ADAMIS
PHARMACEUTICALS CORPORATION
2009
EQUITY INCENTIVE PLAN
1.
GENERAL.
(a) Successor to Prior
Plan.
The Plan is intended as the successor to the Company's
2005 Equity Incentive Plan (the
"Prior
Plan"
). Following the Effective Date, no additional stock awards shall be
granted under the Prior Plan. Any shares remaining available for issuance
pursuant to the exercise of stock awards under the Prior Plan shall become
available for issuance pursuant to Stock Awards granted hereunder. Any shares
subject to outstanding stock awards granted under the Prior Plan that expire or
terminate for any reason prior to exercise or settlement shall become available
for issuance pursuant to Stock Awards granted hereunder. On the Effective Date,
all outstanding stock awards granted under the Prior Plan shall be deemed to be
stock awards granted pursuant to the Plan, but shall remain subject to the terms
of the Prior Plan with respect to which they were originally granted. All Stock
Awards granted subsequent to the Effective Date shall be subject to the terms of
the Plan.
(b) Eligible Award
Recipients.
The persons eligible to receive Awards are
Employees, Directors and Consultants.
(c) Available
Awards.
The Plan provides for the grant of the following
Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii)
Restricted Stock Awards, (iv) Restricted Stock Unit Awards, (v) Stock
Appreciation Rights, (vi) Performance Stock Awards, (vii) Performance Cash
Awards, and (viii) Other Stock Awards.
(d) General
Purpose.
The Company, by means of the Plan, seeks to secure
and retain the services of the group of persons eligible to receive Awards as
set forth in Section 1(b), to provide incentives for such persons to exert
maximum efforts for the success of the Company and any Affiliate and to provide
a means by which such eligible recipients may be given an opportunity to benefit
from increases in value of the Common Stock through the granting of Stock
Awards.
2. ADMINISTRATION.
(a) Administration by
Board.
The Board shall administer the Plan unless and until
the Board delegates administration of the Plan to a Committee or Committees, as
provided in Section 2(c).
(b) Powers of
Board.
The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(i)
To determine
from time to time (A) which of the persons eligible under the Plan shall be
granted Awards; (B) when and how each Award shall be granted; (C) what type or
combination of types of Award shall be granted; (D) the provisions of each Award
granted (which need not be identical), including the time or times when a person
shall be permitted to receive cash or Common Stock pursuant to a Stock Award;
and (E) the number of shares of Common Stock with respect to which a Stock Award
shall be granted to each such person.
(iii)
To settle all
controversies regarding the Plan and Awards granted under it.
(iv)
To accelerate
the time at which a Stock Award may first be exercised or the time during which
an Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Award stating the time at which it may
first be exercised or the time during which it will vest.
(v)
To suspend or
terminate the Plan at any time. Suspension or termination of the Plan shall not
impair rights and obligations under any Stock Award granted while the Plan is in
effect except with the written consent of the affected Participant.
(vi)
To amend the
Plan in any respect the Board deems necessary or advisable, including, without
limitation, relating to Incentive Stock Options and certain nonqualified
deferred compensation under Section 409A of the Code and to bring the Plan
and/or Stock Awards granted under the Plan into compliance therewith, subject to
the limitations, if any, of applicable law. However, except as provided in
Section 9(a) relating to Capitalization Adjustments, stockholder approval shall
be required for any amendment of the Plan that either (A) materially increases
the number of shares of Common Stock available for issuance under the Plan, (B)
materially expands the class of individuals eligible to receive Awards under the
Plan, (C) materially increases the benefits accruing to Participants under the
Plan or materially reduces the price at which shares of Common Stock may be
issued or purchased under the Plan, (D) materially extends the term of the Plan,
or (E) expands the types of Awards available for issuance under the Plan, but in
each of (A) to (E) only to the extent required by applicable law or listing
requirements. Except as provided above, rights under any Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(1) the Company requests the consent of the affected Participant, and (2) such
Participant consents in writing.
(vii)
To submit any amendment
to the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of (A) Section 162(m) of the
Code and the regulations thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
Covered Employees, (B) Section 422 of the Code regarding Incentive Stock Options
or (C) Rule 16b-3.
(viii)
To approve forms of
Award Agreements for use under the Plan and to amend the terms of any one or
more Awards or stock awards granted under the Prior Plan, including, but not
limited to, amendments to provide terms more favorable to the Participant than
previously provided in the Award Agreement, subject to any specified limits in
the Plan that are not subject to Board discretion;
provided however,
that the
Participant's rights under any Award shall not be impaired by any such amendment
unless (A) the Company requests the consent of the affected Participant, and (B)
such Participant consents in writing. Notwithstanding the foregoing, subject to
the limitations of applicable law, if any, the Board may amend the terms of any
one or more Awards without the affected Participant's consent if necessary to
maintain the qualified status of the Award as an Incentive Stock Option or to
bring the Award into compliance with Section 409A of the Code and Department of
Treasury regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other guidance that may be
issued or amended after the Effective Date.
(ix)
Generally, to
exercise such powers and to perform such acts as the Board deems necessary or
expedient to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan or Awards.
(x)
To adopt such
procedures and sub-plans as are necessary or appropriate to permit or facilitate
participation in the Plan by Employees, Directors or Consultants who are foreign
nationals or employed outside the United States.
(xi)
To effect, at
any time and from time to time, with the consent of any adversely affected
Optionholder, (A) the reduction of the exercise price of any outstanding Option
under the Plan; (B) the cancellation of any outstanding Option under the Plan
and the grant in substitution therefor of (1) a new Option under the Plan or
another equity plan of the Company covering the same or a different number of
shares of Common Stock, (2) a Restricted Stock Award (including a stock bonus),
(3) a Stock Appreciation Right, (4) Restricted Stock Unit, (5) an Other Stock
Award, (6) cash and/or (7) other valuable consideration (as determined by the
Board, in its sole discretion); or (C) any other action that is treated as a
repricing under generally accepted accounting principles.
(c) Delegation to
Committee.
(i)
General.
The Board
may delegate some or all of the administration of the Plan to a Committee or
Committees. If administration of the Plan is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board that have been delegated to the
Committee, including the power to delegate to a subcommittee of the Committee
any of the administrative powers the Committee is authorized to exercise (and
references in the Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may retain the authority to concurrently administer the Plan with the
Committee and may, at any time, revest in the Board some or all of the powers
previously delegated to the Committee, Committees, subcommittee or
subcommittees.
(ii)
Section 162(m) and Rule 16b-3
Compliance.
In the sole discretion of the Board, the Committee
may consist solely of two (2) or more Outside Directors, in accordance with
Section 162(m) of the Code, or solely of two (2) or more Non-Employee Directors,
in accordance with Rule 16b-3. In addition, the Board or the Committee, in its
sole discretion, may (A) delegate to a Committee which need not consist of
Outside Directors the authority to grant Awards to eligible persons who are
either (1) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Stock Award,
or (2) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code, or (B) delegate to a Committee which need not
consist of Non-Employee Directors the authority to grant Stock Awards to
eligible persons who are not then subject to Section 16 of the Exchange
Act.
(d) Delegation to an
Officer.
The Board may delegate to one or more Officers the
authority to do one or both of the following (i) designate Employees who are not
Officers to be recipients of Options (and, to the extent permitted by applicable
law, other Stock Awards) and the terms thereof, and (ii) determine the number of
shares of Common Stock to be subject to such Stock Awards granted to such
Employees;
provided,
however,
that the Board resolutions regarding such delegation shall
specify the total number of shares of Common Stock that may be subject to the
Stock Awards granted by such Officer and that such Officer may not grant a Stock
Award to himself or herself. Notwithstanding anything to the contrary in this
Section 2(d), the Board may not delegate to an Officer authority to determine
the Fair Market Value pursuant to Section 13(v)(ii) below. The Board
may delegate to one of more officers the authority to renew and resolve disputes
with respect to Awards held by Participants who are not an officer or director
of the Company or any other person whose transactions in the Company’s common
stock are subject to Section 16 of the Exchange Act.
(e) Effect of Board's
Decision.
All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all
persons.
3. SHARES
SUBJECT TO THE PLAN.
(a) Share
Reserve.
Subject to the provisions of Section 9(a) relating to
Capitalization Adjustments, the aggregate number of shares of Common Stock that
may be issued pursuant to Stock Awards shall consist of the sum of the seven
million (7,000,000) of Common Stock (the
"Share
Reserve"
). In addition, the number of shares of Common Stock
available for issuance under Stock Awards pursuant to the Plan shall
automatically increase on January 1st of each year commencing in 2010 and ending
on (and including) January 1, 2019, in an amount equal to the lesser of (i) five
percent (5%) of the total number of shares of Common Stock outstanding on
December 31st of the preceding calendar year, or (ii) a lessor number of shares
of Common Stock determined by the Board before the start of a calendar year for
which and increase applies. For clarity, the limitation in this Section 3(a) is
a limitation in the number of shares of the Company's common stock that may be
issued pursuant to the Plan. Accordingly, this Section 3(a) does not limit the
granting of Stock Awards except as provided in Section 7(a). Shares may be
issued in connection with a merger or acquisition as permitted by NASD Rule
4350(i)(1)(A)(iii) or, if applicable, NYSE Listed Company Manual Section
303A.08, or AMEX Company Guide Section 711 and such issuance shall not reduce
the number of shares.
(b) Reversion of Shares to
the Share Reserve.
If a Stock Award (i) expires or otherwise
terminates without having been exercised in full, (ii) are forfeited back to the
Company because of the failure to meet a contingency or condition required to
vest such shares in the Participant or (iii) is settled in cash (i.e., the
holder of the Stock Award receives cash rather than stock), the shares not
issued under such Stock Award shall remain available for issuance under the
Plan, and such expiration, termination, forfeiture or settlement shall not
reduce (or otherwise offset) the number of shares of the Company's common stock
that may be issued pursuant to the Plan. Also, any shares reacquired by the
Company pursuant to subsection 8(g) or as consideration for the exercise of an
Option shall again become available for issuance under the Plan.
(c) Incentive Stock Option
Limit.
No more than 70,000,000 shares of common stock shall be
issued pursuant to the exercise of Incentive Stock Options.
(d) Section 162(m)
Limitation on Annual Grants.
Subject to the provisions of
Section 9(a) relating to Capitalization Adjustments, at such time as the Company
may be subject to the applicable provisions of Section 162(m) of the Code, no
Employee shall be eligible to be granted during any calendar year Stock Awards
whose value is determined by reference to an increase over an exercise or strike
price of at least one hundred percent (100%) of the Fair Market Value on the
date the Stock Award is granted covering more than five million (5,000,000)
shares of Common Stock.
(e) Source of
Shares.
The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired shares of Common Stock, including shares
repurchased by the Company on the open market.
4. ELIGIBILITY.
(a) Eligibility for
Specific Stock Awards.
Incentive Stock Options may be granted
only to employees of the Company or a parent corporation or subsidiary
corporation thereof (as such terms are defined in Sections 424(e) and 424(f) of
the Code). Stock Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants.
(b) Ten Percent
Stockholders.
A Ten Percent Stockholder shall not be granted
an Incentive Stock Option unless the exercise price of such Option is at least
one hundred ten percent (110%) of the Fair Market Value on the date of grant and
the Option is not exercisable after the expiration of five (5) years from the
date of grant.
(c) Consultants.
A
Consultant shall be eligible for the grant of a Stock Award only if, at the time
of grant, a Form S-8 Registration Statement under the Securities Act (
"Form
S-8"
) is available to register either the offer or the sale of the
Company's securities to such Consultant because of the nature of the services
that the Consultant is providing to the Company, because the Consultant is a
natural person, or because of any other rule governing the use of Form
S-8.
5. OPTION
PROVISIONS.
Each
Option shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate. All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and,
if certificates are issued, a separate certificate or certificates shall be
issued for shares of Common Stock purchased on exercise of each type of Option.
If an Option is not specifically designated as an Incentive Stock Option, then
the Option shall be a Nonstatutory Stock Option. The provisions of separate
Options need not be identical;
provided, however
, that each
Option Agreement shall conform to (through incorporation of provisions hereof by
reference in the Option Agreement or otherwise) the substance of each of the
following provisions:
(a) Term.
Subject
to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option
shall be exercisable after the expiration of ten (10) years from the date of its
grant or such shorter period specified in the Option Agreement.
(b) Exercise
Price.
Subject to the provisions of Section 4(b) regarding Ten
Percent Stockholders, the exercise price of each Option shall be not less than
one hundred percent (100%) of the Fair Market Value subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than one hundred percent (100%) of the Fair
Market Value subject to the Option if such Option is granted pursuant to an
assumption or substitution for another option in a manner consistent with the
provisions of Section 424(a) of the Code (whether or not such options are
Incentive Stock Options).
(c) Consideration.
The
purchase price of Common Stock acquired pursuant to the exercise of an Option
shall be paid, to the extent permitted by applicable law and as determined by
the Board in its sole discretion, by any combination of the methods of payment
set forth below. The Board shall have the authority to grant Options that do not
permit all of the following methods of payment (or otherwise restrict the
ability to use certain methods) and to grant Options that require the consent of
the Company to utilize a particular method of payment. The methods of payment
permitted by this Section 5(c) are:
(i)
by cash, check,
bank draft or money order payable to the Company;
(ii)
pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of the stock subject to the Option, results in
either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company from
the sales proceeds;
(iii)
by delivery to the
Company (either by actual delivery or attestation) of shares of Common
Stock;
(iv)
by a "net
exercise" arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issuable upon exercise by the largest whole number of
shares with a Fair Market Value that does not exceed the aggregate exercise
price;
provided,
however,
that the Company shall accept a cash or other payment from the
Participant to the extent of any remaining balance of the aggregate exercise
price not satisfied by such reduction in the number of whole shares to be
issued;
provided,
further,
that shares of Common Stock will no longer be subject to an
Option and will not be exercisable thereafter to the extent that (A) shares
issuable upon exercise are reduced to pay the exercise price pursuant to the
"net exercise", (B) shares are delivered to the Participant as a result of such
exercise, and/or (C) shares are withheld to satisfy tax withholding obligations;
or
(v)
in any other
form of legal consideration that may be acceptable to the Board in its sole
discretion and permissible under applicable law.
(d) Transferability of
Options.
The Board may, in its sole discretion, impose such
limitations on the transferability of Options as the Board shall determine. In
the absence of such a determination by the Board to the contrary, the following
restrictions on the transferability of Options shall apply:
(i)
Restrictions on
Transfer.
An Option shall not be transferable except by will
or by the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder; provided, however, that
the Board may, in its sole discretion, permit transfer of the Option in a manner
that is not prohibited by applicable tax and/or securities laws upon the
Optionholder's request.
(ii)
Domestic Relations
Orders.
Notwithstanding the foregoing, an Option may be
transferred pursuant to a domestic relations order,
provided, however,
that if an
Option is an Incentive Stock Option, such Option may be deemed to be a
Nonstatutory Stock Option as a result of such transfer.
(iii)
Beneficiary
Designation.
Notwithstanding the foregoing, the Optionholder
may, by delivering written notice to the Company, in a form provided by or
otherwise satisfactory to the Company, designate a third party who, in the event
of the death of the Optionholder, shall thereafter be entitled to exercise the
Option. In the absence of such a designation, the executor or administrator of
the Optionholder's estate shall be entitled to exercise the Option.
(e) Vesting of Options
Generally.
The total number of shares of Common Stock subject
to an Option may vest and therefore become exercisable in periodic installments
that may or may not be equal. The Option may be subject to such other terms and
conditions on the time or times when it may or may not be exercised (which may
be based on the satisfaction of Performance Goals or other criteria) as the
Board may deem appropriate. The vesting provisions of individual Options may
vary. The provisions of this Section 5(e) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.
(f) Termination of
Continuous Service.
Except as otherwise provided in the
applicable Option Agreement or any other written agreement between the
Optionholder and the Company, in the event that an Optionholder's Continuous
Service terminates (other than for Cause or upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination of Continuous Service) but only within such period of time ending on
the earlier of (i) the date three (3) months following the termination of the
Optionholder's Continuous Service (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination of Continuous Service, the
Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall
terminate.
(g) Extension of
Termination Date.
An Optionholder's Option Agreement may
provide that if the exercise of the Option following the termination of the
Optionholder's Continuous Service (other than for Cause or upon the
Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of a period of three (3) months after the
termination of the Optionholder's Continuous Service during which the exercise
of the Option would not be in violation of such registration requirements, or
(ii) the expiration of the term of the Option as set forth in the Option
Agreement.
(h) Disability of
Optionholder.
In the event that an Optionholder's Continuous
Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination of Continuous
Service), but only within such period of time ending on the earlier of (i) the
date twelve (12) months following such termination of Continuous Service (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination of Continuous Service, the Optionholder does not exercise his
or her Option within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.
(i) Death of
Optionholder.
In the event that (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death, or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or, if applicable, by a person designated as
the beneficiary of the option upon the Optionholder's death, but only within the
period ending on the earlier of (A) the date eighteen (18) months following the
date of death (or such longer or shorter period specified in the Option
Agreement), or (B) the expiration of the term of such Option as set forth in the
Option Agreement. If, after the Optionholder's death, the Option is not
exercised within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate. If the Optionholder designates a third
party beneficiary of the Option in accordance with Section 5(d)(iii), then upon
the death of the Optionholder such designated beneficiary shall have the sole
right to exercise the Option and receive the Common Stock or other consideration
resulting from an Option exercise.
(j) Termination for
Cause.
Except as explicitly provided otherwise in an
Optionholder's Option Agreement or any other written agreement between the
Optionholder and the Company, in the event that an Optionholder's Continuous
Service is terminated for Cause, the Option shall terminate upon the termination
date of such Optionholder's Continuous Service, and the Optionholder shall be
prohibited from exercising his or her Option from and after the time of such
termination of Continuous Service.
(k) Non-Exempt
Employees.
No Option granted to an Employee that is a
non-exempt employee for purposes of the Fair Labor Standards Act shall be first
exercisable for any shares of Common Stock until at least six months following
the date of grant of the Option. The foregoing provision is intended to operate
so that any income derived by a non-exempt employee in connection with the
exercise or vesting of an Option will be exempt from his or her regular rate of
pay.
6. PROVISIONS
OF STOCK AWARDS OTHER THAN OPTIONS.
(a) Restricted Stock
Awards.
Each Restricted Stock Award Agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. To the extent consistent with the Company's Bylaws, at the Board's
election, shares of Common Stock may be (x) held in book entry form subject to
the Company's instructions until any restrictions relating to the Restricted
Stock Award lapse; or (y) evidenced by a certificate, which certificate shall be
held in such form and manner as determined by the Board. The terms and
conditions of Restricted Stock Award Agreements may change from time to time,
and the terms and conditions of separate Restricted Stock Award Agreements need
not be identical,
provided,
however
, that each Restricted Stock Award Agreement shall include
(through incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:
(i)
Consideration.
A
Restricted Stock Award may be awarded in consideration for (A) past or future
services actually or to be rendered to the Company or an Affiliate, or (B) any
other form of legal consideration that may be acceptable to the Board in its
sole discretion and permissible under applicable law.
(ii)
Vesting.
Shares of
Common Stock awarded under the Restricted Stock Award Agreement may be subject
to forfeiture to the Company in accordance with a vesting schedule to be
determined by the Board.
(iii)
Termination of Participant's
Continuous Service.
In the event a Participant's Continuous
Service terminates, the Company may receive via a forfeiture condition or a
repurchase right, any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination of Continuous
Service under the terms of the Restricted Stock Award Agreement.
(iv)
Transferability.
Rights
to acquire shares of Common Stock under the Restricted Stock Award Agreement
shall be transferable by the Participant only upon such terms and conditions as
are set forth in the Restricted Stock Award Agreement, as the Board shall
determine in its sole discretion, so long as Common Stock awarded under the
Restricted Stock Award Agreement remains subject to the terms of the Restricted
Stock Award Agreement.
(b) Restricted Stock Unit
Awards.
Each Restricted Stock Unit Award Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of Restricted Stock Unit Award Agreements
may change from time to time, and the terms and conditions of separate
Restricted Stock Unit Award Agreements need not be identical,
provided, however,
that each
Restricted Stock Unit Award Agreement shall conform to (through incorporation of
the provisions hereof by reference in the Agreement or otherwise) the substance
of each of the following provisions:
(i)
Consideration.
At
the time of grant of a Restricted Stock Unit Award, the Board will determine the
consideration, if any, to be paid by the Participant upon delivery of each share
of Common Stock subject to the Restricted Stock Unit Award. The consideration to
be paid (if any) by the Participant for each share of Common Stock subject to a
Restricted Stock Unit Award may be paid in any form of legal consideration that
may be acceptable to the Board in its sole discretion and permissible under
applicable law.
(ii)
Vesting.
At the
time of the grant of a Restricted Stock Unit Award, the Board may impose such
restrictions or conditions to the vesting of the Restricted Stock Unit Award as
it, in its sole discretion, deems appropriate.
(iii)
Payment.
A
Restricted Stock Unit Award may be settled by the delivery of shares of Common
Stock, their cash equivalent, any combination thereof or in any other form of
consideration, as determined by the Board and contained in the Restricted Stock
Unit Award Agreement.
(iv)
Additional
Restrictions.
At the time of the grant of a Restricted Stock
Unit Award, the Board, as it deems appropriate, may impose such restrictions or
conditions that delay the delivery of the shares of Common Stock (or their cash
equivalent) subject to a Restricted Stock Unit Award to a time after the vesting
of such Restricted Stock Unit Award.
(v)
Dividend
Equivalents.
Dividend equivalents may be credited in respect
of shares of Common Stock covered by a Restricted Stock Unit Award, as
determined by the Board and contained in the Restricted Stock Unit Award
Agreement. At the sole discretion of the Board, such dividend equivalents may be
converted into additional shares of Common Stock covered by the Restricted Stock
Unit Award in such manner as determined by the Board. Any additional shares
covered by the Restricted Stock Unit Award credited by reason of such dividend
equivalents will be subject to all the terms and conditions of the underlying
Restricted Stock Unit Award Agreement to which they relate.
(vi)
Termination of Participant's
Continuous Service.
Except as otherwise provided in the
applicable Restricted Stock Unit Award Agreement, such portion of the Restricted
Stock Unit Award that has not vested will be forfeited upon the Participant's
termination of Continuous Service.
(vii)
Compliance with Section 409A of the
Code.
Notwithstanding anything to the contrary set forth
herein, any Restricted Stock Unit Award granted under the Plan that is not
exempt from the requirements of Section 409A of the Code shall incorporate terms
and conditions necessary to avoid the consequences of Section 409A(a)(1) of the
Code. Such restrictions, if any, shall be determined by the Board and contained
in the Restricted Stock Unit Award Agreement evidencing such Restricted Stock
Unit Award. For example, such restrictions may include, without limitation, a
requirement that any Common Stock that is to be issued in a year following the
year in which the Restricted Stock Unit Award vests must be issued in accordance
with a fixed pre-determined schedule.
(c) Stock Appreciation
Rights.
Each Stock Appreciation Right Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. Stock Appreciation Rights may be granted as stand-alone Stock
Awards or in tandem with other Stock Awards. The terms and conditions of Stock
Appreciation Right Agreements may change from time to time, and the terms and
conditions of separate Stock Appreciation Right Agreements need not be
identical;
provided,
however
, that each Stock Appreciation Right Agreement shall conform to
(through incorporation of the provisions hereof by reference in the Agreement or
otherwise) the substance of each of the following provisions:
(i)
Term.
No Stock
Appreciation Right shall be exercisable after the expiration of ten (10) years
from the date of its grant or such shorter period specified in the Stock
Appreciation Right Agreement.
(ii)
Strike Price.
Each
Stock Appreciation Right will be denominated in shares of Common Stock
equivalents. The strike price of each Stock Appreciation Right shall not be less
than one hundred percent (100%) of the Fair Market Value equivalents subject to
the Stock Appreciation Right on the date of grant.
(iii)
Calculation of
Appreciation.
The appreciation distribution payable on the
exercise of a Stock Appreciation Right will be not greater than an amount equal
to the excess of (A) the aggregate Fair Market Value (on the date of the
exercise of the Stock Appreciation Right) of a number of shares of Common Stock
equal to the number of shares of Common Stock equivalents in which the
Participant is vested under such Stock Appreciation Right, and with respect to
which the Participant is exercising the Stock Appreciation Right on such date,
over (B) the strike price that will be determined by the Board at the time of
grant of the Stock Appreciation Right.
(iv)
Vesting.
At the
time of the grant of a Stock Appreciation Right, the Board may impose such
restrictions or conditions to the vesting of such Stock Appreciation Right as
it, in its sole discretion, deems appropriate.
(v)
Exercise.
To
exercise any outstanding Stock Appreciation Right, the Participant must provide
written notice of exercise to the Company in compliance with the provisions of
the Stock Appreciation Right Agreement evidencing such Stock Appreciation
Right.
(vi)
Payment.
The
appreciation distribution in respect to a Stock Appreciation Right may be paid
in Common Stock, in cash, in any combination of the two or in any other form of
consideration, as determined by the Board and set forth in the Stock
Appreciation Right Agreement evidencing such Stock Appreciation
Right.
(vii)
Termination of Continuous
Service.
In the event that a Participant's Continuous Service
terminates other than for Cause, the Participant may exercise his or her Stock
Appreciation Right (to the extent that the Participant was entitled to exercise
such Stock Appreciation Right as of the date of termination of Continuous
Service) but only within such period of time ending on the earlier of (A) the
date three (3) months following the termination of the Participant's Continuous
Service (or such longer or shorter period specified in the Stock Appreciation
Right Agreement), or (B) the expiration of the term of the Stock Appreciation
Right as set forth in the Stock Appreciation Right Agreement. If, after
termination of Continuous Service, the Participant does not exercise his or her
Stock Appreciation Right within the time specified herein or in the Stock
Appreciation Right Agreement (as applicable), the Stock Appreciation Right shall
terminate.
(viii)
Termination for
Cause.
Except as explicitly provided otherwise in an
Participant's Stock Appreciation Right Agreement, in the event that a
Participant's Continuous Service is terminated for Cause, the Stock Appreciation
Right shall terminate upon the termination date of such Participant's Continuous
Service, and the Participant shall be prohibited from exercising his or her
Stock Appreciation Right from and after the time of such termination of
Continuous Service.
(ix)
Compliance with Section 409A of the
Code.
Notwithstanding anything to the contrary set forth
herein, any Stock Appreciation Rights granted under the Plan that are not exempt
from the requirements of Section 409A of the Code shall incorporate terms and
conditions necessary to avoid the consequences specified in Section 409A(a)(1)
of the Code. Such restrictions, if any, shall be determined by the Board and
contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right. For example, such restrictions may include, without
limitation, a requirement that a Stock Appreciation Right that is to be paid
wholly or partly in cash must be exercised and paid in accordance with a fixed
pre-determined schedule.
(d) Performance
Awards.
(i)
Performance Stock
Awards.
A Performance Stock Award is a Stock Award that may be
granted, may vest, or may be exercised based upon the attainment during a
Performance Period of certain Performance Goals. A Performance Stock Award may,
but need not, require the completion of a specified period of Continuous
Service. The length of any Performance Period, the Performance Goals to be
achieved during the Performance Period, and the measure of whether and to what
degree such Performance Goals have been attained shall be conclusively
determined by the Committee in its sole discretion. The maximum number of shares
that may be granted to any Participant in a calendar year attributable to
Performance Stock Awards described in this
Section
6(d)(i) shall not exceed five million (5,000,000) shares of Common Stock. In
addition, to the extent permitted by applicable law and the applicable Award
Agreement, the Board may determine that cash may be used in payment of
Performance Stock Awards.
(ii)
Performance Cash
Awards.
A Performance Cash Award is a cash award that may be
granted upon the attainment during a Performance Period of certain Performance
Goals. A Performance Cash Award may also require the completion of a specified
period of Continuous Service. The length of any Performance Period, the
Performance Goals to be achieved during the Performance Period, and the measure
of whether and to what degree such Performance Goals have been attained shall be
conclusively determined by the Committee in its sole discretion. The maximum
value that may be granted to any Participant in any calendar year attributable
to cash awards described in this Section 6(d)(ii) shall not exceed one million
dollars ($1,000,000). The Board may provide for or, subject to such terms and
conditions as the Board may specify, may permit a Participant to elect for, the
payment of any Performance Cash Award to be deferred to a specified date or
event. The Committee may specify the form of payment of Performance Cash Awards,
which may be cash or other property, or may provide for a Participant to have
the option for his or her Performance Cash Award, or such portion thereof as the
Board may specify, to be paid in whole or in part in cash or other property. In
addition, to the extent permitted by applicable law and the applicable Award
Agreement, the Board may determine that Common Stock authorized under the Plan
may be used in payment of Performance Cash Awards, including additional shares
in excess of the Performance Cash Award as an inducement to hold shares of
Common Stock.
(e)
Other Stock
Awards.
Other forms of Stock Awards valued in whole or in part
by reference to, or otherwise based on, Common Stock may be granted either alone
or in addition to Stock Awards provided for under Section 5 and the preceding
provisions of this Section 6. Subject to the provisions of the Plan, the Board
shall have sole and complete authority to determine the persons to whom and the
time or times at which such Other Stock Awards will be granted, the number of
shares of Common Stock (or the cash equivalent thereof) to be granted pursuant
to such Other Stock Awards and all other terms and conditions of such Other
Stock Awards.
7. COVENANTS
OF THE COMPANY.
(a)
Availability of
Shares.
During the terms of the Stock Awards, the Company
shall keep available at all times the number of shares of Common Stock required
to satisfy such Stock Awards.
(b)
Securities Law
Compliance.
The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards;
provided, however,
that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority that counsel for the
Company deems necessary for the lawful issuance and sale of Common Stock under
the Plan, the Company shall be relieved from any liability for failure to issue
and sell Common Stock upon exercise of such Stock Awards unless and until such
authority is obtained.
(c)
No Obligation to
Notify.
The Company shall have no duty or obligation to any
holder of a Stock Award to advise such holder as to the time or manner of
exercising such Stock Award. Furthermore, the Company shall have no duty or
obligation to warn or otherwise advise such holder of a pending termination or
expiration of a Stock Award or a possible period in which the Stock Award may
not be exercised. The Company has no duty or obligation to minimize the tax
consequences of a Stock Award to the holder of such Stock Award.
8. MISCELLANEOUS.
(a) Use of Proceeds from
Sales of Common Stock.
Proceeds from the sale of shares of
Common Stock pursuant to Stock Awards shall constitute general funds of the
Company.
(b) Corporate Action
Constituting Grant of Stock Awards.
Corporate action
constituting a grant by the Company of a Stock Award to any Participant shall be
deemed completed as of the date of such corporate action, unless otherwise
determined by the Board, regardless of when the instrument, certificate, or
letter evidencing the Stock Award is communicated to, or actually received or
accepted by, the Participant.
(c) Stockholder
Rights.
No Participant shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares of Common
Stock subject to such Stock Award unless and until (i) such Participant has
validly exercised the Stock Award pursuant to its terms and (ii) the issuance of
the Common Stock pursuant to such exercise has been entered into the books and
records of the Company.
(d) No Employment or Other
Service Rights.
Nothing in the Plan, any Stock Award Agreement
or other instrument executed thereunder or in connection with any Award granted
pursuant to the Plan shall confer upon any Participant any right to continue to
serve the Company or an Affiliate in the capacity in effect at the time the
Stock Award was granted or shall affect the right of the Company or an Affiliate
to terminate (i) the employment of an Employee with or without notice and with
or without cause, (ii) the service of a Consultant pursuant to the terms of such
Consultant's agreement with the Company or an Affiliate, or (iii) the service of
a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.
(e) Incentive Stock Option
$100,000 Limitation.
To the extent that the aggregate Fair
Market Value (determined at the time of grant) of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by any
Optionholder during any calendar year (under all plans of the Company and any
Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options, notwithstanding
any contrary provision of the applicable Option Agreement(s).
(f) Investment
Assurances.
The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (x) the issuance of the shares
upon the exercise or acquisition of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under the
Securities Act, or (y) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.
(g) Withholding
Obligations.
Unless prohibited by the terms of a Stock Award
Agreement, the Company may, in its sole discretion, satisfy any federal, state
or local tax withholding obligation relating to an Award by any of the following
means (in addition to the Company's right to withhold from any compensation paid
to the Participant by the Company) or by a combination of such means: (i)
causing the Participant to tender a cash payment; (ii) withholding shares of
Common Stock from the shares of Common Stock issued or otherwise issuable to the
Participant in connection with the Award; provided, however, that no shares of
Common Stock are withheld with a value exceeding the minimum amount of tax
required to be withheld by law (or such lower amount as may be necessary to
avoid classification of the Stock Award as a liability for financial accounting
purposes); (iii) withholding cash from an Award settled in cash; (iv)
withholding payment from any amounts otherwise payable to the Participant; or
(v) by such other method as may be set forth in the Award
Agreement.
(h) Electronic
Delivery.
Any reference herein to a "written" agreement or
document shall include any agreement or document delivered electronically or
posted on the Company's intranet.
(i) Deferrals.
To
the extent permitted by applicable law, the Board, in its sole discretion, may
determine that the delivery of Common Stock or the payment of cash, upon the
exercise, vesting or settlement of all or a portion of any Award may be deferred
and may establish programs and procedures for deferral elections to be made by
Participants. Deferrals by Participants will be made in accordance with Section
409A of the Code. Consistent with Section 409A of the Code, the Board may
provide for distributions while a Participant is still an employee. The Board is
authorized to make deferrals of Stock Awards and determine when, and in what
annual percentages, Participants may receive payments, including lump sum
payments, following the Participant's termination of employment or retirement,
and implement such other terms and conditions consistent with the provisions of
the Plan and in accordance with applicable law.
(j) Compliance with
Section 409A of the Code.
To the extent that the Board
determines that any Award granted under the Plan is subject to Section 409A of
the Code, the Award Agreement evidencing such Award shall incorporate the terms
and conditions necessary to avoid the consequences described in Section
409A(a)(1) of the Code. To the extent applicable, the Plan and Award Agreements
shall be interpreted in accordance with Section 409A of the Code and related
Department of Treasury guidance. Notwithstanding any provision of the Plan to
the contrary, in the event that following the Effective Date the Board
determines that any Award may be subject to Section 409A of the Code and related
Department of Treasury guidance, the Board may adopt such amendments to the Plan
and the applicable Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take
any other actions, that the Board determines are necessary or appropriate to (i)
exempt the Award from Section 409A of the Code and/or preserve the intended tax
treatment of the benefits provided with respect to the Award, or (ii) comply
with the requirements of Section 409A of the Code and related Department of
Treasury guidance.
9. ADJUSTMENTS
UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.
(a) Capitalization
Adjustments.
In the event of a Capitalization Adjustment, the
Board shall appropriately and proportionately adjust: (i) the class(es) and
maximum number of securities subject to the Plan pursuant to Section 3(a), (ii)
the class(es) and maximum number of securities that may be issued pursuant to
the exercise of Incentive Stock Options pursuant to Section 3(c), (iii) the
class(es) and maximum number of securities that may be awarded to any person
pursuant to Section 3(d) and 6(d)(i), and (iv) the class(es) and number of
securities and price per share of stock subject to outstanding Stock Awards. The
Board shall make such adjustments, and its determination shall be final, binding
and conclusive.
(b) Dissolution or
Liquidation.
Except as otherwise provided in the Stock Award
Agreement, in the event of a dissolution or liquidation of the Company, all
outstanding Stock Awards (other than Stock Awards consisting of vested and
outstanding shares of Common Stock not subject to a forfeiture condition or the
Company's right of repurchase) shall terminate immediately prior to the
completion of such dissolution or liquidation, and the shares of Common Stock
subject to the Company's repurchase rights may be repurchased by the Company
notwithstanding the fact that the holder of such Stock Award is providing
Continuous Service,
provided,
however,
that the Board may, in its sole discretion, cause some or all
Stock Awards to become fully vested, exercisable and/or no longer subject to
repurchase or forfeiture (to the extent such Stock Awards have not previously
expired or terminated) before the dissolution or liquidation is completed but
contingent on its completion.
(c) Corporate
Transaction.
The following provisions shall apply to Stock
Awards in the event of a Corporate Transaction unless otherwise provided in the
instrument evidencing the Stock Award or any other written agreement between the
Company or any Affiliate and the holder of the Stock Award.
(i)
Stock Awards May Be
Assumed.
Except as otherwise stated in the Stock Award
Agreement, in the event of a Corporate Transaction, any surviving corporation or
acquiring corporation (or the surviving or acquiring corporation's parent
company) may assume or continue any or all Stock Awards outstanding under the
Plan or may substitute similar stock awards for Stock Awards outstanding under
the Plan (including but not limited to, awards to acquire the same consideration
paid to the stockholders of the Company pursuant to the Corporate Transaction),
and any reacquisition or repurchase rights held by the Company in respect of
Common Stock issued pursuant to Stock Awards may be assigned by the Company to
the successor of the Company (or the successor's parent company, if any), in
connection with such Corporate Transaction. A surviving corporation or acquiring
corporation (or its parent) may choose to assume or continue only a portion of a
Stock Award or substitute a similar stock award for only a portion of a Stock
Award. The terms of any assumption, continuation or substitution shall be set by
the Board in accordance with the provisions of Section 2.
(ii)
Stock Awards Held by Current
Participants.
Except as otherwise stated in the Stock Award
Agreement, in the event of a Corporate Transaction in which the surviving
corporation or acquiring corporation (or its parent company) does not assume or
continue such outstanding Stock Awards or substitute similar stock awards for
such outstanding Stock Awards in accordance with subsection (i) above, then with
respect to Stock Awards that have not been assumed, continued or substituted and
that are held by Participants whose Continuous Service has not terminated prior
to the effective time of the Corporate Transaction (referred to as the
"Current
Participants"
), the vesting of such Stock Awards (and, with respect to
Options and Stock Appreciation Rights, the time at which such Stock Awards may
be exercised) shall (contingent upon the effectiveness of the Corporate
Transaction) be accelerated in full to a date prior to the effective time of
such Corporate Transaction as the Board shall determine (or, if the Board shall
not determine such a date, to the date that is five (5) days prior to the
effective time of the Corporate Transaction), and such Stock Awards shall
terminate if not exercised (if applicable) at or prior to the effective time of
the Corporate Transaction, and any reacquisition or repurchase rights held by
the Company with respect to such Stock Awards shall lapse (contingent upon the
effectiveness of the Corporate Transaction).
(iii)
Stock Awards Held by Persons other
than Current Participants.
Except as otherwise stated in the
Stock Award Agreement, in the event of a Corporate Transaction in which the
surviving corporation or acquiring corporation (or its parent company) does not
assume or continue such outstanding Stock Awards or substitute similar stock
awards for such outstanding Stock Awards in accordance with subsections (i) or
(ii) above, respectively, then with respect to Stock Awards that have not been
assumed, continued or substituted and that are held by persons other than
Current Participants, the vesting of such Stock Awards (and, if applicable, the
time at which such Stock Award may be exercised) shall not be accelerated and
such Stock Awards (other than a Stock Award consisting of vested and outstanding
shares of Common Stock not subject to a forfeiture condition or the Company's
right of repurchase) shall terminate if not exercised (if applicable) prior to
the effective time of the Corporate Transaction;
provided, however,
that any
reacquisition or repurchase rights held by the Company with respect to such
Stock Awards shall not terminate and may continue to be exercised
notwithstanding the Corporate Transaction.
(iv)
Payment for Stock Awards in Lieu of
Exercise.
Notwithstanding the foregoing, in the event a Stock
Award will terminate if not exercised prior to the effective time of a Corporate
Transaction, the Board may provide, in its sole discretion, that the holder of
such Stock Award may not exercise such Stock Award but will receive a payment,
in such form as may be determined by the Board, equal in value to the excess, if
any, of (A) the value of the property the holder of the Stock Award would have
received upon the exercise of the Stock Award (including, at the discretion of
the Board, any unvested portion of such Stock Award), over (B) any exercise
price payable by such holder in connection with such exercise.
(d) Change in
Control.
A Stock Award may be subject to additional
acceleration of vesting and exercisability upon or after a Change in Control as
may be provided in the Stock Award Agreement for such Stock Award or as may be
provided in any other written agreement between the Company or any Affiliate and
the Participant, but in the absence of such provision, no such acceleration
shall occur.
10. TERMINATION
OR SUSPENSION OF THE PLAN.
(a) Plan
Term.
Unless sooner terminated by the Board pursuant to
Section 2, the Plan shall automatically terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Awards may be granted
under the Plan while the Plan is suspended or after it is
terminated.
(b) No Impairment of
Rights.
Suspension or termination of the Plan shall not impair
rights and obligations under any Award granted while the Plan is in effect
except with the written consent of the affected Participant.
11. EFFECTIVE
DATE OF PLAN.
The Plan
shall become effective on the Effective Date. Prior to the Effective Date, the
Prior Plan is unaffected by the Plan, and Stock Awards shall continue to be
granted from the Prior Plan. If the Plan has not been approved by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted by the Board, the adoption of the Plan shall be null and
void and the Prior Plan shall continue unaffected by the adoption of the
Plan.
12. CHOICE
OF LAW.
The law
of the State of California shall govern all questions concerning the
construction, validity and interpretation of the Plan, without regard to such
state's conflict of laws rules.
13. AUTOMATIC GRANTS TO NON-EMPLOYEE
DIRECTORS
.
13.1
Eligibility
.
Non-Employee Directors are eligible for Options granted pursuant to this Section
13. Notwithstanding the foregoing, this Section 13 does not limit the ability of
the Board to grant discretionary Awards to Non-Employee Directors.
13.2
Initial Grant
.
Each Non-Employee Director who has not received an option to purchase Common
Stock in the twelve (12) month period immediately preceding the Effective Date
(the “Initial Twelve Month Period”) and who is or who becomes a member of the
Board on the Effective Date will automatically be granted an Option to purchase
fifty thousand (50,000) Shares on the Effective Date. Each Non-Employee Director
who first becomes a member of the Board after the Effective Date will
automatically be granted an Option to purchase fifty thousand (50,000) Shares on
the date such Non-Employee Director first becomes a member of the Board. Each
Option granted pursuant to this Section 13.2 shall be called an “Initial
Grant.”
13.3
Succeeding
Grant
. On the first business day following the annual meeting of the
Company’s Stockholders, each Non-Employee Director who is continuing in service
as a member of the Board will on the first business day following such annual
meeting of stockholders automatically be granted an Option to purchase twenty
five thousand (25,000) Shares. Each Option granted pursuant to this Section 13.3
shall be called a “Succeeding Grant”. Notwithstanding the foregoing, in the
event a Non-Employee Director received an Initial Grant within the twelve (12)
month period preceding the annual meeting of the Company’s stockholders, then
the number of Shares subject to such Director’s first Succeeding Grant shall be
the number of Shares equal to the product of (a) twenty five thousand (25,000)
and (b) a fraction, the numerator of which is the number of full calendar months
such Non-Employee Director has been a member of the Board prior to the Company’s
annual meeting of stockholders and the denominator of which is twelve
(12).
13.4
Vesting and
Exercisability
.
(a)
Initial Grants
.
Initial Grants shall vest 50% on the grant date. The remaining 50%
shall become exercisable as to 1/36 of the remaining Shares on each monthly
anniversary of the date of grant, such that Initial Grants are fully vested and
exercisable on the third anniversary of the date of grant, so long as the
Non-Employee Director continuously remains a director, consultant or employee of
the Company.
(b)
Succeeding Grants
.
Succeeding Grants shall vest and become exercisable as to 1/36 of the total
Shares subject to the Succeeding Grant on each monthly anniversary of the date
of grant, such that Succeeding Grants are fully vested and exercisable on the
third anniversary of the date of grant, so long as the Non-Employee Director
continuously remains a director, consultant or employee of the
Company.
(c)
Change In Control
. In
the event of a Change In Control, the vesting of all Options granted to
Non-Employee Directors pursuant to this Section 13 shall accelerate and such
Options will become exercisable in full immediately prior to the consummation of
the Change In Control at such time and on such conditions as the Committee
determines, and if such Options are not exercised on or prior to the
consummation of the Change In Control, they shall terminate immediately
following the consummation of the Change In Control.
13.5
Form of Option
Grant
. Each Option granted under this Section 13 shall be a NSO and shall
be evidenced by a Non-Employee Director Stock Award Agreement in such form as
the Board from time to time approve and which shall comply with and be subject
to the terms and conditions of this Plan.
13.6
Exercise Price.
The Exercise Price per Share of each Option granted under this Section 13 shall
be the Fair Market Value of the Share on the date the Option is
granted.
13.7
Termination of
Option
. Except as provided in Section 13.4(c) or this Section 13.7, each
Option granted under this Section 13 shall expire ten (10) years after its date
of grant. The date on which the Non-Employee Director ceases to be a member of
the Board, a consultant or employee of the Company shall be referred to as the
“Non-Employee Director Termination Date” for purposes of this Section 13.7. An
Option may be exercised after the Non-Employee Director Termination Date only as
set forth below:
(a)
Termination
Generally
. If the Non-Employee Director ceases to be a member of the
Board, consultant or employee of the Company for any reason except death,
Disability or Change In Control, each Initial Grant and Succeeding Grant, to the
extent then vested pursuant to Section 13.4 above, then held by such
Non-Employee Director may be exercised by the Non-Employee Director within
twelve (12) months after the Non-Employee Director Termination Date, but in no
event later than the Expiration Date.
(b)
Death
. If the
Non-Employee Director ceases to be a member of the Board, consultant or employee
of the Company because of his or her death, then each Initial Grant and
Succeeding Grant, to the extent then vested pursuant to Section 13.4 above, then
held by such Non-Employee Director, may be exercised by the Non-Employee
Director or his or her legal representative within twelve (12) months after the
Non-Employee Director Termination Date, but in no event later than the
Expiration Date.
(c)
Disability
. If the
Non-Employee Director ceases to be a member of the Board, consultant or employee
of the Company because of his or her Disability, then each Initial Grant and
Succeeding Grant, to the extent then vested pursuant to Section 13.4 above, then
held by such Non-Employee Director, may be exercised by the Non-Employee
Director or his or her legal representative within twelve (12) months after the
Non-Employee Director Termination Date, but in no event later than the
Expiration Date.
(d)
Change In
Control
. If the Non-Employee Director ceases to be a member of
the Board, consultant or employee of the Company because of a Change In Control,
then each Initial Grant and Succeeding Grant, to the extent then vested pursuant
to Section 13.4 above, then held by such Non-Employee Director, may be exercised
by the Non-Employee Director or his or her legal representative within twelve
(12) months after the Non-Employee Director Termination Date, but in no event
later than the Expiration Date.
14. DEFINITIONS.
As
used in the Plan, the definitions contained in this Section 14 shall apply to
the capitalized terms indicated below:
(a)
"Affiliate"
means,
at the time of determination, any "parent" or "subsidiary" of the Company as
such terms are defined in Rule 405 of the Securities Act. The Board shall have
the authority to determine the time or times at which "parent" or "subsidiary"
status is determined within the foregoing definition.
(b)
"Award"
means
a Stock Award or a Performance Cash Award.
(c)
"Board"
means
the Board of Directors of the Company.
(d)
"Capitalization
Adjustment"
means any change that is made in, or other events
that occur with respect to, the Common Stock subject to the Plan or subject to
any Stock Award after the Effective Date without the receipt of consideration by
the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company. Notwithstanding the foregoing, the conversion of
any convertible securities of the Company shall not be treated as a transaction
"without receipt of consideration" by the Company.
(e)
"Cause"
means
with respect to a Participant, the occurrence of any of the following events:
(i) such Participant's commission of any felony or any crime involving fraud,
dishonesty or moral turpitude under the laws of the United States or any state
thereof; (ii) such Participant's attempted commission of, or participation in, a
fraud or act of dishonesty against the Company; (iii) such Participant's
intentional, material violation of any contract or agreement between the
Participant and the Company or of any statutory duty owed to the Company; (iv)
such Participant's unauthorized use or disclosure of the Company's confidential
information or trade secrets; or (v) such Participant's gross misconduct. The
determination that a termination of the Participant's Continuous Service is
either for Cause or without Cause shall be made by the Company in its sole
discretion. Any determination by the Company that the Continuous Service of a
Participant was terminated by reason of dismissal without Cause for the purposes
of outstanding Awards held by such Participant shall have no effect upon any
determination of the rights or obligations of the Company or such Participant
for any other purpose.
(f)
"Change in
Control"
means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following
events:
(i)
any Exchange
Act Person becomes the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power
of the Company's then outstanding securities other than by virtue of a merger,
consolidation or similar transaction. Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur (A) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof or any other
Exchange Act Person from the Company in a transaction or series of related
transactions the primary purpose of which is to obtain financing for the Company
through the issuance of equity securities or (B) solely because the level of
Ownership held by any Exchange Act Person (the "
Subject Person
") exceeds the
designated percentage threshold of the outstanding voting securities as a result
of a repurchase or other acquisition of voting securities by the Company
reducing the number of shares outstanding, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred,
increases the percentage of the then outstanding voting securities Owned by the
Subject Person over the designated percentage threshold, then a Change in
Control shall be deemed to occur;
(ii)
there is
consummated a merger, consolidation or similar transaction involving (directly
or indirectly) the Company and, immediately after the consummation of such
merger, consolidation or similar transaction, the stockholders of the Company
immediately prior thereto do not Own, directly or indirectly, either (A)
outstanding voting securities representing more than fifty percent (50%) of the
combined outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving Entity in such
merger, consolidation or similar transaction, in each case in substantially the
same proportions relative to each other as their Ownership of the outstanding
voting securities of the Company immediately prior to such
transaction;
(iii)
the stockholders of the
Company approve or the Board approves a plan of complete dissolution or
liquidation of the Company, or a complete dissolution or liquidation of the
Company shall otherwise occur, except for a liquidation into a parent
corporation;
(iv)
there is
consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries
to an Entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are Owned by stockholders of the Company in
substantially the same proportions relative to each other as their Ownership of
the outstanding voting securities of the Company immediately prior to such sale,
lease, license or other disposition; or
(v)
individuals
who, immediately following the Effective Time, are members of the Board (the
"Incumbent
Board"
) cease for any reason to constitute at least a majority of the
members of the Board; (
provided, however,
that if
the appointment or election (or nomination for election) of any new Board member
was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of the Plan, be
considered as a member of the Incumbent Board).
Notwithstanding
the foregoing or any other provision of the Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the
Company or any Affiliate and the Participant shall supersede the foregoing
definition with respect to Awards subject to such agreement;
provided, however,
that if no
definition of Change in Control or any analogous term is set forth in such an
individual written agreement, the foregoing definition shall apply.
The Board
may, in its sole discretion and without Participant consent, amend the
definition of "Change in Control" to conform to the definition of "Change of
Control" under Section 409A of the Code and related Department of Treasury
guidance.
(g)
"Code"
means
the Internal Revenue Code of 1986, as amended.
(h)
"Committee"
means
a committee of one (1) or more Directors to whom authority has been delegated by
the Board in accordance with Section 2(c).
(i)
"Common
Stock"
means the common stock of the Company.
(j)
"Company"
means
Adamis Pharmaceuticals Corporation (formerly Cellegy Pharmaceuticals, Inc.), a
Delaware corporation.
(k)
"Consultant"
means
any person, including an advisor, who is (i) engaged by the Company
or an Affiliate to render consulting or advisory services and is compensated for
such services, including employees of Cartesian Medical Group, Inc. who provide
bona-fide services to the Company, or (ii) serving as a member of the board of
directors of an Affiliate and is compensated for such services. However, service
solely as a Director, or payment of a fee for such service, shall not cause a
Director to be considered a "Consultant" for purposes of the Plan.
(l)
"Continuous
Service"
means that the Participant's service with the Company
or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant's service with the Company or an Affiliate, shall not terminate a
Participant's Continuous Service. For example, a change in status from an
employee of the Company to a Consultant (whether to the Company or to an
Affiliate) or to a Director shall not constitute an interruption of Continuous
Service. To the extent permitted by law, the Board or the chief executive
officer of the Company, in that party's sole discretion, may determine whether
Continuous Service shall be considered interrupted in the case of any leave of
absence approved by that party, including sick leave, military leave or any
other personal leave. Notwithstanding the foregoing, a leave of absence shall be
treated as Continuous Service for purposes of vesting in a Stock Award only to
such extent as may be provided in the Company's leave of absence policy, in the
written terms of any leave of absence agreement or policy applicable to the
Participant, or as otherwise required by law.
(m)
"Corporate
Transaction"
means the occurrence, in a single transaction or
in a series of related transactions, of any one or more of the following
events:
(i)
a sale or other
disposition of all or substantially all, as determined by the Board in its sole
discretion, of the consolidated assets of the Company and its
Subsidiaries;
(ii)
a sale or
other disposition of at least ninety percent (90%) of the outstanding securities
of the Company;
(iii)
the consummation of a
merger, consolidation or similar transaction following which the Company is not
the surviving corporation; or
(iv)
the
consummation of a merger, consolidation or similar transaction following which
the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of securities, cash
or otherwise.
(n)
"Covered
Employee"
shall have the meaning provided in Section 162(m)(3)
of the Code and the regulations promulgated thereunder.
(o)
"Director"
means
a member of the Board.
(p)
"Disability"
means,
with respect to a Participant, the inability of such Participant to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, as provided
in Sections 22(e)(3) and 409A(a)(2)(c)(i) of the Code.
(q) "
Effective
Date"
means the date of the closing of the merger transaction
contemplated by the Agreement and Plan of Reorganization dated as of February
12, 2008, entered into by and among Cellegy Pharmaceuticals, Inc., Cellegy
Holdings, Inc., and Adamis Pharmaceuticals Corporation.
(r)
"Employee"
means
any person employed by the Company or an Affiliate. However, service solely as a
Director, or payment of a fee for such services, shall not cause a Director to
be considered an "Employee" for purposes of the Plan.
(s)
"Entity"
means
a corporation, partnership, limited liability company or other
entity.
(t)
"Exchange
Act"
means the Securities Exchange Act of 1934, as
amended.
(u)
"Exchange Act
Person"
means any natural person, Entity or "group" (within
the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
"Exchange Act Person" shall not include (i) the Company or any Subsidiary of the
Company, (ii) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their Ownership of stock of
the Company; or (v) any natural person, Entity or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is
the Owner, directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the combined voting power of the Company's then
outstanding securities.
(v)
"Fair Market
Value"
means, as of any date, the value of the Common Stock
determined as follows:
(i)
If the Common
Stock is listed on any established stock exchange or traded on any established
market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the greatest
volume of trading in the Common Stock) on the date of determination, as reported
in
The Wall Street
Journal
or such other source as the Board deems reliable. Unless
otherwise provided by the Board, if there is no closing sales price (or closing
bid if no sales were reported) for the Common Stock on the date of
determination, then the Fair Market Value shall be the closing selling price (or
closing bid if no sales were reported) on the last preceding date for which such
quotation exists.
(ii)
In the absence
of such markets for the Common Stock, the Fair Market Value shall be determined
by the Board in good faith and in a manner that complies with Section 409A of
the Code.
(w)
"Incentive Stock
Option"
means an Option granted pursuant to Section 5 of the
Plan that is intended to be, and qualifies as, an "incentive stock option"
within the meaning of Section 422 of the Code and the regulations promulgated
thereunder.
(x)
"Non-Employee
Director"
means a Director who either (i) is not a current
Employee or Officer of the Company or an Affiliate, does not receive
compensation, either directly or indirectly, from the Company or an Affiliate
for services rendered as a Consultant or in any capacity other than as a
Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("
Regulation
S-K
")), does not possess an interest in any other transaction for which
disclosure would be required under Item 404(a) of Regulation S-K, and is not
engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.
(y)
"Nonstatutory
Stock Option"
means any Option granted pursuant to Section 5
of the Plan that does not qualify as an Incentive Stock Option.
(z)
"Officer"
means
a person who is an officer of the Company within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated
thereunder.
(aa)
"Option"
means
an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of
Common Stock granted pursuant to the Plan.
(bb)
"Option
Agreement"
means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an Option grant. Each
Option Agreement shall be subject to the terms and conditions of the
Plan.
(cc)
"Optionholder"
means
a person to whom an Option is granted pursuant to the Plan or, if permitted
under the terms of the Plan, such other person who holds an outstanding
Option.
(dd)
"Other Stock
Award"
means an award based in whole or in part by reference
to the Common Stock which is granted pursuant to the terms and conditions of
Section 6(e).
(ee)
"Other Stock
Award Agreement"
means a written agreement between the Company
and a holder of an Other Stock Award evidencing the terms and conditions of an
Other Stock Award grant. Each Other Stock Award Agreement shall be subject to
the terms and conditions of the Plan.
(ff)
"Outside
Director"
means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" who receives
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year, has not been an officer of the Company
or an "affiliated corporation," and does not receive remuneration from the
Company or an "affiliated corporation," either directly or indirectly, in any
capacity other than as a Director, or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code.
(gg)
"Own," "Owned,"
"Owner," "Ownership"
A person or Entity shall be deemed to
"Own," to have "Owned," to be the "Owner" of, or to have acquired "Ownership" of
securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.
(hh)
"Participant"
means
a person to whom an Award is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Stock Award.
(ii)
"Performance Cash
Award"
means an award of cash granted pursuant to the terms
and conditions of Section 6(d)(ii).
(jj)
"Performance
Criteria"
means the one or more criteria that the Board shall
select for purposes of establishing the Performance Goals for a Performance
Period. The Performance Criteria that shall be used to establish such
Performance Goals may be based on any one of, or combination of, the following:
(i) earnings per share; (ii) earnings before interest, taxes and depreciation;
(iii) earnings before interest, taxes, depreciation and amortization; (iv) total
stockholder return; (v) return on equity; (vi) return on assets, investment, or
capital employed; (vii) operating margin; (viii) gross margin; (ix) operating
income; (x) net income (before or after taxes); (xi) net operating income; (xii)
net operating income after tax; (xiii) pre-tax profit; (xiv) operating cash
flow; (xv) sales or revenue targets; (xvi) increases in revenue or product
revenue; (xvii) expenses and cost reduction goals; (xviii) improvement in or
attainment of working capital levels; (xix) economic value added (or an
equivalent metric); (xx) market share; (xxi) cash flow; (xxii) cash flow per
share; (xxiii) share price performance; (xxiv) debt reduction; (xxv)
implementation or completion of projects or processes; (xxvi) customer
satisfaction; (xxvii) completion of regulatory or development milestones;
(xxviii) stockholders' equity; and (xxix) to the extent that an Award is not
intended to comply with Section 162(m) of the Code, other measures of
performance selected by the Board. Partial achievement of the specified criteria
may result in the payment or vesting corresponding to the degree of achievement
as specified in the Stock Award Agreement or the written terms of a Performance
Cash Award. The Board shall, in its sole discretion, define the manner of
calculating the Performance Criteria it selects to use for such Performance
Period.
(kk)
"Performance
Goals"
means, for a Performance Period, the one or more goals
established by the Board for the Performance Period based upon the satisfaction
of the Performance Criteria. Performance Goals may be based on a Company-wide
basis, with respect to one or more business units, divisions, Affiliates, or
business segments, and in either absolute terms or relative to the performance
of one or more comparable companies or the performance of one or more relevant
indices. At the time of the grant of any Award, the Board is authorized to
determine whether, when calculating the attainment of Performance Goals for a
Performance Period: (i) to exclude restructuring and/or other nonrecurring
charges; (ii) to exclude exchange rate effects, as applicable, for non-U.S.
dollar denominated net sales and operating earnings; (iii) to exclude the
effects of changes to generally accepted accounting standards required by the
Financial Accounting Standards Board; (iv) to exclude the effects of any
statutory adjustments to corporate tax rates; and (v) to exclude the effects of
any "extraordinary items" as determined under generally accepted accounting
principles. In addition, the Board retains the discretion to reduce or eliminate
the compensation or economic benefit due upon attainment of Performance
Goals.
(ll)
"Performance
Period"
means the period of time selected by the Board over
which the attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant's right to and the payment of a Stock Award
or a Performance Cash Award. Performance Periods may be of varying and
overlapping duration, at the sole discretion of the Board.
(mm)
"Performance
Stock Award"
means a Stock Award granted under the terms and
conditions of Section 6(d)(i).
(nn)
"Plan"
means
this Genoptix, Inc. 2007 Equity Incentive Plan.
(oo)
"Restricted Stock
Award"
means an award of shares of Common Stock which is
granted pursuant to the terms and conditions of Section 6(a).
(pp)
"Restricted Stock
Award Agreement"
means a written agreement between the Company
and a holder of a Restricted Stock Award evidencing the terms and conditions of
a Restricted Stock Award grant. Each Restricted Stock Award Agreement shall be
subject to the terms and conditions of the Plan.
(qq)
"Restricted Stock
Unit Award"
means an unfunded right to receive shares of
Common Stock at a future date which is granted pursuant to the terms and
conditions of Section 6(b).
(rr)
"Restricted Stock
Unit Award Agreement"
means a written agreement between the
Company and a holder of a Restricted Stock Unit Award evidencing the terms and
conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit
Award Agreement shall be subject to the terms and conditions of the
Plan.
(ss)
"Rule
16b-3"
means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(tt)
"Securities
Act"
means the Securities Act of 1933, as
amended.
(uu)
"Stock
Appreciation Right"
means a right to receive the appreciation
on Common Stock that is granted pursuant to the terms and conditions of Section
6(c).
(vv)
"Stock
Appreciation Right Agreement"
means a written agreement
between the Company and a holder of a Stock Appreciation Right evidencing the
terms and conditions of a Stock Appreciation Right grant. Each Stock
Appreciation Right Agreement shall be subject to the terms and conditions of the
Plan.
(ww)
"Stock
Award"
means any right to receive Common Stock granted under
the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a
Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation
Right, a Performance Stock Award or any Other Stock Award.
(xx)
"Stock Award
Agreement"
means a written agreement between the Company and a
Participant evidencing the terms and conditions of a Stock Award grant. Each
Stock Award Agreement shall be subject to the terms and conditions of the
Plan.
(yy)
"Subsidiary"
means,
with respect to the Company, (i) any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, Owned by the Company, and
(ii) any partnership, limited liability company or other entity in which the
Company has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%).
(zz)
"Ten Percent
Stockholder"
means a person who Owns (or is deemed to Own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Affiliate.