Shutterfly 2011 Annual Report Download - page 85

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13. WITHHOLDING TAXES .
13.1 Withholding Generally
. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the
Company may require the Participant to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such Shares. Whenever, under this Plan, payments in satisfaction of
Awards are to be made in cash, such payment will be net of an amount sufficient to satisfy federal, state, and local withholding tax requirements.
13.2 Stock Withholding
. When, under applicable tax laws, a Participant incurs tax liability in connection with the
exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be
withheld, the Committee may in its sole discretion allow the Participant to satisfy the minimum withholding tax obligation by electing to have
the Company withhold from the Shares to be issued that number of Shares having a Fair Market Value equal to the minimum amount required to
be withheld, determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements established by the Committee and be in writing in a form acceptable
to the Committee.
14. TRANSFERABILITY .
14.1 General Rule
. Except as otherwise provided in this Section 14, no Award and no interest therein, shall be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent and distribution, and no
Award may be made subject to execution, attachment or similar process.
14.2 All Awards other than NQSOs . All Awards other than NQSOs shall be exercisable: (i) during the Participant’
s
lifetime only by (A) the Participant, or (B) the Participant’s guardian or legal representative; and (ii) after the Participant’
s death, by the legal
representative of the Participant’s heirs or legatees.
14.3 NQSOs . Unless otherwise restricted by the Committee, an NQSO shall be exercisable: (i) during the Participant’
s
lifetime only by (A) the Participant, (B) the Participant’
s guardian or legal representative, (C) a Family Member of the Participant who has
acquired the NQSO by “permitted transfer;” and (ii) after the Participant’s death, by the legal representative of the Participant’
s heirs or
legatees. “ Permitted transfer ”
means, as authorized by this Plan and the Committee in an NQSO, any transfer effected by the Participant
during the Participant’
s lifetime of an interest in such NQSO but only such transfers which are by gift or domestic relations order. A permitted
transfer does not include any transfer for value and neither of the following are transfers for value: (a) a transfer under a domestic relations order
in settlement of marital property rights or (b) a transfer to an entity in which more than fifty percent of the voting interests are owned by Family
Members or the Participant in exchange for an interest in that entity.
15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES .
15.1 Voting and Dividends
. No Participant will have any of the rights of a shareholder with respect to any Shares until
the Shares are issued to the Participant. After Shares are issued to the Participant, the Participant will be a shareholder and have all the rights of
a shareholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to
such Shares; provided
, that if such Shares are restricted stock, then any new, additional or different securities the Participant may become
entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of
the Company will be subject to the same restrictions as the restricted stock; provided , further
, that the Participant will have no right to retain
such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’
s Exercise Price pursuant to Section
15.2.
15.2 Restrictions on Shares . At the discretion of the Committee, the Company may reserve to itself and/or its assignee
(s) a right to repurchase (a “ Right of Repurchase ”) a portion of or all Unvested Shares held by a Participant following such Participant’
s
Termination at any time within ninety (90) days after the later of the Participant’
s Termination Date and the date the Participant purchases
Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Exercise Price, as the case may be.