeseeable emergency within the meaning of Section 409A of the Code, if determined by the Committee and set forth in the applicable Agreement. Notwithstanding any other provision of the Plan, however, no dividends payable with respect to an Award or Dividend Equivalents may be paid in connection with any Awards or Dividend Equivalents that are to become nonforfeitable and transferable or earned and payable based upon performance conditions unless and until the performance conditions are satisfied, and, if determined by the Committee and set forth in the applicable Agreement, any such dividends and Dividend Equivalents will accumulate (without interest) and become payable to the Participant at the time, and only to the extent that, the applicable Awards or Dividend Equivalents have become non-forfeitable and transferable or earned and payable upon satisfaction of the relevant performance conditions. 14.08 Time and Method of Exercise The Committee shall determine and set forth in the Agreement the time or times at which Awards granted under the Plan may be exercised or settled in whole or in part and shall set forth in the Agreement the rules regarding the exercise, settlement and/or termination of Awards upon the Participant’s death, Disability, termination of employment or ceasing to be a director. Unless the Agreement provides otherwise, an Award may be exercised by delivering notice to the Company’s principal office, to the attention of its Secretary (or the Secretary’s designee) no less than one (1) business day in advance of the effective date of the proposed exercise. Such notice shall be accompanied by the applicable Agreement, shall specify the number of shares of Common Stock with respect to which the Award is being exercised and the effective date of the proposed exercise and shall be signed by the Participant or other person then having the right to -26- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 31 of 61 7/20/2016 4:34 PM Ex. 1 Page 35 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 35 of 65 exercise the Award. Such notice may be withdrawn at any time prior to the close of business on the business day immediately preceding the effective date of the proposed exercise. Unless the Committee otherwise permits through the applicable Agreement or otherwise, no partial exercise of an Award shall be for an aggregate exercise or purchase price or a base value of less than One Thousand Dollars ($1,000). Notwithstanding any other provision of the Plan, however, if an Award is to become exercisable, nonforfeitable and transferable or earned and payable on the completion of a specified period of employment or service with the Company or any Affiliate, without the achievement of any performance conditions being required, and the Award is not being granted in lieu of any other cash compensation the Participant is to receive that would be payable over a shorter period of time, then unless the applicable Agreement provides otherwise, the Award shall become exercisable, non-forfeitable and transferable or earned and payable with respect to twenty-five percent (25%) of the underlying shares of Common Stock (or any amounts payable thereunder for Awards denoted in dollars) on each of the first, second, third and fourth anniversaries of the date of grant (subject to acceleration of vesting, to the extent permitted by the Plan and the Committee, in the event of a Change in Control or the Participant’s death, Disability, Retirement or involuntary termination of employment or service (including a voluntary termination of employment or service for good reason). Notwithstanding any provision of the Plan providing for the maximum term of an Award, in the event any Award would expire prior to exercise, vesting or settlement because trading in shares of Common Stock is prohibited by law or by any insider trading policy of the Company, the term of the Award shall automatically be extended until thirty (30) days after the expiration of any such prohibitions to permit the Participant to realize the value of the Award, provided such extension with respect to the applicable Award (i) is permitted by law, (ii) does not result in a violation of Section 409A with respect to the Award, (iii) permits any Award that is intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code to continue to so qualify and (iv) does not otherwise adversely impact the tax consequences of the Award (such as for incentive stock options and related Awards). An Agreement may provide that the Award will be automatically, and without any action by the Participant, deemed exercised, by means of a “net exercise” procedure, immediately prior to the expiration of the Award if the then Fair Market Value of the underlying shares of Common Stock at that time exceeds the exercise or purchase price or base value of the Award, in order to permit the Participant to realize the value of the Award. With respect to an Option and its Corresponding SAR, the Agreement may provide which Award will be deemed exercised. If the Agreement does not so provide, the Option shall be deemed exercised and the Corresponding SAR shall expire unexercised. 14.09 Effect of Termination Date on Options, SARs and Other Stock-Based Awards in the Nature of Purchase Rights (a) If a Participant incurs a Termination Date due to death or Disability, any unexercised Option, SAR or Other Stock-Based Award in the nature of purchase rights granted to the Participant may thereafter be exercised by the Participant (or, where appropriate, a transferee of the Participant), to the extent then exercisable, (i) for a period of twelve (12) months after the Termination Date or (ii) until the expiration of the stated term of the Option, SAR or Other Stock-Based Award in the nature of purchase rights, whichever period is shorter, unless specifically provided otherwise in the applicable Agreement (in which case the terms of -27- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 32 of 61 7/20/2016 4:34 PM Ex. 1 Page 36 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 36 of 65 the Agreement shall control). Any portion of the Option, SAR or Other Stock-Based Award in the nature of purchase rights that remains unexercised after the expiration of such period, regardless of whether such portion of the Option, SAR or Other Stock-Based Award in the nature of purchase rights is vested or unvested, shall terminate and be forfeited with no further compensation due to the Participant. (b) If a Participant incurs a Termination Date due to Retirement, any unexercised Option, SAR or Other Stock-Based Award in the nature of purchase rights granted to the Participant may thereafter be exercised by the Participant (or, where appropriate, a transferee of the Participant), to the extent then exercisable, (i) for a period of twelve (12) months after the Termination Date or (ii) until the expiration of the stated term of the Option, SAR or Other Stock-Based Award in the nature of purchase rights, whichever period is shorter, unless specifically provided otherwise in the applicable Agreement (in which case the terms of the Agreement shall control). Any portion of the Option, SAR or Other Stock-Based Award in the nature of purchase rights that remains unexercised after the expiration of such period described above, regardless of whether such portion of the Option, SAR or Other Stock-Based Award in the nature of purchase rights is vested or unvested, shall terminate and be forfeited with no further compensation due to the Participant. (c) If a Participant incurs a Termination Date, other than on death, Disability or Retirement, as a result of termination of service or employment by the Company and its Affiliates involuntarily and without Cause, any unexercised Option, SAR or Other Stock-Based Award in the nature of purchase rights granted to the Participant may thereafter be exercised by the Participant (or, where appropriate, a transferee of the Participant), to the extent then exercisable (i) for a period of ninety (90) days after the Termination Date or (ii) until the expiration of the stated term of the Option, SAR or Other Stock-Based Award in the nature of purchase rights, whichever period is shorter, unless specifically provided otherwise in the applicable Agreement (in which case the terms of the Agreement shall control). Any portion of the Option, SAR or Other Stock-Based Award in the nature of purchase rights that remains unexercised at the expiration of such period described above, regardless of whether such portion of the Option, SAR or Other Stock-Based Award in the nature of purchase rights is vested or unvested, shall terminate and be forfeited with no further compensation due to the Participant. (d) If a Participant incurs a Termination Date for any reason, other than death, Disability or Retirement, other than as the result of termination of service or employment by the Company and its Affiliates involuntarily and without Cause, and other than as the result of termination of service or employment by the Company and its Affiliates involuntarily and with Cause, any unexercised Option, SAR or Other Stock-Based Award in the nature of purchase rights granted to the Participant may thereafter be exercised by the Participant (or, where appropriate, a transferee of the Participant), to the extent exercisable as of the Termination Date, (i) for a period of ninety (90) days after the Termination Date, or (ii) until the expiration of the stated term of the Option, SAR or Other Stock-Based Award in the nature of purchase rights, whichever period is shorter, unless specifically provided otherwise in the applicable Agreement (in which case the terms of the Agreement shall control). Any portion of the Option, SAR or Other Stock-Based Award in the nature of purchase rights that remains unexercised after the expiration of such period, regardless of whether such portion of the Option, SAR or Other Stock-Based Award in the nature of purchase rights is vested or unvested, shall terminate and be forfeited with no further compensation due to the Participant. -28- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 33 of 61 7/20/2016 4:34 PM Ex. 1 Page 37 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 37 of 65 14.10 Non U. S. Participants The Committee may grant Awards to Participants located outside of the United States of America. Notwithstanding any other provision of the Plan (other than the limitations of Section 6.02 and Section 19.13) the terms of such Awards shall be as the Committee, in its sole discretion, determines as appropriate and permitted under the law that applies to any Award granted to Participants located outside of the United States of America. ARTICLE XV QUALIFIED PERFORMANCE-BASED COMPENSATION 15.01 Performance Conditions In accordance with the Plan, the Committee may prescribe that Awards will become exercisable, nonforfeitable and transferable, and earned and payable, based on objectively determinable performance conditions. Objectively determinable performance conditions are performance conditions (i) that are established in writing (a) at the time of grant or (b) no later than the earlier of (x) 90 days after the beginning of the period of service to which they relate and (y) before the lapse of 25% of the period of service to which they relate; (ii) that are uncertain of achievement at the time they are established and (iii) the achievement of which is determinable by a third party with knowledge of the relevant facts. The performance conditions may be stated with respect to (a) revenue, (b) earnings before interest, taxes, depreciation and amortization (“EBITDA”), (c) cash earnings (earnings before amortization of intangibles), (d) operating income, (e) pre-or after-tax income, (f) earnings per share, (g) net cash flow, (h) net cash flow per share, (i) net earnings, (j) return on equity, (k) return on total capital, (l) return on sales, (m) return on net assets employed, (n) return on assets or net assets, (o) share price performance, (p) total shareholder return, (q) improvement in or attainment of expense levels, (r) improvement in or attainment of working capital levels, (s) net sales, (t) revenue growth or product revenue growth, (u) operating income (before or after taxes), (v) pre-or after-tax income (before or after allocation of corporate overhead and bonus), (w) earnings per share; (x) return on equity, (y) appreciation in and/or maintenance of the price of the shares of Common, (z) market share, (aa) gross profits, (bb) comparisons with various stock market indices; (cc) reductions in cost, (dd) cash flow or cash flow per share (before or after dividends), (ee) return on capital (including return on total capital or return on invested capital), (ff) cash flow return on investments; (gg) improvement in or attainment of expense levels or working capital levels, (hh) shareholder equity. The business criteria above, may be related to a specific customer or group of customers or products or geographic region. The form of the performance conditions may be measured on a Company, Affiliate, product, division, business unit, service line, segment or geographic basis, individually, alternatively or in any combination, subset or component thereof. Performance goals may include one or more of the foregoing business criteria, either individually, alternatively or any combination, subset or component. Performance goals may reflect absolute performance or a relative comparison of the performance to the performance of a peer group or index or other external measure of the selected business criteria. Profits, earnings -29- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 34 of 61 7/20/2016 4:34 PM Ex. 1 Page 38 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 38 of 65 and revenues used for any performance condition measurement may exclude any extraordinary or non-recurring items. The performance conditions may, but need not, be based upon an increase or positive result under the aforementioned business criteria and could include, for example and not by way of limitation, maintaining the status quo or limiting the economic losses (measured, in each case, by reference to the specific business criteria). The performance conditions may not include solely the mere continued employment of the Participant. However, the Award may become exercisable, nonforfeitable and transferable or earned and payable contingent on the Participant’s continued employment or service, and/or employment or service at the time the Award becomes exercisable, nonforfeitable and transferable or earned and payable, in addition to the performance conditions described above. The Committee shall have the sole discretion to select one or more periods of time over which the attainment of one or more of the foregoing performance conditions will be measured for the purpose of determining a Participant’s right to, and the settlement of, an Award that will become exercisable, nonforfeitable and transferable or earned and payable based on performance conditions. 15.02 Establishing the Amount of the Award The amount of the Award that will become exercisable, nonforfeitable and transferable or earned and payable if the performance conditions are obtained (or an objective formula for, or method of, computing such amount) also must be established at the time set forth in Section 15.01 above. Notwithstanding the preceding sentence, the Committee may, in its sole discretion, reduce the amount of the Award that will become exercisable, nonforfeitable and transferable or earned and payable, as applicable, if the Committee determines that such reduction is appropriate under the facts and circumstances. In no event shall the Committee have the discretion to increase the amount of the Award that will become exercisable, nonforfeitable and transferable or earned and payable. 15.03 Earning the Award If the Committee, on the date of grant, prescribes that an Award shall become exercisable, nonforfeitable and transferable or earned and payable only upon the attainment of any of the above enumerated performance conditions, the Award shall become exercisable, nonforfeitable and transferable or earned and payable only to the extent that the Committee certifies in writing that such conditions have been achieved. An Award will not satisfy the requirements of this Article XV to constitute “qualified performance-based compensation” if the facts and circumstances indicate the Award will become exercisable, nonforfeitable and transferable or earned and payable regardless of whether the performance conditions are attained. However, an Award does not fail to meet the requirements of this Article XV merely because the Award would become exercisable, nonforfeitable and transferable or earned and payable upon the Participant’s death or Disability or upon a Change in Control, although an Award that actually becomes exercisable, nonforfeitable and transferable or earned and payable on account of those events prior to the attainment of the performance conditions would not constitute “qualified performance-based compensation” under Code Section 162(m). In determining if the performance conditions have been achieved, the Committee may adjust the performance targets in the event of any unbudgeted acquisition, divestiture or other unexpected fundamental change in the business of the Company, an Affiliate or business unit or in any product that is material -30- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 35 of 61 7/20/2016 4:34 PM Ex. 1 Page 39 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 39 of 65 taken as a whole as appropriate to fairly and equitably determine if the Award is to become exercisable, nonforfeitable and transferable or earned and payable only pursuant to the conditions set forth in the Award. Additionally, in determining if such performance conditions have been achieved, the Committee also may adjust the performance targets in the event of any (a) unanticipated asset write-downs or impairment charges, (b) litigation or claim judgments or settlements thereof, (c) changes in tax laws, accounting principles or other laws or provisions affecting reported results, (d) costs and accruals for reorganization or restructuring programs, or extraordinary non-reoccurring items as described in Accounting Principles Board Opinion No. 30 or as described in management’s discussion and analysis of the financial condition and results of operations appearing in the Company’s Annual Report on Form 10-K for the applicable year or as identified in the financial statements, the notes to the financial statements or other securities law filings (each as defined by generally accepted accounting principles), (e) acquisitions, dispositions or discontinued operations or (f) foreign exchange gains or losses as appropriate to fairly and equitably determine if the Award is to become exercisable, nonforfeitable and transferable or earned and payable only pursuant to the conditions set forth in the Award. To the extent any such adjustments would affect Awards, the intent is that they shall be in a form that allows the Award to continue to meet the requirements of Section 162(m) of the Code for deductibility and, to the extent required under Section 162(m) of the Code for “qualified performance-based compensation,” set forth in the applicable Agreement. 15.04 Performance Awards The purpose of this Article XV is to permit the grant of Awards that constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code. The Committee may specify that the Award is intended to constitute “qualified performance-based compensation” by conditioning the right of the Participant to exercise the Award or have it settled, and the timing thereof, upon achievement or satisfaction of any of the enumerated performance criteria and conditions set forth in this Article XV. Notwithstanding the foregoing, the Committee may grant an Award that is subject to the achievement or satisfaction of performance conditions that are not specifically set forth herein to the extent the Committee does not intend for such Award to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code. ARTICLE XVI ADJUSTMENT UPON CHANGE IN COMMON STOCK 16.01 General Adjustments The maximum number of shares of Common Stock that may be issued pursuant to Awards, the terms of outstanding Awards and the per individual limitations on the number of shares of Common Stock that may be issued pursuant to Awards shall be adjusted as the Committee shall determine to be equitably required in the event (a) there occurs a reorganization, recapitalization, stock split, spin-off, split-off, stock dividend, issuance of stock rights, combination of shares, merger, consolidation or distribution (stock or cash) to stockholders other than an ordinary cash dividend; (b) the Company engages in a transaction Code Section 424 describes; or (c) there occurs any other transaction or event which, in the judgment of the Board, -31- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 36 of 61 7/20/2016 4:34 PM Ex. 1 Page 40 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 40 of 65 necessitates such action. In that respect, the Committee shall make such adjustments as are necessary in the number or kind of shares of Common Stock or securities which are subject to the Award, the exercise price or Initial Value of the Award and such other adjustments as are appropriate in the discretion of the Committee. Such adjustments may provide for the elimination of fractional shares that might otherwise be subject to Awards without any payment therefor. Notwithstanding the foregoing, the conversion of one or more outstanding shares of preferred stock or convertible debentures that the Company may issue from time to time into Common Stock shall not in and of itself require any adjustment under this Article XVI. In addition, the Committee may make such other adjustments to the terms of any Awards to the extent equitable and necessary to prevent an enlargement or dilution of the Participant’s rights thereunder as a result of any such event or similar transaction. Any determination made under this Article XVI by the Committee shall be final and conclusive. 16.02 No Adjustments The issuance by the Company of stock of any class, or securities convertible into stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of stock or obligations of the Company convertible into such stock or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the maximum number of shares that may be issued pursuant to Awards, the per individual limitations on the number of shares that may be issued pursuant to Awards or the terms of outstanding Awards. 16.03 Substitute Awards The Committee may grant Awards in substitution for Options, SARs, restricted stock, Restricted Stock Units, Incentive Awards or similar Awards held by an individual who becomes an employee of the Company or an Affiliate in connection with a transaction described in the first paragraph of Section 16.01. Notwithstanding any provision of the Plan (other than the limitation of Section 6.02), the terms of such substituted Awards shall be as the Committee, in its discretion, determines is appropriate. 16.04 Limitation on Adjustments Notwithstanding the foregoing, no adjustment hereunder shall be authorized or made if and to the extent the existence of such authority or action (a) would cause Awards under the Plan that are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code to otherwise fail to qualify as “qualified performance-based compensation,” (b) would cause the Committee to be deemed to have the authority to change the targets, within the meaning of Section 162(m) of the Code, under performance goals or relating to Awards granted to Named Executive Officers and intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, (c) would cause a Non-409A Award to be subject to Section 409A of the Code, (d) would violate Code Section 409A for a 409A Award, (e) would cause a modification of an incentive stock option under Section 424 of the Code and loss of treatment as an incentive stock option or (f) would adversely affect any exemption under Rule 16b-3 of the Exchange Act, unless the Committee determines that such adjustment is necessary and specifically acknowledges that the adjustment will be made notwithstanding any such result. -32- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 37 of 61 7/20/2016 4:34 PM Ex. 1 Page 41 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 4 of 65 ARTICLE XVII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES 17.01 Compliance No Option or SAR shall be exercisable, no Restricted Stock Award, Restricted Stock Unit, Incentive Award, Other Stock-Based Award, Dividend Equivalents or Cash Awards shall be granted or settled, no shares of Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements), any listing agreement to which the Company is a party and the rules of all domestic stock exchanges on which the Company’s shares may be listed. The Company shall have the right to rely on an opinion of its counsel as to such compliance. Any stock certificate evidencing shares of Common Stock issued pursuant to an Award may bear such legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations and to reflect any other restrictions applicable to such shares as the Committee otherwise deems appropriate. No Option or SAR shall be exercisable, no Restricted Stock Award, Restricted Stock Unit, Incentive Award, Other Stock-Based Award, Dividend Equivalents or Cash Awards shall be granted or settled, no shares of Common Stock shall be issued, no certificate for shares of Common Stock shall be delivered and no payment shall be made under this Plan until the Company has obtained such consent or approval as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters. 17.02 Postponement of Exercise or Payment The Committee may postpone any grant, exercise, vesting or payment of an Award for such time as the Committee in its sole discretion may deem necessary in order to permit the Company (i) to effect, amend or maintain any necessary registration of the Plan or the shares of Common Stock issuable pursuant to the Award under the securities laws; (ii) to take any action in order to (A) list such shares of Common Stock or other shares of stock of the Company on a stock exchange if shares of Common Stock or other shares of stock of the Company are not then listed on such exchange or (B) comply with restrictions or regulations incident to the maintenance of a public market for its shares of Common Stock or other shares of stock of the Company, including any rules or regulations of any stock exchange on which the shares of Common Stock or other shares of stock of the Company are listed; (iii) to determine that such shares of Common Stock in the Plan are exempt from such registration or that no action of the kind referred to in (ii)(B) above needs to be taken; (iv) to comply with any other applicable law, including without limitation, securities laws; (v) to comply with any legal or contractual requirements during any such time the Company or any Affiliate is prohibited from doing any of such acts under applicable law, including without limitation, during the course of an investigation of the Company or any Affiliate, or under any contract, loan agreement or covenant or other agreement to which the Company or any Affiliate is a party or (vi) to otherwise comply with any prohibition on such acts or payments during any applicable blackout period; and the -33- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 38 of 61 7/20/2016 4:34 PM Ex. 1 Page 42 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 42 of 65 Company shall not be obligated by virtue of any terms and conditions of any Agreement or any provision of the Plan to recognize the grant, exercise, vesting or payment of an Award or to grant, sell or issue shares of Common Stock or make any such payments in violation of the securities laws or the laws of any government having jurisdiction thereof or any of the provisions hereof. Any such postponement shall not extend the term of the Award and neither the Company nor its directors and officers nor the Committee shall have any obligation or liability to any Participant or to any other person with respect to shares of Common Stock or payments as to which the Award shall lapse because of such postponement. Additionally, the Committee may postpone any grant, exercise vesting or payment of an Award if the Company reasonably believes the Company’s or any applicable Affiliate’s deduction with respect to such Award would be limited or eliminated by application of Code Section 162(m) to the extent permitted by Section 409A of the Code; provided, however, such delay will last only until the earliest date at which the Company reasonably anticipates that the deduction with respect to the Award will not be limited or eliminated by the application of Code Section 162(m) or the calendar year in which the Participant separates from service. 17.03 Forfeiture or Reimbursement A Participant shall be required to forfeit any and all rights under Awards or to reimburse the Company for any payment under any Award (with interest as necessary to avoid imputed interest or original issue discount under the Code or as otherwise required by applicable law) to the extent applicable law or any applicable claw-back or recoupment policy of the Company or any of its Affiliates requires such forfeiture or reimbursement. ARTICLE XVIII LIMITATION ON BENEFITS Despite any other provisions of this Plan to the contrary, if the receipt of any payments or benefits under this Plan would subject a Participant to tax under Code Section 4999, the Committee may determine whether some amount of payments or benefits would meet the definition of a “Reduced Amount.” If the Committee determines that there is a Reduced Amount, the total payments or benefits to the Participant under all Awards must be reduced to such Reduced Amount, but not below zero. It is the intention of the Company and the Participant to reduce the payments under this Plan only if the aggregate Net After Tax Receipts to the Participant would thereby be increased. If the Committee determines that the benefits and payments must be reduced to the Reduced Amount, the Company must promptly notify the Participant of that determination, with a copy of the detailed calculations by the Committee. All determinations of the Committee under this Article XVIII are final, conclusive and binding upon the Company and the Participant. As result of the uncertainty in the application of Code Section 4999 at the time of the initial determination by the Committee under this Article XVIII, however, it is possible that amounts will have been paid under the Plan to or for the benefit of a Participant which should not have been so paid (“Overpayment”) or that additional amounts which will not have been paid under the Plan to or for the benefit of a Participant could have been so paid (“Underpayment”), in each case consistent with the calculation of the Reduced Amount. If the Committee, based either upon the assertion of a deficiency by the Internal Revenue Service -34- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 39 of 61 7/20/2016 4:34 PM Ex. 1 Page 43 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 43 of 65 against the Company or the Participant, which the Committee believes has a high probability of success, or controlling precedent or other substantial authority, determines that an Overpayment has been made, any such Overpayment must be treated for all purposes as a loan, to the extent permitted by applicable law, which the Participant must repay to the Company together with interest at the applicable federal rate under Code Section 7872(f)(2); provided, however, that no such loan may be deemed to have been made and no amount shall be payable by the Participant to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which the Participant is subject to tax under Code Sections 1, 3101 or 4999 or generate a refund of such taxes. If the Committee, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, the Committee must promptly notify the Company of the amount of the Underpayment, which then shall be paid promptly to the Participant but no later than the end of the Participant’s taxable year next following the Participant’s taxable year in which the determination is made that the Underpayment has occurred. For purposes of this Section, (a) “Net After Tax Receipt” means the Present Value of a payment under this Plan net of all taxes imposed on Participant with respect thereto under Code Sections 1, 3101 and 4999, determined by applying the highest marginal rate under Code Section 1 which applies to the Participant’s taxable income for the applicable taxable year; (b) “Present Value” means the value determined in accordance with Code Section 280G(d)(4); and (c) “Reduced Amount” means the smallest aggregate amount of all payments and benefits under this Plan which (i) is less than the sum of all payments and benefits under this Plan and (ii) results in aggregate Net After Tax Receipts which are equal to or greater than the Net After Tax Receipts which would result if the aggregate payments and benefits under this Plan were any other amount less than the sum of all payments and benefits to be made under this Plan. ARTICLE XIX GENERAL PROVISIONS 19.01 Effect on Employment and Service Neither the adoption of this Plan, its operation nor any documents describing or referring to this Plan (or any part thereof), shall confer upon any individual or entity any right to continue in the employ or service of the Company or an Affiliate or in any way affect any right and power of the Company or an Affiliate to terminate the employment or service of any individual or entity at any time with or without assigning a reason therefor. 19.02 Unfunded Plan This Plan, insofar as it provides for Awards, shall be unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by Awards under this Plan. Any liability of the Company to any Person with respect to any Award under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company. -35- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 40 of 61 7/20/2016 4:34 PM Ex. 1 Page 44 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 44 of 65 19.03 Rules of Construction Headings are given to the articles and sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall be construed to refer to any amendment to or successor of such provision of law. 19.04 Tax Withholding and Reporting Unless an Agreement provides otherwise, each Participant shall be responsible for satisfying in cash or cash equivalent any income and employment (including, without limitation, Social Security and Medicare) tax withholding obligations, if applicable, attributable to participation in the Plan and the grant, exercise, vesting or payment of Awards granted hereunder (including the making of a Code Section 83(b) election with respect to an Award). In accordance with procedures that the Committee establishes, the Committee, to the extent applicable law permits, may allow a Participant to pay any such applicable amounts (a) by surrendering (actually or by attestation) shares of Common Stock that the Participant already owns and, if necessary to avoid adverse accounting consequences, has held for at least six (6) months (but only for the minimum required withholding); (b) by a cashless exercise, or surrender of shares of Common Stock already owned, through a broker; (c) by means of a “net exercise” procedure by the surrender of shares of Common Stock to which the Participant is otherwise entitled under the Award (but only for the minimum required withholding); (d) by such other medium of payment as the Committee, in its discretion, shall authorize; or (e) by any combination of the aforementioned methods of payment. The Company shall comply with all such reporting and other requirements relating to the administration of this Plan and the grant, exercise, vesting or payment of any Award hereunder as applicable law requires. 19.05 Code Section 83(b) Election The Committee must approve in advance whether a Participant may make an election under Section 83(b) of the Code with respect to any Award (to include in gross income in the year of transfer the amounts specified in Code Section 83(b)) or under similar laws may be made. In any case in which a Participant is permitted to make such an election in connection with an Award, the Participant shall notify the Company of such election within ten (10) days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b) or other applicable provisions. 19.06 Reservation of Shares The Company, during the term of this Plan, shall at all time reserve and keep available such number of shares of Common Stock as shall be sufficient to satisfy the requirements of the Plan. Additionally, the Company, during the term of this Plan, shall use its best efforts to seek to obtain from appropriate regulatory agencies any requisite authorizations needed in order to issue and to sell such number of shares of Common Stock as shall be sufficient to satisfy the requirements of the Plan. However, the inability of the Company to obtain from any such regulatory agency the requisite authorizations the Company’s counsel deems to be necessary for the lawful issuance and sale of any shares of Common Stock hereunder, or the inability of the -36- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 41 of 61 7/20/2016 4:34 PM Ex. 1 Page 45 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 45 of 65 Company to confirm to its satisfaction that any issuance and sale of any shares of Common Stock hereunder will meet applicable legal requirements, shall relieve the Company of any liability in respect to the failure to issue or to sell such shares of Common Stock as to which such requisite authority shall not have been obtained. 19.07 Governing Law This Plan and all Awards granted hereunder shall be governed by the laws of the State of Delaware, except to the extent federal law applies. 19.08 Other Actions Nothing in the Plan shall be construed to limit the authority of the Company to exercise its corporate rights and powers, including, by way of illustration and not by way of limitation, the right to grant Options, SARs, Restricted Stock Awards, Restricted Stock Units, Incentive Awards, Other Stock-Based Awards or Dividend Equivalents for proper corporate purposes otherwise than under the Plan to any employee or to any other Person, firm, corporation, association or other entity, or to grant Options, SARs, Restricted Stock Awards, or Restricted Stock Units, Incentive Awards, Other Stock-Based Awards or Dividend Equivalents to, or assume such Awards of any Person in connection with, the acquisition, purchase, lease, merger, consolidation, reorganization or otherwise, of all or any part of the business and assets of any Person, firm, corporation, association or other entity. 19.09 Repurchase of Common Stock Subject to Section 19.13 below, the Company or its designee may have the option and right to purchase any Award or any shares of Common Stock issued pursuant to any Award in accordance with the terms and conditions set forth in the applicable Agreement. However, shares of Common Stock repurchased pursuant to an Agreement will still be deemed issued pursuant to the Plan and will not be available for issuance pursuant to future Awards under the Plan (not counting for this purpose any shares of Common Stock repurchased in connection with the lapse or forfeiture of any Restricted Stock Award). 19.10 Other Conditions The Committee, in its discretion, may require the Participant on or before the date of grant, exercise, payment or settlement of an Award to enter into (i) a confidentiality, non-solicitation, non-competition, non-disparagement or other similar agreement with the Company or any Affiliate, which may become effective on the date of termination of employment or service of the Participant with the Company or any Affiliate or any other date the Committee may specify and shall contain such terms and conditions as the Committee shall otherwise specify, (ii) an agreement to cancel any other employment agreement, service agreement, fringe benefit or compensation arrangement in effect between the Company or any Affiliate and such Participant and/or (iii) a shareholders’ agreement with respect to shares of Common Stock to be issued pursuant to the Award. If the Participant should fail to enter into any such agreement at the Committee’s request, then no Award shall be granted, exercised, paid or settled and the number of shares of Common Stock that would have been subject to such Award, if any, shall be -37- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 42 of 61 7/20/2016 4:34 PM Ex. 1 Page 46 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 46 of 65 added to the remaining shares of Common Stock available under the Plan. In the event the Participant should enter into any such confidentiality, non-solicitation, non-competition, non-disparagement or other similar agreement with the Company or any Affiliate, as a condition to the grant, exercise, payment or settlement of the Award, and the Participant subsequently breach or violate any provision of such agreement, then the Participant shall forfeit any and all further rights under such Award and the Clawback Requirement shall be triggered. 19.11 Forfeiture Provisions Notwithstanding any other provisions of the Plan or any Agreement, all rights to any Award that a Participant has will be immediately discontinued and forfeited, and the Company shall not have any further obligation hereunder to the Participant with respect to any Award and the Award will not be exercisable (whether or not previously exercisable) or become vested or payable on and after the time the Participant is discharged from employment or service with the Company or any Affiliate for Cause. 19.12 Legends; Payment of Expenses The Company may endorse such legend or legends upon the certificates for shares of Common Stock issued upon the grant or exercise of an Award and may issue such “stop transfer” instructions to its transfer agent in respect of such shares as it determines, in its sole discretion, to be necessary or appropriate to (i) prevent a violation of, or to perfect an exemption from, the registration requirements under the Exchange Act, applicable state securities laws or other requirements, (b) implement the provisions of the Plan or any Agreement between the Company and the Participant with respect to such shares of Common Stock, (c) permit the Company to determine the occurrence of a “disqualifying disposition” as described in Section 421(b) of the Code of the shares of Common Stock transferred upon the exercise of an incentive stock option granted under the Plan or (d) as may be appropriate to continue an Award’s exemption or compliance with Section 409A of the Code. The Company shall pay all issuance taxes with respect to the issuance of shares of Common Stock upon the grant or exercise of the Award, as well as all fees and expenses incurred by the Company in connection with such issuance. 19.13 Repricing of Awards Notwithstanding any other provisions of this Plan, except for adjustments pursuant to Article XVI or to the extent approved by the Company’s stockholders and consistent with the rules of any stock exchange on which the Company’s securities are traded, this Plan does not permit (a) any decrease in the exercise or purchase price or base value of any outstanding Awards, (b) the issuance of any replacement Options, SARs or Other Stock-Based Awards in the nature of purchase rights which shall be deemed to occur if a Participant agrees to forfeit an existing Option, SAR or Other Stock-Based Award in the nature of purchase rights in exchange for a new Option, SAR or Other Stock-Based Award in the nature of purchase rights with a lower exercise or purchase price or base value, (c) the Company to repurchase underwater or out-of- the-money Options, SARs or Other Stock-Based Awards in the nature of purchase rights, which shall be deemed to be those Options, SARs or Other Stock-Based Awards in the nature of purchase rights with exercise or purchase prices or base values in excess of the current Fair Market Value of the shares of Common Stock underlying the Option, SAR or Other Stock-Based -38- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 43 of 61 7/20/2016 4:34 PM Ex. 1 Page 47 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 47 of 65 Award in the nature of purchase rights, (d) the issuance of any replacement or substitute Awards or the payment of cash in exchange for, or in substitution of, underwater or out-of-the-money Options, SARs or Other Stock-Based Awards in the nature of purchase rights, (e) the Company to repurchase any Award if the Award has not become exercisable, vested or payable prior to the repurchase or (f) any other action that is treated as a repricing under generally accepted accounting principles. 19.14 Right of Setoff The Company or an Affiliate may, to the extent permitted by applicable law, deduct from and setoff against any amounts the Company or Affiliate may owe the Participant from time to time, including amounts payable in connection with any Award, owed as wages, fringe benefits or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company or Affiliate, including but not limited to any amounts owed under the Plan, although the Participant shall remain liable for any part of the Participant’s obligation not satisfied through such deduction and setoff. By accepting any Award granted hereunder, the Participant agrees to any deduction or setoff hereunder. 19.15 Fractional Shares No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereof shall be forfeited or otherwise eliminated. ARTICLE XX CLAIMS PROCEDURES 20.01 Initial Claim If a Participant has exercised an Option or SAR or if shares of Restricted Stock have become vested or Restricted Stock Units, Incentive Awards, Other Stock-Based Awards or Dividend Equivalents have become payable, and the Participant has not received the benefits to which the Participant believes he or she is entitled under such Award, then the Participant must submit a written claim for such benefits to the Committee within ninety (90) days of the date the Participant tried to exercise the Option or SAR, the date the Participant contends the Restricted Stock vested or the date the Participant contends the Restricted Stock Units, Incentive Awards, or Other Stock-Based Awards of Dividend Equivalents became payable or the claim will be forever barred. 20.02 Appeal of Claim If a claim of a Participant is wholly or partially denied, the Participant or his duly authorized representative may appeal the denial of the claim to the Committee. Such appeal must be made at any time within thirty (30) days after the Participant receives written notice from the Company of the denial of the claim. In connection therewith, the Participant or his duly authorized representative may request a review of the denied claim, may review pertinent -39- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 44 of 61 7/20/2016 4:34 PM Ex. 1 Page 48 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 48 of 65 documents and may submit issues and comments in writing. Upon receipt of an appeal, the Committee shall make a decision with respect to the appeal and, not later than sixty (60) days after receipt of such request for review, shall furnish the Participant with the decision on review in writing, including the specific reasons for the decision written in a manner calculated to be understood by the Participant, as well as specific references to the pertinent provisions of the Plan upon which the decision is based. 20.03 Time to File Suit The Committee has the discretionary and final authority under the Plan to determine the validity of a claim. Accordingly, any decision the Committee makes on a Participant’s appeal will be administratively final. If a Participant disagrees with the Committee’s final decision, the Participant may sue, but only after the claim on appeal has been denied. Any lawsuit must be filed within ninety (90) days of receipt of the Committee’s final written denial of the Participant’s claim or the claim will be forever barred. ARTICLE XXI AMENDMENT 21.01 Amendment of Plan The Board may amend or terminate this Plan at any time; provided, however, that no amendment to the Plan may materially adversely impair the rights of a Participant with respect to outstanding Awards without the Participant’s consent. In addition, an amendment will be contingent on approval of the Company’s stockholders, to the extent required by law or any tax or regulatory requirement applicable to the Plan or by the rules of any stock exchange on which the Company’s securities are traded or if the amendment would (i) increase the benefits accruing to Participants under the Plan, including without limitation, any amendment to the Plan or any Agreement to permit a repricing of any outstanding Awards under Section 19.13, (ii) increase the aggregate number of shares of Common Stock that may be issued under the Plan, (iii) modify the requirements as to eligibility for participation in the Plan, or (iv) change the performance conditions set forth in Article XV of the Plan for Awards that intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code. Additionally, to the extent the Board deems necessary to continue to comply with the performance-based exception to the deduction limits of Code Section 162(m), the Board will resubmit the material terms of the performance conditions set forth in Article XV to the Company’s stockholders for approval no later than the first stockholder meeting that occurs in the fifth (5 ) year following the year in which the stockholders previously approved the performance objectives. Notwithstanding any other provision of the Plan, any termination of the Plan shall comply with the requirements of Code Section 409A with regard to any 409A Awards. 21.02 Amendment of Awards The Committee may amend any outstanding Awards to the extent it deems appropriate; provided, however, that no amendment to an outstanding Award may adversely impair the rights of a Participant without the Participant’s consent. -40- th EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 45 of 61 7/20/2016 4:34 PM Ex. 1 Page 49 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 49 of 65 ARTICLE XXII SECTION 409A PROVISION 22.01 Intent of Awards It is intended that Awards that are granted under the Plan shall be exempt from treatment as “deferred compensation” subject to Section 409A of the Code unless otherwise specified by the Committee. Towards that end, all Awards under the Plan are intended to contain such terms as will qualify the Awards for an exemption from Section 409A of the Code unless otherwise specified by the Committee. The terms of the Plan and all Awards granted hereunder shall be construed consistent with the foregoing intent. Notwithstanding any other provision hereof, the Committee may amend any outstanding Award without Participant’s consent if, as determined by the Committee, in its sole discretion, such amendment is required either to (a) confirm exemption under Section 409A of the Code, (b) comply with Section 409A of the Code or (c) prevent the Participant from being subject to any tax or penalty under Section 409A of the Code. Notwithstanding the foregoing, however, neither the Company nor any of its Affiliates nor the Committee shall be liable to a Participant or any other Person if an Award that is subject to Section 409A of the Code or the Participant or any other Person is otherwise subject to any additional tax, interest or penalty under Section 409A of the Code. Each Participant is solely responsible for the payment of any tax liability (including any taxes, penalties and interest that may arise under Section 409A of the Code) that may result from an Award. 22.02 409A Awards The Committee may grant Awards under the Plan that are intended to be 409A Awards that comply with Section 409A of the Code. The terms of such 409A Award, including any authority by the Company and the rights of the Participant with respect to such 409A Award, will be subject to such rules and limitations and shall be interpreted in a manner as to comply with Section 409A of the Code. 22.03 Election Requirements If a Participant is permitted to elect to defer an Award or any payment under an Award, such election shall be made in accordance with the requirements of Code Section 409A. Each initial deferral election (an “Initial Deferral Election”) must be received by the Committee prior to the following dates or will have no effect whatsoever: (a) Except as otherwise provided below, the December 31 immediately preceding the year in which the compensation is earned; (b) With respect to any annual or long-term incentive pay which qualifies as “performance-based compensation” within the meaning of Code Section 409A, by the date six (6) months prior to the end of the performance measurement period applicable to such incentive pay provided such additional requirements set forth in Code Section 409A are met; -41- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 46 of 61 7/20/2016 4:34 PM Ex. 1 Page 50 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 50 of 65 (c) With respect to “fiscal year compensation” as defined under Code Section 409A, by the last day of the Company’s fiscal year immediately preceding the year in which the fiscal year compensation is earned; or (d) With respect to mid-year Awards or other legally binding rights to a payment of compensation in a subsequent year that is subject to a forfeiture condition requiring the Participant’s continued service for a period of at least twelve (12) months, on or before the thirtieth (30 ) day following the grant of such Award, provided that the election is made at least twelve (12) months in advance of the earliest date at which the forfeiture condition could lapse. The Committee may, in its sole discretion, permit Participants to submit additional deferral elections in order to delay, but not to accelerate, a payment, or to change the form of payment of an amount of deferred compensation (a “Subsequent Deferral Election”), if, and only if, the following conditions are satisfied: (a) the Subsequent Deferral Election must not take effect until twelve (12) months after the date on which it is made, (b) in the case of a payment other than a payment attributable to the Participant’s death, disability or an unforeseeable emergency (all within the meaning of Section 409A of the Code) the Subsequent Deferral Election further defers the payment for a period of not less than five (5) years from the date such payment would otherwise have been made and (c) the Subsequent Deferral Election is received by the Committee at least twelve (12) months prior to the date the payment would otherwise have been made. In addition, Participants may be further permitted to revise the form of payment they have elected, or the number of installments elected, provided that such revisions comply with the requirements of a Subsequent Deferral Election. 22.04 Time of Payment The time and form of payment of a 409A Award shall be as set forth in an applicable Agreement. A 409A Award may only be paid in connection with a separation from service, a fixed time, death, disability, Change in Control or an unforeseeable emergency within the meaning of Section 409A of the Code. The time of distribution of the 409A Award must be fixed by reference to the specified payment event. Notwithstanding the foregoing, if the time of distribution of the 409A Award is not set forth in the applicable Agreement, then the time of distribution of the 409A Award shall be within two and one-half months of the end of the later of the calendar year or the fiscal year of the Company or Affiliate that employs the Participant in which the 409A Award becomes vested and no longer subject to a substantial risk of forfeiture within the meaning of Code Section 409A. For purposes of Code Section 409A, each installment payment will be treated as the entitlement to a single payment. 22.05 Acceleration or Deferral The Company shall have no authority to accelerate or delay or change the form of any distributions relating to 409A Awards except as permitted under Code Section 409A. -42- th EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 47 of 61 7/20/2016 4:34 PM Ex. 1 Page 51 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 5 of 65 22.06 Distribution Requirements Any distribution of a 409A Award triggered by a Participant’s termination of employment shall be made only at the time that the Participant has had a separation from service within the meaning of Code Section 409A. A separation from service shall occur where it is reasonably anticipated that no further services will be performed after that date or that the level of bona fide services the Participant will perform after that date (whether as an employee or independent contractor of the Company or an Affiliate) will permanently decrease to less than fifty percent (50%) of the average level of bona fide services performed over the immediately preceding thirty-six (36) month period. A Participant shall be considered to have continued employment and to not have a separation from service while on a leave of absence if the leave does not exceed six (6) consecutive months (twenty-nine (29) months for a disability leave of absence) or, if longer, so long as the Participant retains a right to reemployment with the Company or Affiliate under an applicable statute or by contract. For this purpose, a “disability leave of absence” is an absence due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, where such impairment causes the Participant to be unable to perform the duties of Participant’s position of employment or a substantially similar position of employment. Continued services solely as a director of the Company or an Affiliate shall not prevent a separation from service from occurring by an employee as permitted by Section 409A of the Code. 22.07 Key Employee Rule Notwithstanding any other provision of the Plan, any distribution of a 409A Award that would be made upon a separation from service within six (6) months following the separation from service of a “specified employee” as defined under Code Section 409A and as determined under procedures adopted by the Board or its delegate shall instead occur on the first day of the seventh month following the separation from service (or upon the Participant’s death, if earlier) to the extent required by Section 409A of the Code. In the case of installments, this delay shall not affect the timing of any installment otherwise payable after the requisite delay period. 22.08 Distributions Upon Vesting In the case of any Award providing for a distribution upon the lapse of a substantial risk of forfeiture, if the timing of such distribution is not otherwise specified in the Plan or the applicable Agreement, the distribution shall be made not later than two and one-half (2 / ) months after the calendar year in which the risk of forfeiture lapsed. 22.09 Scope and Application of this Provision For purposes of this Article XXII, references to a term or event (including any authority or right of the Company or a Participant) being “permitted” under Code Section 409A means that the term or event will not cause the Participant to be deemed to be in constructive receipt of compensation relating to the 409A Award prior to the distribution of cash, shares of Common Stock or other property or to be liable for payment of interest or a tax penalty under Code Section 409A. -43- 1 2 EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 48 of 61 7/20/2016 4:34 PM Ex. 1 Page 52 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 52 of 65 ARTICLE XXIII EFFECTIVE DATE OF PLAN The Plan is effective on the date of its adoption by the Board, contingent on the approval of the Plan by the Company’s stockholders within twelve (12) months after such date. Awards, other than Restricted Stock or outright grants of shares on Common Stock, may be granted under this Plan on and after the effective date, provided that no Award shall become exercisable, vested, earned or payable unless the Company’s stockholders approve the Plan within twelve (12) months after the Board’s adoption of the Plan. Restricted Stock and outright grants of shares of Common Stock may only be granted after the Company’s stockholders approve the Plan. ARTICLE XXIV DURATION OF PLAN No Award may be granted under this Plan on and after ten (10) years following the effective date of the Plan. Awards granted before that date shall remain valid in accordance with their terms. -44- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 49 of 61 7/20/2016 4:34 PM Ex. 1 Page 53 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 53 of 65 INTREXON CORPORATION 2013 OMNIBUS INCENTIVE PLAN Restricted Stock Agreement No. of shares subject to Restricted Stock Agreement: __________ THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) dated as of the ___ day of _____, _______, between Intrexon Corporation, a Virginia corporation (the “Company”), and ____________________ (the “Participant”), is made pursuant and subject to the provisions of the Company’s 2013 Omnibus Incentive Plan (the “Plan”), a copy of which is attached hereto. All terms used herein that are defined in the Plan have the same meaning given them in the Plan. 1. Grant of Shares. Pursuant to the Plan, the Company, on __________, _____ (the “Date of Grant”), granted to the Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions set forth herein, ________ shares of the Common Stock of the Company (the “Shares”). The Shares shall be nontransferable and forfeitable until the time they vest and become nonforfeitable as described herein. The Shares will vest and become nonforfeitable as hereinafter provided. 2. Terms and Conditions. The Shares are subject to the following terms and conditions: (a) Vesting of Shares. (i) In General. Except as otherwise provided below, _____ percent (__%) of the Shares (rounded down to the nearest whole number of Shares) will become vested and nonforfeitable on each of the ____, _____ and ______ anniversaries of the Date of Grant and the remaining Shares will become vested and nonforfeitable on the ______ anniversary of the Date of Grant, provided the Participant has been continuously employed by, or providing services to, the Company or an Affiliate from the Date of Grant until such time. (ii) Change in Control. Notwithstanding the foregoing, in the event a Change in Control occurs and no provision is made for the continuance, assumption or substitution of the Shares by the Company or its successor in connection with a Change in Control, then, the Shares shall fully vest and become nonforfeitable as of the Change in Control provided the Participant has been continuously employed by, or providing services to, the Company or any Affiliate from the Date of Grant until such time. (iii) Death or Disability. Notwithstanding the foregoing, the Shares shall fully vest and become nonforfeitable, to the extent not then previously vested, in the event the Participant’s employment or service with the Company and its Affiliates is terminated as a result of the Participant’s death or Disability. The Committee, in its sole discretion, shall determine whether the Participant has a Disability for purposes of this Agreement. (iv) Termination without Cause. Notwithstanding the foregoing, the Shares also shall fully vest and become nonforfeitable , to the extent not then previously vested, in the event the Participant’s employment or service with the Company and its Affiliates is terminated by the Company and its Affiliates involuntarily and without Cause. (b) Transferability. Except as provided herein, the Shares are nontransferable while such Shares remain forfeitable, other than by will or the laws of descent and distribution, and during the Participant’s lifetime, may be transferred by the Participant to immediate family members or trusts or other entities on behalf of the Participant and/or immediate family members or for charitable donations. Any such transfer will be permitted only if (i) the Participant does not receive any consideration for the transfer and (ii) the Committee expressly approves the transfer. Any transferee to whom the Shares are transferred shall be bound by the same terms and conditions that governed the Shares during the time it was held by the Participant (which terms and conditions shall still be read from the perspective of the Participant); provided, however, that the transferee may not transfer the -45- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 50 of 61 7/20/2016 4:34 PM Ex. 1 Page 54 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 54 of 65 Shares except by will or the laws of descent and distribution. Any such transfer shall be evidenced by an appropriate written document that the Participant executes and the Participant shall deliver a copy thereof to the Committee on or prior to the effective date of the transfer. No right or interest of the Participant or any transferee in the Shares shall be liable for, or subject to, any lien, obligation or liability of the Participant or any transferee. 3. Forfeiture of the Shares. (a) The Shares will become vested and nonforfeitable, if at all, no later than __________. The Shares that are not vested and nonforfeitable by such time will be forfeited automatically at the close of business on that date or, if earlier, at the time the Shares may no longer become vested and nonforfeitable under any circumstances. (b) Shares that are not vested and nonforfeitable pursuant to Section 2(a) as of the date of termination of the Participant’s employment by, or service with, the Company and its Affiliates will be forfeited automatically at the close of business on that date (or, if earlier, in connection with the termination of the Participant’s employment by, or service with, the Company and its Affiliates for Cause). (c) In no event may the Shares become vested and nonforfeitable, in whole or in part, after forfeiture pursuant to Sections 3(a) or (b) above. 4. Agreement to Terms of the Plan and Agreement. The Participant has received a copy of the Plan, has read and understands the terms of the Plan and this Agreement, and agrees to be bound by their terms and conditions. 5. Withholding of Taxes. The Company’s obligation to deliver the Shares upon vesting is subject to the Participant’s satisfaction of any applicable federal, state and local income and employment tax and withholding requirements in a manner and form satisfactory to the Company. The Company, to the extent applicable law permits, may allow the Participant to pay such withholding amounts (i) by surrendering (actually or by attestation) shares of Common Stock that the Participant already owns (but only for the minimum required withholding), (ii) by a cashless exercise through a broker, (iii) by means of a “net exercise” procedure or (iv) by such other medium of payment as the Company in its discretion shall authorize. 6. Tax Consequences. The Participant acknowledges (i) that there may be adverse tax consequences upon acquisition or disposition of the Shares and (ii) that Participant should consult a tax adviser prior to such acquisition or disposition. The Participant is solely responsible for determining the tax consequences of the Shares and for satisfying the Participant’s tax obligations with respect to the Shares (including, but not limited to, any income or excise tax as resulting from the application of Code Section 409A), and the Company shall not be liable if this Award is subject to Code Section 409A. 7. Fractional Shares. Fractional shares shall not be issuable hereunder, and when any provision hereof may entitle the Participant to a fractional share such fractional share shall be disregarded. 8. Change in Capital Structure. The terms of this Agreement shall be adjusted in accordance with the terms and conditions of the Plan as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock splits, subdivisions or consolidations of shares or other similar changes in capitalization. 9. Notice. Any notice or other communication given pursuant to this Agreement, or in any way with respect to this Agreement, shall be in writing and shall be personally delivered or mailed by United States registered or certified mail, postage prepaid, return receipt requested, to the following addresses: If to the Company: Intrexon Corporation 1872 Pratt Drive Blacksburg, VA 24060 Attention: Secretary If to the Participant: ____________________________ ____________________________ ____________________________ -46- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 51 of 61 7/20/2016 4:34 PM Ex. 1 Page 55 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 55 of 65 10. Shareholder Rights. While the Shares may be forfeited and are nontransferable, a Participant will have all rights of a stockholder with respect to the Shares, including the right to receive dividends and vote the shares; provided, however, that during such period (a) a Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Shares, (b) the Company shall retain custody of any certificates evidencing the Shares and (c) the Participant will deliver to the Company a stock power, endorsed in blank, with respect to this Agreement. In lieu of retaining custody of the certificates evidencing Shares granted pursuant to this Agreement, the shares of Common Stock granted pursuant to this Agreement may, in the Company’s discretion, be held in escrow by the Company or recorded as outstanding by notation on the stock records of the Company until the Participant’s interest in such Shares vest. Notwithstanding the preceding sentences, dividends payable with respect to the Shares shall accumulate (without interest) and become payable in cash or in shares of Common Stock to the Participant at the time, and only to the extent that, the portion of the Shares to which the dividends relate has become transferable and nonforfeitable. The limitations set forth in the preceding sentences shall not apply after the Shares are transferable and are no longer forfeitable. 11. No Right to Continued Employment or Service. Neither the Plan, the granting of the Shares nor any other action taken pursuant to the Plan or this Agreement constitutes or is evidence of any agreement or understanding, expressed or implied, that the Company or any Affiliate shall retain the Participant as an employee or other service provider for any period of time or at any particular rate of compensation. 12. Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Participant and the successors of the Company. 13. Conflicts. In the event of any conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof. 14. Counterparts. This Agreement may be executed in a number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one in the same instrument. 15. Miscellaneous. The parties agree to execute such further instruments and take such further actions as may be necessary to carry out the intent of the Plan and this Agreement. This Agreement and the Plan shall constitute the entire agreement of the parties with respect to the subject matter hereof. 16. Section 409A. Notwithstanding any of the provisions of this Agreement, it is intended that this Agreement be exempt from Section 409A of the Code. Notwithstanding the preceding, neither the Company nor any Affiliate shall be liable to the Participant or any other person if the Internal Revenue Service or any court or other authority have any jurisdiction over such matter determines for any reason that this Agreement is subject to taxes, penalties or interest as a result of failing to be exempt from, or comply with, Section 409A of the Code. 17. Governing Law. This Agreement shall be governed by the laws of the State of Virginia, except to the extent federal law applies. -47- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 52 of 61 7/20/2016 4:34 PM Ex. 1 Page 56 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 56 of 65 IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer, and the Participant has affixed his signature hereto. COMPANY: INTREXON CORPORATION By: Name: Title: PARTICIPANT: [Participant’s Name] -48- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 53 of 61 7/20/2016 4:34 PM Ex. 1 Page 57 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 57 of 65 INTREXON CORPORATION 2013 OMNIBUS INCENTIVE PLAN Incentive Stock Option Agreement No. of shares subject to Incentive Stock Option: __________ THIS INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”) dated as of the ___ day of _____, _______, between Intrexon Corporation, a Virginia corporation (the “Company”), and ____________________ (the “Participant”), is made pursuant and subject to the provisions of the Company’s 2013 Omnibus Incentive Plan (the “Plan”), a copy of which is attached hereto. All terms used herein that are defined in the Plan have the same meaning given them in the Plan. 1. Grant of Option. Pursuant to the Plan, the Company, on __________, _____ (the “Date of Grant”), granted to the Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions set forth herein, the right and option to purchase from the Company all or any part of an aggregate of ________ shares of the Common Stock of the Company, at the price of $______ per share (which is not less than the Fair Market Value of a share of Common Stock on the Date of Grant). In the case of a Ten Percent Shareholder, the price per share shall not be less than 110 percent of the Fair Market Value of a share of Common Stock of the Company on the Date of Grant. This Option is intended to be treated as an “Incentive Stock Option” under Code Section 422, but only to the extent the aggregate Fair Market Value (determined as of the Date of Grant) of the shares for which the Option (and all other options of the Participant that are intended to be Incentive Stock Options whether granted under the Plan or any other plan of the Company or any of its Affiliates) becomes exercisable for the first time in any calendar year does not exceed One Hundred Thousand Dollars ($100,000). The Company makes no representation (other than the above expression of intent) or warranty whatsoever to the Participant as to the tax consequences of the grant or exercise of the Option or the disposition of the shares acquired hereunder. In the event that the Option awarded under this Agreement does not qualify for special tax treatment as an Incentive Stock Option, the Option may be exercisable as a Nonqualified Stock Option. The Company shall not be liable to the Participant if the Option or any portion thereof does not qualify as an Incentive Stock Option. 2. Terms and Conditions. This Option is subject to the following terms and conditions: (a) Expiration Date. This Option shall expire at 11:59 p.m. on ________, ______ (the “Expiration Date”) or such earlier time as set forth in Sections 3, 4, 5 or 6 of this Agreement. In no event shall the Expiration Date be later than 10 years from the Date of Grant. In the case of a Ten Percent Shareholder, the Option shall expire no later than 5 years from the Date of Grant. (b) Vesting of Option. (i) In General. Except as otherwise provided below, this Option shall become exercisable with respect to ______ percent (____%) of the shares of Common Stock subject to the Option (rounded to the nearest whole share) on each of the _____, ____ and ______ anniversaries of the Date of Grant and with respect to the remaining shares of Common Stock subject to the Option on the _____ anniversary of the Date of Grant, provided the Participant has been continuously employed by the Company or an Affiliate from the Date of Grant until such time. Once this Option has become exercisable, it shall continue to be exercisable until the earlier of the termination of the Participant’s rights hereunder pursuant to Sections 3, 4, 5 or 6 of this Agreement or the Expiration Date. A partial exercise of this Option shall not affect the Participant’s right to exercise this Option with respect to the remaining shares of Common Stock, subject to the conditions of the Plan and this Agreement. (ii) Change in Control. Notwithstanding the foregoing, in the event a Change in Control occurs and no provision is made for the continuance, assumption or substitution of the Option by the Company or its successor in connection with a Change in Control, then, the Option shall become exercisable in full, to the extent not exercisable previously, on the earlier of the Control Change Date or the date the Option is to be terminated in connection with the Change in Control, provided the Participant has remained continuously employed by the Company or any Affiliate from the Date of Grant until such time. -49- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 54 of 61 7/20/2016 4:34 PM Ex. 1 Page 58 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 58 of 65 (iii) Death or Disability. Notwithstanding the foregoing, this Option also shall become exercisable in full, to the extent not then previously exercisable, in the event the Participant’s employment with the Company and its Affiliates is terminated as a result of the Participant’s death or Disability. The Committee, in its sole discretion, shall determine whether the Participant has a Disability for purposes of this Agreement. (iv) Termination without Cause. Notwithstanding the foregoing, this Option also shall become exercisable in full, to the extent not then previously exercisable, in the event the Participant’s employment with the Company and its Affiliates is terminated by the Company or any Affiliate involuntarily and without Cause. (c) Method of Exercise and Payment for Shares. This Option shall be exercised by delivering written notice of exercise, along with the Option price for the portion of the Option being exercised and all applicable tax withholdings, to the attention of the Company’s Secretary at the Company’s address specified in Section 10 below. The exercise date shall be the date of delivery. The Participant shall pay the Option price and all applicable tax withholdings in cash or cash equivalent acceptable to the Committee. However, the Committee in its discretion may, but is not required to, allow the Participant to pay the Option price and tax withholdings (i) by surrendering shares of Common Stock the Participant already owns, (ii) by a cashless exercise through a broker, (iii) by means of a “net settlement” procedure, (iv) by such other medium of payment as the Committee shall authorize or (v) by any combination of the allowable methods of payment set forth herein. (d) Transferability. Except as provided herein, this Option is nontransferable and, during the Participant’s lifetime, only the Participant may exercise this Option. Notwithstanding the foregoing, this Option may be transferred by will or the laws of descent and distribution. 3. Exercise in the Event of Death or Disability. This Option shall be exercisable for all or part of the number of shares of Common Stock that the Participant is entitled to purchase pursuant to Section 2(b) as of the date the Participant ceases to be employed by the Company and its Affiliates as a result of the Participant’s death or Disability prior to the Expiration Date and the termination of the Participant’s rights under Sections 4 or 5 of this Agreement. In that event, this Option may be exercised by the Participant, the Participant’s estate, or the person or persons to whom the Participant’s rights under this Option shall pass by will or the laws of descent and distribution, for the remainder of the period preceding the Expiration Date or within twelve (12) months after the date the Participant ceases to be employed by the Company and its Affiliates as a result of the Participant’s death or Disability, whichever period is shorter. 4. Exercise After Retirement. This Option shall be exercisable for all or part of the number of shares of Common Stock that the Participant is entitled to purchase pursuant to Section 2(b) as of the date the Participant ceases to be employed by the Company and its Affiliates as a result of the Participant’s Retirement prior to the Expiration Date and the termination of the Participant’s rights under Sections 3, 5 or 6 of this Agreement. In that event, the Participant may exercise this Option for the remainder of the period preceding the Expiration Date or until the date that is twelve (12) months after the date the Participant ceases to be employed by the Company and its Affiliates due to Retirement, whichever period is shorter. 5. Exercise After Termination of Employment. This Option shall be exercisable for all or part of the number of shares of Common Stock that the Participant is entitled to purchase pursuant to Section 2(b) as of the date the Participant ceases to be employed by the Company and its Affiliates, if the Participant ceases to be employed by the Company and its Affiliates other than as a result of the Participant’s death, Disability or Retirement and other than as the result of the termination of employment by the Company or an Affiliate for Cause prior to the Expiration Date and the termination of the Participant’s rights under Sections 3 or 5 of this Agreement. In that event, the Participant may exercise this Option for the remainder of the period preceding the Expiration Date or until the date that is ninety (90) days after the date Participant ceases to be employed by the Company and its Affiliates, whichever period is shorter. -50- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 55 of 61 7/20/2016 4:34 PM Ex. 1 Page 59 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 59 of 65 6. Termination of Employment for Cause. Notwithstanding any other provision of this Agreement, all rights hereunder will be immediately discontinued and forfeited, and the Company shall not have any further obligation hereunder to the Participant, and the Option will not be exercisable for any number of shares of Common Stock (even if the Option previously became exercisable), on and after the time the Participant is discharged from employment with the Company and its Affiliates by the Company or an Affiliate for Cause. 7. Agreement to Terms of the Plan and Agreement. The Participant has received a copy of the Plan, has read and understands the terms of the Plan and this Agreement, and agrees to be bound by their terms and conditions. 8. Tax Consequences. The Participant acknowledges (i) that there may be adverse tax consequences upon acquisition or disposition of the shares of Common Stock received upon exercise of this Option and (ii) that Participant should consult a tax adviser prior to such acquisition or disposition. The Participant is solely responsible for determining the tax consequences of the Option and for satisfying the Participant’s tax obligations with respect to the Option (including, but not limited to, any income or excise tax as resulting from the application of Code Section 409A), and the Company shall not be liable if this Award is subject to Code Section 409A. If the Participant disposes of the Option shares within two years of the grant of the Option or within one year after the Option shares are transferred to the Participant, whichever is later (“Disqualifying Disposition”), the Participant shall notify the Company of the Disqualifying Disposition. If, due to the Disqualifying Disposition, gain attributable to the exercise of the Option becomes includible in the Participant’s gross income for Federal income tax purposes with respect to the Option, the Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any Federal, state and local taxes of any kind required by law to be withheld or paid with respect to that amount. If permitted by the Company, tax withholding or payment obligations may be settled with Common Stock of the company, including Common Stock that is part of the Option that gives rise to the withholding requirement. The obligations of the Company under the Plan and pursuant to this Agreement shall be conditioned upon that payment or arrangements with the Company and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant from the Company or any Affiliate. 9. Fractional Shares. Fractional shares shall not be issuable hereunder, and when any provision hereof may entitle the Participant to a fractional share such fractional share shall be disregarded. 10. Change in Capital Structure. The terms of this Option shall be adjusted in accordance with the terms and conditions of the Plan as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock splits, subdivisions or consolidations of shares or other similar changes in capitalization. 11. Notice. Any notice or other communication given pursuant to this Agreement, or in any way with respect to this Option, shall be in writing and shall be personally delivered or mailed by United States registered or certified mail, postage prepaid, return receipt requested, to the following addresses: If to the Company: Intrexon Corporation 1872 Pratt Drive Blacksburg, VA 24060 Attention: Secretary If to the Participant: ____________________________ ____________________________ ____________________________ 12. Shareholder Rights. The Participant shall not have any rights as a shareholder with respect to shares of Common Stock subject to this Option until the issuance of the shares of the Common Stock upon exercise of the Option. 13. No Right to Continued Employment. Neither the Plan, the granting of this Option nor any other action taken pursuant to the Plan or this Option constitutes or is evidence of any agreement or understanding, expressed or implied, that the Company or any Affiliate shall retain the Participant as an employee for any period of time or at any particular rate of compensation. -51- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 56 of 61 7/20/2016 4:34 PM Ex. 1 Page 60 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 60 of 65 14. Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Participant and the successors of the Company. 15. Conflicts. In the event of any conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof. 16. Counterparts. This Agreement may be executed in a number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one in the same instrument. 17. Miscellaneous. The parties agree to execute such further instruments and take such further actions as may be necessary to carry out the intent of the Plan and this Agreement. This Agreement and the Plan shall constitute the entire agreement of the parties with respect to the subject matter hereof. 18. Section 409A. Notwithstanding any of the provisions of this Agreement, it is intended that the Option be exempt from Section 409A of the Code. Notwithstanding the preceding, neither the Company nor any Affiliate shall be liable to the Participant or any other person if the Internal Revenue Service or any court or other authority have any jurisdiction over such matter determines for any reason that the Option is subject to taxes, penalties or interest as a result of failing to be exempt from, or comply with, Section 409A of the Code. 19. Governing Law. This Agreement shall be governed by the laws of the State of Virginia, except to the extent federal law applies. IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer, and the Participant has affixed his signature hereto. COMPANY: INTREXON CORPORATION By: Name: Title: PARTICIPANT: [Participant’s Name] -52- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 57 of 61 7/20/2016 4:34 PM Ex. 1 Page 61 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 6 of 65 INTREXON CORPORATION 2013 OMNIBUS INCENTIVE PLAN Nonqualified Stock Option Agreement No. of shares subject to Nonqualified Stock Option: __________ THIS NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of the ___ day of _____, _______, between Intrexon Corporation, a Virginia corporation (the “Company”), and ____________________ (the “Participant”), is made pursuant and subject to the provisions of the Company’s 2013 Omnibus Incentive Plan (the “Plan”), a copy of which is attached hereto. All terms used herein that are defined in the Plan have the same meaning given them in the Plan. 1. Grant of Option. Pursuant to the Plan, the Company, on __________, _____ (the “Date of Grant”), granted to the Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions set forth herein, the right and option to purchase from the Company all or any part of an aggregate of ________ shares of the Common Stock of the Company, at the price of $______ per share (which is not less than the Fair Market Value of a share of Common Stock on the Date of Grant). This Option is intended to be treated as a nonqualified stock option, which is not subject to Code Section 422. This Option is exercisable as hereinafter provided. 2. Terms and Conditions. This Option is subject to the following terms and conditions: (a) Expiration Date. This Option shall expire at 11:59 p.m. on ________, ______ (the “Expiration Date”) or such earlier time as set forth in Sections 3, 4, 5 or 6 of this Agreement. In no event shall the Expiration Date be later than 10 years from the Date of Grant. (b) Vesting of Option. (i) In General. Except as otherwise provided below, this Option shall become exercisable with respect to ______ percent (____%) of the shares of Common Stock subject to the Option (rounded to the nearest whole share) on each of the _____, ____ and ______ anniversaries of the Date of Grant and with respect to the remaining shares of Common Stock subject to the Option on the _____ anniversary of the Date of Grant, provided the Participant has been continuously employed by, or providing services to, the Company or an Affiliate from the Date of Grant until such time. Once this Option has become exercisable, it shall continue to be exercisable until the earlier of the termination of the Participant’s rights hereunder pursuant to Sections 3, 4, 5 or 6 of this Agreement or the Expiration Date. A partial exercise of this Option shall not affect the Participant’s right to exercise this Option with respect to the remaining shares of Common Stock, subject to the conditions of the Plan and this Agreement. (ii) Change in Control. Notwithstanding the foregoing, in the event a Change in Control occurs and no provision is made for the continuance, assumption or substitution of the Option by the Company or its successor in connection with a Change in Control, then, the Option shall become exercisable in full, to the extent not exercisable previously, on the earlier of the Control Change Date or the date the Option is to be terminated in connection with the Change in Control, provided the Participant has remained continuously employed by, or providing service to, the Company or any Affiliate from the Date of Grant until such time. (iii) Death or Disability. Notwithstanding the foregoing, this Option also shall become exercisable in full, to the extent not then previously exercisable, in the event the Participant’s employment or service with the Company and its Affiliates is terminated as a result of the Participant’s death or Disability. The Committee, in its sole discretion, shall determine whether the Participant has a Disability for purposes of this Agreement. -53- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 58 of 61 7/20/2016 4:34 PM Ex. 1 Page 62 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 62 of 65 (iv) Termination without Cause. Notwithstanding the foregoing, this Option also shall become exercisable in full, to the extent not then previously exercisable, in the event the Participant’s employment or service with the Company and its Affiliates is terminated by the Company or any Affiliate involuntarily and without Cause. (c) Method of Exercise and Payment for Shares. This Option shall be exercised by delivering written notice of exercise, along with the Option price for the portion of the Option being exercised and all applicable tax withholdings, to the attention of the Company’s Secretary at the Company’s address specified in Section 10 below. The exercise date shall be the date of delivery. The Participant shall pay the Option price and all applicable tax withholdings in cash or cash equivalent acceptable to the Committee. However, the Committee in its discretion may, but is not required to, allow the Participant to pay the Option price and tax withholdings (i) by surrendering shares of Common Stock the Participant already owns, (ii) by a cashless exercise through a broker, (iii) by means of a “net settlement” procedure, (iv) by such other medium of payment as the Committee shall authorize or (v) by any combination of the allowable methods of payment set forth herein. (d) Transferability. Except as provided herein, this Option is nontransferable and, during the Participant’s lifetime, only the Participant may exercise this Option. Notwithstanding the foregoing, this Option may be transferred by will or the laws of descent and distribution, and during the Participant’s lifetime, may be transferred by the Participant to immediate family members or trusts or other entities on behalf of the Participant and/or immediate family members or for charitable donations. Any such transfer will be permitted only if (i) the Participant does not receive any consideration for the transfer and (ii) the Committee expressly approves the transfer. Any transferee to whom this Option is transferred shall be bound by the same terms and conditions that governed this Option during the time it was held by the Participant (which terms and conditions shall still be read from the perspective of the Participant); provided, however, that the transferee may not transfer this Option except by will or the laws of descent and distribution. Any such transfer shall be evidenced by an appropriate written document that the Participant executes and the Participant shall deliver a copy thereof to the Committee on or prior to the effective date of the transfer. No right or interest of the Participant or any transferee in this Option shall be liable for, or subject to, any lien, obligation or liability of the Participant or any transferee. 3. Exercise in the Event of Death or Disability. This Option shall be exercisable for all or part of the number of shares of Common Stock that the Participant is entitled to purchase pursuant to Section 2(b) as of the date the Participant ceases to be employed by or provide services to the Company and its Affiliates as a result of the Participant’s death or Disability prior to the Expiration Date and the termination of the Participant’s rights under Sections 4, 5 or 6 of this Agreement. In that event, this Option may be exercised by the Participant, the Participant’s estate, or the person or persons to whom the Participant’s rights under this Option shall pass by will or the laws of descent and distribution, for the remainder of the period preceding the Expiration Date or within twelve (12) months after the date the Participant ceases to be employed by or provide services to the Company and its Affiliates as a result of the Participant’s death or Disability, whichever period is shorter. 4. Exercise After Retirement. This Option shall be exercisable for all or part of the number of shares of Common Stock that the Participant is entitled to purchase pursuant to Section 2(b) as of the date the Participant ceases to be employed by, or provide services to, the Company and its Affiliates as a result of the Participant’s Retirement prior to the Expiration Date and the termination of the Participant’s rights under Sections 3, 5 or 6 of this Agreement. In that event, the Participant may exercise this Option for the remainder of the period preceding the Expiration Date or until the date that is twelve (12) months after the date the Participant ceases to be employed by, or provide services to, the Company and its Affiliates due to Retirement, whichever period is shorter. 5. Exercise After Termination of Employment or Service. This Option shall be exercisable for all or part of the number of shares of Common Stock that the Participant is entitled to purchase pursuant to Section 2(b) as of the date the Participant ceases to be employed by, or provide services to, the Company and its Affiliates, if the Participant ceases to be employed by, or provide services to, the Company and its Affiliates other than as a result of the Participant’s death, Disability or Retirement and other than as the result of termination of service or employment by the Company or any Affiliate for Cause prior to the Expiration Date and the termination of the Participant’s rights under Sections 3, 4 or 6 of this Agreement. In that event, the Participant may exercise this Option for the remainder of the period preceding the Expiration Date or until the date that is ninety (90) days after the date Participant ceases to be employed by, or provide services to, the Company and its Affiliates, whichever period is shorter. -54- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 59 of 61 7/20/2016 4:34 PM Ex. 1 Page 63 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 63 of 65 6. Termination of Employment or Service for Cause. Notwithstanding any other provision of this Agreement, all rights hereunder will be immediately discontinued and forfeited, and the Company shall not have any further obligation hereunder to the Participant, and the Option will not be exercisable for any number of shares of Common Stock (even if the Option previously became exercisable), on and after the time the Participant is discharged from employment or service with the Company and its Affiliates by the Company or an Affiliate for Cause. 7. Agreement to Terms of the Plan and Agreement. The Participant has received a copy of the Plan, has read and understands the terms of the Plan and this Agreement, and agrees to be bound by their terms and conditions. 8. Tax Consequences. The Participant acknowledges (i) that there may be adverse tax consequences upon acquisition or disposition of the shares of Common Stock received upon exercise of this Option and (ii) that Participant should consult a tax adviser prior to such acquisition or disposition. The Participant is solely responsible for determining the tax consequences of the Option and for satisfying the Participant’s tax obligations with respect to the Option (including, but not limited to, any income or excise tax as resulting from the application of Code Section 409A), and the Company shall not be liable if this Award is subject to Code Section 409A. 9. Fractional Shares. Fractional shares shall not be issuable hereunder, and when any provision hereof may entitle the Participant to a fractional share such fractional share shall be disregarded. 10. Change in Capital Structure. The terms of this Option shall be adjusted in accordance with the terms and conditions of the Plan as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock splits, subdivisions or consolidations of shares or other similar changes in capitalization. 11. Notice. Any notice or other communication given pursuant to this Agreement, or in any way with respect to this Option, shall be in writing and shall be personally delivered or mailed by United States registered or certified mail, postage prepaid, return receipt requested, to the following addresses: If to the Company: Intrexon Corporation 1872 Pratt Drive Blacksburg, VA 24060 Attention: Secretary If to the Participant: ____________________________ ____________________________ ____________________________ 12. Shareholder Rights. The Participant shall not have any rights as a shareholder with respect to shares of Common Stock subject to this Option until the issuance of the shares of the Common Stock upon exercise of the Option. 13. No Right to Continued Employment or Service. Neither the Plan, the granting of this Option nor any other action taken pursuant to the Plan or this Option constitutes or is evidence of any agreement or understanding, expressed or implied, that the Company or any Affiliate shall retain the Participant as an employee or other service provider for any period of time or at any particular rate of compensation. 14. Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Participant and the successors of the Company. -55- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 60 of 61 7/20/2016 4:34 PM Ex. 1 Page 64 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 64 of 65 15. Conflicts. In the event of any conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof. 16. Counterparts. This Agreement may be executed in a number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one in the same instrument. 17. Miscellaneous. The parties agree to execute such further instruments and take such further actions as may be necessary to carry out the intent of the Plan and this Agreement. This Agreement and the Plan shall constitute the entire agreement of the parties with respect to the subject matter hereof. 18. Section 409A. Notwithstanding any of the provisions of this Agreement, it is intended that the Option be exempt from Section 409A of the Code. Notwithstanding the preceding, neither the Company nor any Affiliate shall be liable to the Participant or any other person if the Internal Revenue Service or any court or other authority have any jurisdiction over such matter determines for any reason that the Option is subject to taxes, penalties or interest as a result of failing to be exempt from, or comply with, Section 409A of the Code. 19. Governing Law. This Agreement shall be governed by the laws of the State of Virginia, except to the extent federal law applies. IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer, and the Participant has affixed his signature hereto. COMPANY: INTREXON CORPORATION By: Name: Title: PARTICIPANT: [Participant’s Name] -56- EX-10.2 https://www.sec.gov/Archives/edgar/data/1356090/0001193125133... 61 of 61 7/20/2016 4:34 PM Ex. 1 Page 65 Case 3:16-cv-01826-BTM-JMA Document 12-2 Fil d 01/10/17 P ge 65 of 65