Adamis Pharmaceuticals Corporation 8-K [admp-8k_082020.htm]

 

Exhibit 10.1

 

ADAMIS PHARMACEUTICALS CORPORATION
2020 EQUITY INCENTIVE PLAN 

 

1.             GENERAL.

 

(a)           Eligible Award Recipients. Employees, Directors and Consultants
are eligible to receive Awards.

 

(b)           Available Awards. The Plan provides for the grant of the following
types of Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options,
(iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted
Stock Unit Awards, (vi) Performance Stock Awards, (vii) Other Stock Awards, and
(viii) Cash Awards.

 

(c)           Purpose. The Plan, through the grant of Awards, is intended to
help the Company secure and retain the services of eligible award recipients, to
provide incentives for such persons to exert maximum efforts for the success of
the Company and any Affiliate, and provide a means by which the eligible
recipients may benefit from increases in value of the Common Stock.

 

2.             ADMINISTRATION.

 

(a)           Administration by the Board. The Board will administer the Plan.
The Board may delegate administration of the Plan to a Committee or Committees,
as provided in Section 2(c).

 

(b)           Powers of the Board. The Board will have the power, subject to,
and within the limitations of, the express provisions of the Plan:

 

(i)                To determine: (A) who will be granted Awards; (B) when and
how each Award will be granted; (C) what type of Award will be granted; (D) the
provisions of each Award (which need not be identical), including when a person
will be permitted to exercise or otherwise receive cash or Common Stock under
the Award; (E) the number of shares of Common Stock subject to, or the cash
value of, an Award; and (F) the Fair Market Value applicable to an Award.

 

(ii)               To construe and interpret the Plan and Awards granted under
it, and to establish, amend and revoke rules and regulations for administration
of the Plan and Awards. The Board, in the exercise of these powers, may correct
any defect, omission or inconsistency in the Plan or in any Award Agreement, in
a manner and to the extent it will deem necessary or expedient to make the Plan
or Award fully effective.

 

(iii)              To settle all controversies regarding the Plan and Awards
granted under it.

 

(iv)             To accelerate, in whole or in part, the time at which an Award
may be exercised or vest (or the time at which cash or shares of Common Stock
may be issued in settlement thereof). For purposes of clarification, the Board
retains the discretion to adjust or accelerate the vesting schedule of
outstanding Awards, with the consent of the Participant.

 

(v)              To suspend or terminate the Plan at any time. Except as
otherwise provided in the Plan or an Award Agreement, suspension or termination
of the Plan will not impair a Participant’s rights under the Participant’s
then-outstanding Award without the Participant’s written consent, except as
provided in subsection (viii) below.

 

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(vi)              To amend the Plan in any respect the Board deems necessary or
advisable, including, without limitation, by adopting amendments relating to
Incentive Stock Options and certain nonqualified deferred compensation under
Section 409A of the Code and/or to make the Plan or Awards granted under the
Plan compliant with the requirements for Incentive Stock Options or exempt from,
or compliant with, the requirements for nonqualified deferred compensation under
Section 409A of the Code, subject to the limitations, if any, of applicable law.
If required by applicable law or listing requirements, and except as provided in
Section 9(a) relating to Capitalization Adjustments, the Company will seek
stockholder approval of any amendment of the Plan that (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, (D) materially reduces the price at which shares of Common Stock may
be issued or purchased under the Plan, (E) materially extends the term of the
Plan, or (F) materially expands the types of Awards available for issuance under
the Plan or is otherwise required by applicable law or listing requirements to
be approved by the stockholders of the Company. Except as otherwise provided in
the Plan (including subsection (viii) below) or an Award Agreement, no amendment
of the Plan will impair a Participant’s rights under an outstanding Award
without the Participant’s written consent.

 

(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 Section 422 of the Code regarding “incentive stock options.”

 

(viii)           To approve forms of Award Agreements for use under the Plan and
to amend the terms of any one or more Awards, 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 a
Participant’s rights under any Award will 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, (1) a
Participant’s rights will not be deemed to have been impaired by any such
amendment if the Board, in its sole discretion, determines that the amendment,
taken as a whole, does not materially impair the Participant’s rights, and (2)
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 (A)
to maintain the qualified status of the Award as an Incentive Stock Option under
Section 422 of the Code; (B) to change the terms of an Incentive Stock Option,
if such change results in impairment of the Stock Award solely because it
impairs the qualified status of the Stock Award as an Incentive Stock Option
under Section 422 of the Code; (C) to clarify the manner of exemption from, or
to bring the Award into compliance with, Section 409A of the Code; or (D) to
comply with other applicable laws or listing requirements.

 

(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 rules, procedures and sub-plans related to the
operation and administration of the Plan as are necessary or appropriate to
permit participation in the Plan by Employees, Directors or Consultants who are
foreign nationals or employed outside the United States (provided that Board
approval will not be necessary for immaterial modifications to the Plan or any
Award Agreement that are required for compliance with the laws of the relevant
foreign jurisdiction).

 

(xi)              To effect, with the consent of any adversely affected
Participant, (A) the reduction of the exercise, purchase or strike price of any
outstanding Award; (B) the cancellation of any outstanding Award and the grant
in substitution therefor of a new (1) Option or SAR, (2) Restricted Award, (3)
Restricted Stock Unit Award, (4) Other Award, (5) cash and/or (6) other valuable
consideration determined by the Board, in its sole discretion, with any such
substituted award (x) covering the same or a different number of shares of
Common Stock as the cancelled Award and (y) granted under the Plan or another
equity or compensatory plan of the Company; or (C) any other action that is
treated as a repricing under generally accepted accounting principles
(collectively (A) through (C), an “Exchange Program”).

 

(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 will 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 this Plan to the Board
will thereafter be to the Committee or subcommittee, as applicable). Any
delegation of administrative powers will be reflected in resolutions, not
inconsistent with the provisions of the Plan, adopted from time to time by the
Board or Committee (as applicable). 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. Whether or not the
Board has delegated administration of the Plan to a Committee, the Board will
have the final power to determine all questions of policy and expediency that
may arise in the administration of the Plan.

 

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(ii)               Rule 16b-3 Compliance. The Committee may consist solely of
two or more Non-Employee Directors, in accordance with Rule 16b-3. In addition,
the Board or the Committee, in its sole discretion, may delegate to a Committee
which need not consist of Non-Employee Directors the authority to grant 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 (1) 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 SARs (and, to the
extent permitted by applicable law, other Awards) and, to the extent permitted
by applicable law, the terms of such Awards, and (ii) determine the number of
shares of Common Stock to be subject to such Awards granted to such Employees;
provided, however, that the Board resolutions regarding such delegation will
specify the total number of shares of Common Stock that may be subject to the
Awards granted by such Officer and that such Officer may not grant an Award to
himself or herself. Any such Awards will be granted on the form of Award
Agreement most recently approved for use by the Committee or the Board, unless
otherwise provided in the resolutions approving the delegation authority. The
Board may not delegate authority to an Officer who is acting solely in the
capacity of an Officer (and not also as a Director) to determine the Fair Market
Value pursuant to Section 15 below.

 

(e)           Effect of Board’s Decision. All determinations, interpretations
and constructions made by the Board in good faith will not be subject to review
by any person and will be final, binding and conclusive on all persons.

 

3.             SHARES SUBJECT TO THE PLAN.

 

(a)           Share Reserve.

 

(i)                Subject to the provisions of Section 9(a) relating to
Capitalization Adjustments, and the following sentence regarding the annual
increase, the aggregate number of shares of Common Stock that may be issued
pursuant to Awards will be two million (2,000,000) shares from the Effective
Date up to the first Evergreen Date that occurs as described in the next
sentence (as may be increased on Evergreen Dates, the “Share Reserve”). In
addition, the Share Reserve will automatically increase on January 1st of each
year commencing January 1, 2021, and ending on (and including) January 1, 2030
(or, if the Plan terminates earlier, then January 1 of the year in which the
Plan terminates) (each, an “Evergreen Date”), in an amount equal to five percent
(5.0%) of the total number of shares of Capital Stock outstanding on the last
day of the immediately preceding calendar year. Notwithstanding the foregoing,
the Board may act prior to the start of a calendar year for which an increase
applies to provide that there will be no increase in the Share Reserve for such
year or that the increase in the Share Reserve for such year will be a lesser
number of shares of Common Stock than would otherwise occur pursuant to the
preceding sentence.

 

(ii)               For clarity, the Share Reserve in this Section 3(a) is a
limitation on the number of shares of Common Stock that may be issued pursuant
to the Plan. As a single share may be subject to grant more than once (e.g., if
a share subject to an Award is forfeited, it may be made subject to grant again
as provided in Section 3(b) below), the Share Reserve is not a limit on the
number of Awards that can be granted.

 

(iii)              Shares may be issued in connection with a merger or
acquisition as permitted by NASDAQ Listing Rule 5635(c) or, if applicable, NYSE
Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711
or other applicable rule, and such issuance will not reduce the number of shares
available for issuance under the Plan.

 

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(b)           Reversion of Shares to the Share Reserve. If an Award or any
portion thereof (i) expires or otherwise terminates without all of the shares
covered by such Award having been issued or (ii) is settled in cash (i.e., the
Participant receives cash rather than stock), such expiration, termination or
settlement will not reduce (or otherwise offset) the number of shares of Common
Stock that may be available for issuance under the Plan. If any shares of Common
Stock issued pursuant to an Award are forfeited back to or repurchased by the
Company because of the failure to meet a contingency or condition required to
vest such shares in the Participant or shares of Common Stock that are
surrendered to the Company pursuant to an Exchange Program, then the shares that
are forfeited, repurchased or so surrendered will again become available for
issuance under the Plan. Any shares reacquired by the Company in satisfaction of
tax withholding obligations on an Award or as consideration for the exercise or
purchase price of an Award will again become available for issuance under the
Plan.

 

(c)           Incentive Stock Option Limit. Subject to the provisions of Section
9(a) relating to Capitalization Adjustments, the aggregate maximum number of
shares of Common Stock that may be issued pursuant to the exercise of Incentive
Stock Options will be will be 80,000,000 shares of Common Stock plus, to the
extent allowable under Section 422 of the Code and the Treasury Regulations
promulgated thereunder, any shares that become available for issuance under the
Plan pursuant to the second sentence of Section 3(a)(i) above or Section 3(b)
above.

 

(d)           Source of Shares. The stock issuable under the Plan will be shares
of authorized but unissued or reacquired Common Stock, including shares
repurchased by the Company on the open market or otherwise.

 

4.             ELIGIBILITY.

 

(a)           Eligibility for Specific 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). Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants; provided, however, that Awards may not be
granted to Employees, Directors and Consultants who are providing Continuous
Service only to any “parent” of the Company, as such term is defined in Rule 405
of the Securities Act, unless (i) the stock underlying such Awards is treated as
“service recipient stock” under Section 409A of the Code (for example, because
the Awards are granted pursuant to a corporate transaction such as a spin off
transaction), (ii) the Company, in consultation with its legal counsel, has
determined that such Awards are otherwise exempt from Section 409A of the Code,
or (iii) the Company, in consultation with its legal counsel, has determined
that such Awards comply with the distribution requirements of Section 409A of
the Code.

 

(b)           Ten Percent Stockholders. A Ten Percent Stockholder will not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least 110% of the Fair Market Value on the date of grant and the Option is not
exercisable after the expiration of five years from the date of grant.

 

(c)           Consultants. A Consultant will not be eligible for the grant of a
Stock Award if, at the time of grant, either the offer or sale of the Company’s
securities to such Consultant is not exempt under Rule 701 because of the nature
of the services that the Consultant is providing to the Company, because the
Consultant is not a natural person, or because of any other provision of Rule
701, unless the Company determines that such grant need not comply with the
requirements of Rule 701 and will satisfy another exemption under the Securities
Act as well as comply with the securities laws of all other relevant
jurisdictions.

 

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5.             PROVISIONS RELATING TO OPTIONS AND STOCK APPRECIATION RIGHTS.

 

Each Option or SAR will be in such form and will contain such terms and
conditions as the Board deems appropriate. All Options will 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
will 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, or if an Option is designated as an Incentive Stock Option but some
portion or all of the Option fails to qualify as an Incentive Stock Option under
the applicable rules, then the Option (or portion thereof) will be a
Nonstatutory Stock Option. The provisions of separate Options or SARs need not
be identical; provided, however, that each Award Agreement will conform to
(through incorporation of provisions hereof by reference in the applicable Award
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 or SAR will be exercisable after the expiration
of ten years from the date of its grant or such shorter period specified in the
Award Agreement.

 

(b)           Exercise Price. Subject to the provisions of Section 4(b)
regarding Ten Percent Stockholders, the exercise or strike price of each Option
or SAR will be not less than 100% of the Fair Market Value of the Common Stock
subject to the Option or SAR on the date the Award is granted. Notwithstanding
the foregoing, an Option or SAR may be granted with an exercise or strike price
lower than 100% of the Fair Market Value of the Common Stock subject to the
Award if such Award is granted pursuant to an assumption of or substitution for
another option or stock appreciation right pursuant to a Corporate Transaction
and in a manner consistent with the provisions of Section 409A of the Code and,
if applicable, Section 424(a) of the Code. Each SAR will be denominated in
shares of Common Stock equivalents.

 

(c)           Purchase Price for Options. The purchase price of Common Stock
acquired pursuant to the exercise of an Option may 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 will 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 use a
particular method of payment. The permitted methods of payment are as follows:

 

(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)             if an Option is a Nonstatutory Stock Option, 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 will 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. 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 used 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 and specified in the applicable Award Agreement.

 

(d)           Exercise and Payment of a SAR. To exercise any outstanding SAR,
the Participant must provide written notice of exercise to the Company in
compliance with the provisions of the Stock Appreciation Right Agreement
evidencing such SAR. The appreciation distribution payable on the exercise of a
SAR 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 SAR) of a number of shares
of Common Stock equal to the number of Common Stock equivalents in which the
Participant is vested under such SAR, and with respect to which the Participant
is exercising the SAR on such date, over (B) the aggregate strike price of the
number of Common Stock equivalents with respect to which the Participant is
exercising the SAR on such date. The appreciation distribution 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 contained in the Award Agreement
evidencing such SAR.

 

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(e)           Transferability of Options and SARs. The Board may, in its sole
discretion, impose such limitations on the transferability of Options and SARs
as the Board will determine. In the absence of such a determination by the Board
to the contrary, the following restrictions on the transferability of Options
and SARs will apply:

 

(i)               Restrictions on Transfer. An Option or SAR will not be
transferable except by will or by the laws of descent and distribution (or
pursuant to subsections (ii) and (iii) below), and will be exercisable during
the lifetime of the Participant only by the Participant. The Board may permit
transfer of the Option or SAR in a manner that is not prohibited by applicable
tax or securities laws. Except as explicitly provided in the Plan, neither an
Option nor an SAR may be transferred for consideration.

 

(ii)              Domestic Relations Orders. Subject to the approval of the
Board or a duly authorized Officer, an Option or SAR may be transferred pursuant
to the terms of a domestic relations order, official marital settlement
agreement or other divorce or separation instrument as permitted by Treasury
Regulations Section 1.421-1(b)(2) or comparable non-U.S. law. 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. Subject to the approval of the Board
or a duly authorized Officer, a Participant may, by delivering written notice to
the Company or to any third party designated by the Company, in a form approved
by the Company (or the designated broker), designate a third party who, upon the
death of the Participant, will thereafter be entitled to exercise the Option or
SAR and receive the Common Stock or other consideration resulting from such
exercise. In the absence of such a designation, upon the death of the
Participant, the executor or administrator of the Participant’s estate or the
Participant’s legal heirs will be entitled to exercise the Option or SAR and
receive the Common Stock or other consideration resulting from such exercise.
However, the Company may prohibit designation of a beneficiary at any time,
including due to any conclusion by the Company that such designation would be
inconsistent with the provisions of applicable laws.

 

(f)            Vesting Generally. The total number of shares of Common Stock
subject to an Option or SAR may vest and become exercisable in periodic
installments that may or may not be equal. The Option or SAR 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 or SARs may vary. The provisions of this Section 5(f) are
subject to any Option or SAR provisions governing the minimum number of shares
of Common Stock as to which an Option or SAR may be exercised.

 

(g)           Termination of Continuous Service. Except as otherwise provided in
the applicable Award Agreement or other agreement between the Participant and
the Company, if a Participant’s Continuous Service terminates (other than for
Cause and other than upon the Participant’s death or Disability), the
Participant may exercise his or her Option or SAR (to the extent that the
Participant was entitled to exercise such Award as of the date of termination of
Continuous Service or as set forth in the Award Agreement or other written
agreement between the Participant and the Company relating to the Option) within
the period of time ending on the earlier of (i) the date which occurs three (3)
months following the termination of the Participant’s Continuous Service (or
such longer or shorter period specified in the applicable Award Agreement, which
period will not be less than 30 days if necessary to comply with applicable laws
unless such termination is for Cause), and (ii) the expiration of the term of
the Option or SAR as set forth in the Award Agreement. If, after termination of
Continuous Service, the Participant does not exercise his or her Option or SAR
(as applicable) within the applicable time frame, the Option or SAR will
terminate.

 

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(h)           Extension of Termination Date. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company, if the exercise of an Option or SAR following the termination of the
Participant’s Continuous Service 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 or SAR will terminate on
the earlier of (i) the expiration of a total period of time (that need not be
consecutive) equal to the applicable post termination exercise period after the
termination of the Participant’s Continuous Service during which the exercise of
the Option or SAR would not be in violation of such registration requirements,
and (ii) the expiration of the term of the Option or SAR as set forth in the
applicable Award Agreement. In addition, unless otherwise provided in a
Participant’s Award Agreement, if the sale of any Common Stock received upon
exercise of an Option or SAR following the termination of the Participant’s
Continuous Service would violate the Company’s insider trading policy, then the
Option or SAR will terminate on the earlier of (i) the expiration of the period
of time (that need not be consecutive) equal to the applicable post-termination
exercise period after the termination of the Participant’s Continuous Service
during which the sale of the Common Stock received upon exercise of the Option
or SAR would not be in violation of the Company’s insider trading policy, or
(ii) the expiration of the term of the Option or SAR as set forth in the
applicable Award Agreement.

 

(i)            Disability of Participant. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company, if a Participant’s Continuous Service terminates as a result of the
Participant’s Disability, the Participant may exercise his or her Option or SAR
(to the extent that the Participant was entitled to exercise such Option or SAR
as of the date of termination of Continuous Service), but only within such
period of time ending on the earlier of (i) the date which occurs 12 months
following such termination of Continuous Service (or such longer or shorter
period specified in the Award Agreement, which period will not be less than six
months if necessary to comply with applicable laws unless such termination is
for Cause), and (ii) the expiration of the term of the Option or SAR as set
forth in the Award Agreement. If, after termination of Continuous Service, the
Participant does not exercise his or her Option or SAR within the applicable
time frame, the Option or SAR (as applicable) will terminate.

 

(j)            Death of Participant. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company, if (i) a Participant’s Continuous Service terminates as a result of the
Participant’s death, or (ii) the Participant dies within the period (if any)
specified in the Award Agreement for exercisability after the termination of the
Participant’s Continuous Service for a reason other than death, then the Option
or SAR may be exercised (to the extent the Participant was entitled to exercise
such Option or SAR as of the date of death) by the Participant’s estate, by a
person who acquired the right to exercise the Option or SAR by bequest or
inheritance or by a person designated to exercise the Option or SAR upon the
Participant’s death, but only within the period ending on the earlier of (i) the
date 18 months following the date of death (or such longer or shorter period
specified in the Award Agreement, which period will not be less than six months
if necessary to comply with applicable laws unless such termination is for
Cause), and (ii) the expiration of the term of such Option or SAR as set forth
in the Award Agreement. If, after the Participant’s death, the Option or SAR is
not exercised within the applicable time frame, the Option or SAR (as
applicable) will terminate.

 

(k)            Termination for Cause. Except as explicitly provided otherwise in
the applicable Award Agreement or other written agreement between the
Participant and the Company, if a Participant’s Continuous Service is terminated
for Cause, the Option or SAR will terminate immediately upon such Participant’s
termination of Continuous Service, and the Participant will be prohibited from
exercising his or her Option or SAR from and after the date of such termination
of Continuous Service. If a Participant’s Continuous Service is suspended
pending an investigation of the existence of Cause, all of the Participant’s
rights under the Option or SAR will also be suspended during the investigation
period.

 

(l)            Non-Exempt Employees. If an Option or SAR is granted to an
Employee who is a non-exempt employee for purposes of the U.S. Fair Labor
Standards Act of 1938, as amended, the Option or SAR will not be first
exercisable for any shares of Common Stock until at least six months following
the date of grant of the Option or SAR (although the Award may vest prior to
such date). To the extent consistent with the provisions of the U.S. Worker
Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a
Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not
assumed, continued, or substituted, or (iii) upon the Participant’s retirement
(as such term may be defined in the Participant’s Award Agreement in another
agreement between the Participant and the Company, or, if no such definition, in
accordance with the Company’s then current employment policies and guidelines),
the vested portion of any Options and SARs may be exercised earlier than six
months following the date of grant. 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 or SAR will be exempt from his or her
regular rate of pay. To the extent permitted and/or required for compliance with
the U.S. Worker Economic Opportunity Act to ensure that any income derived by a
non-exempt employee in connection with the exercise, vesting or issuance of any
shares under any other Award will be exempt from the employee’s regular rate of
pay, the provisions of this Section 5(l) will apply to all Awards and are hereby
incorporated by reference into such Award Agreements.

 

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6.             PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS AND SARS.

 

(a)           Restricted Stock Awards. Each Restricted Stock Award Agreement
will be in such form and will contain such terms and conditions as the Board
will 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 will 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. Each Restricted Stock Award Agreement will
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. A Restricted Stock Award may be awarded in
consideration for (A) cash, check, bank draft or money order payable to the
Company, (B) past services to the Company or an Affiliate, or (C) any other form
of legal consideration (including future services) 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. If a
Participant’s Continuous Service terminates, the Company may receive through a
forfeiture condition or a repurchase right any or all of the shares of Common
Stock held by the Participant that 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 will be transferable by the Participant
only upon such terms and conditions as are set forth in the Restricted Stock
Award Agreement, as the Board will 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.

 

(v)              Dividends. A Restricted Stock Award Agreement may provide that
any dividends paid on Restricted Stock will be subject to the same vesting and
forfeiture restrictions as apply to the shares of Common Stock subject to the
Restricted Stock Award to which they relate.

 

(b)           Restricted Stock Unit Awards. Each Restricted Stock Unit Award
Agreement will be in such form and will contain such terms and conditions as the
Board will 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. Each
Restricted Stock Unit Award Agreement will 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.

 

8

 

 

(ii)               Vesting. At the time of the grant of a Restricted Stock Unit
Award, the Board may impose such restrictions on 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.

 

(iv)              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 of the same terms and conditions of the
underlying Restricted Stock Unit Award Agreement to which they relate.

 

(v)              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)            Termination of Participant’s Continuous Service.
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 contain such provisions so that such Restricted
Stock Unit Award will comply with the requirements of Section 409A 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)           Performance Stock Awards.

 

(i)                Performance Stock Awards. A Performance Stock Award is a
Stock Award that is payable (including that may be granted, may vest or may be
exercised) contingent upon the attainment during a Performance Period of certain
Performance Goals. A Performance Stock Award may but need not require the
Participant’s 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 will be conclusively determined by the
Board or Committee, in its sole discretion. In addition, to the extent permitted
by applicable law and the applicable Stock Award Agreement, the Board may
determine that cash may be used in payment of Performance Stock Awards.

 

(ii)               Board Discretion. The Board retains the discretion to adjust
or eliminate the compensation or economic benefit due upon attainment of
Performance Goals and to define the manner of calculating the Performance
Criteria it selects to use for a Performance Period.

 

(d)          Other Stock Awards. Other forms of Stock Awards valued in whole or
in part by reference to, or otherwise based on, Common Stock, including the
appreciation in value thereof (e.g., options or stock rights with an exercise
price or strike price less than 100% of the Fair Market Value of the Common
Stock at the time of grant) 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 will 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.

 

9

 

 

7.             COVENANTS OF THE COMPANY.

 

(a)           Availability of Shares. The Company will keep available at all
times the number of shares of Common Stock reasonably required to satisfy
then-outstanding Stock Awards.

 

(b)           Compliance with Law. The Company will seek to obtain from each
regulatory commission or agency, as necessary, such authority as may be required
to grant Stock Awards and to issue and sell shares of Common Stock upon exercise
or vesting of the Stock Awards; provided, however, that this undertaking will
not require the Company to register under the Securities Act the Plan or other
securities or applicable laws, any Stock Award or any Common Stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts and at a
reasonable cost, the Company is unable to obtain from any such regulatory
commission or agency the authority that counsel for the Company deems necessary
or advisable for the lawful issuance and sale of Common Stock under the Plan,
the Company will be relieved from any liability for failure to issue and sell
Common Stock upon exercise or vesting of such Stock Awards unless and until such
authority is obtained. A Participant will not be eligible for the grant of a
Stock Award or the subsequent issuance of cash or Common Stock pursuant to the
Stock Award if such grant or issuance would be in violation of any applicable
law.

 

(c)             No Obligation to Notify or Minimize Taxes. The Company will have
no duty or obligation to any Participant to advise such holder as to the time or
manner or tax treatment of exercising such Stock Award. Furthermore, the Company
will 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 will 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
will 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. In the event that the
corporate records (e.g., Board consents, resolutions or minutes) documenting the
corporate action constituting the grant contain terms (e.g., exercise price,
vesting schedule or number of shares) that are inconsistent with those in the
Stock Award Agreement or related grant documents as a result of a clerical error
in the papering of the Stock Award Agreement or related grant documents, the
corporate records will control and the Participant will have no legally binding
right to the incorrect term in the Stock Award Agreement or related grant
documents.

 

(c)           Stockholder Rights. No Participant will 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 a Stock Award unless and until (i) such Participant has
satisfied all requirements for exercise of, or the issuance of shares of Common
Stock under, the Stock Award pursuant to its terms, and (ii) the issuance of the
Common Stock subject to such Stock Award 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 any other instrument executed thereunder or in
connection with any Stock Award granted pursuant thereto will 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 will 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 is incorporated, as the case may be.
Furthermore, to the extent the Company is not the employer of a Participant, the
grant of a Stock Award will be not establish an employment or other service
relationship between the Company and the Participant.

 

10

 

 

(e)           Change in Time Commitment. In the event a Participant’s regular
level of time commitment in the performance of his or her services for the
Company and any Affiliates is reduced (for example, and without limitation, if
the Participant is an Employee of the Company and the Employee has a change in
status from a full-time Employee to a part-time Employee or takes an extended
leave of absence) after the date of grant of any Stock Award to the Participant,
the Board has the right in its sole discretion to (x) make a corresponding
reduction in the number of shares or cash amount subject to any portion of such
Stock Award that is scheduled to vest or become payable after the date of such
change in time commitment, and (y) in lieu of or in combination with such a
reduction, extend the vesting or payment schedule applicable to such Stock
Award. In the event of any such reduction, the Participant will have no right
with respect to any portion of the Stock Award that is so reduced.

 

(f)            Incentive Stock Option Limitations. 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 U.S. $100,000 (or such other limit established in the
Code) or otherwise does not comply with the rules governing Incentive Stock
Options, the Options or portions thereof that exceed such limit (according to
the order in which they were granted) or otherwise do not comply with such rules
will be treated as Nonstatutory Stock Options, notwithstanding any contrary
provision of the applicable Option Agreement(s).

 

(g)           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 such
Participant 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, will be inoperative if (A) 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 (B) 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.

 

(h)           Withholding. Whenever shares are to be issued in satisfaction of
Awards granted under this Plan or a tax event occurs, the Company may require
the Participant to remit to the Company, or to the Parent, Subsidiary, or
Affiliate, as applicable, employing the Participant an amount sufficient to
satisfy applicable U.S. federal, state, local, and international tax or any
other tax or social insurance liability (the “Tax-Related Items”) legally due
from the Participant prior to the delivery of shares pursuant to exercise or
settlement of any Award. Whenever payments in satisfaction of Awards granted
under this Plan are to be made in cash, such payment will be net of an amount
sufficient to satisfy applicable withholding obligations for Tax-Related Items.
Unless prohibited by the terms of a Stock Award Agreement, the Company may, in
its sole discretion, require or permit a Participant to satisfy any U.S.
federal, state or local tax withholding obligation or other Tax-Related Items
legally due from the Participant relating to a Stock Award by any of the
following means or by a combination of such means, in whole or in part and
without limitation: (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 Stock Award;
provided, however, that (A) no shares of Common Stock are withheld with a value
exceeding the maximum amount of tax that may be required to be withheld by law
(or such other amount as may be permitted while still avoiding classification of
the Stock Award as a liability for financial accounting purposes), and (B) with
respect to a Stock Award held by any Participant who is subject to the filing
requirements of Section 16 of the Exchange Act, any such share withholding must
be specifically approved by the Compensation Committee as the applicable method
that must be used to satisfy the tax withholding obligation or such share
withholding procedure must otherwise satisfy the requirements for an exempt
transaction under Section 16(b) of the Exchange Act; (iii) withholding cash from
a Stock Award settled in cash; (iv) withholding payment from any amounts
otherwise payable to the Participant; (v) by means of a “cashless exercise”
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board; (vi) delivering to the Company already-owned shares having a Fair
Market Value equal to the Tax-Related Items to be withheld; or (vii) by such
other method as may be set forth in the Stock Award Agreement. The Company may
withhold or account for these Tax-Related Items by considering applicable
statutory withholding rates or other applicable withholding rates, including up
to the maximum permissible statutory tax rate for the applicable tax
jurisdiction, to the extent consistent with applicable laws.

 

11

 

 

(i)            Electronic Delivery. Any reference herein to a “written”
agreement or document will include any agreement or document delivered
electronically, filed publicly at www.sec.gov (or any successor website thereto)
or posted on the Company’s intranet (or other shared electronic medium
controlled by the Company to which the Participant has access).

 

(j)            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 Stock 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 or otherwise providing services to the Company. 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 Continuous Service, and
implement such other terms and conditions consistent with the provisions of the
Plan and in accordance with applicable law.

 

(k)           Compliance with Section 409A of the Code. Unless otherwise
expressly provided for in a Stock Award Agreement, the Plan and Stock Award
Agreements will be interpreted to the greatest extent possible in a manner that
makes the Plan and the Stock Awards granted hereunder exempt from Section 409A
of the Code, and, to the extent not so exempt, in compliance with Section 409A
of the Code. If the Board determines that any Stock Award granted hereunder is
not exempt from and is therefore subject to Section 409A of the Code, the Stock
Award Agreement evidencing such Stock Award will incorporate the terms and
conditions necessary to avoid the consequences specified in Section 409A(a)(1)
of the Code, and to the extent a Stock Award Agreement is silent on terms
necessary for compliance, such terms are hereby incorporated by reference into
the Stock Award Agreement. Notwithstanding anything to the contrary in this Plan
(and unless the Stock Award Agreement specifically provides otherwise), if the
shares of Common Stock are publicly traded, and if a Participant holding a Stock
Award that constitutes “deferred compensation” under Section 409A of the Code is
a “specified employee” for purposes of Section 409A of the Code, no distribution
or payment of any amount that is due because of a “separation from service” (as
defined in Section 409A of the Code without regard to alternative definitions
thereunder) will be issued or paid before the date that is six months following
the date of such Participant’s “separation from service” or, if earlier, the
date of the Participant’s death, unless such distribution or payment can be made
in a manner that complies with Section 409A of the Code, and any amounts so
deferred will be paid in a lump sum on the day after such six month period
elapses, with the balance paid thereafter on the original schedule.

 

(l)            Exchange Program. Without prior stockholder approval, the Board
may engage in an Exchange Program.

 

(m)          Clawback/Recovery. All Stock Awards granted under the Plan will be
subject to recoupment in accordance with any clawback policy that the Company
adopts or is required to adopt pursuant to the listing standards of any national
securities exchange or association on which the Company’s securities are listed
or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and
Consumer Protection Act or other applicable law, and in addition to any other
remedies available under such policy and applicable law, may require the
cancellation of outstanding Awards and the recoupment of any gains realized with
respect to Awards. In addition, the Board may impose such other clawback,
recovery or recoupment provisions in a Stock Award Agreement as the Board
determines necessary or appropriate, including but not limited to a
reacquisition right in respect of previously acquired shares of Common Stock or
other cash or property upon the occurrence of an event constituting Cause. No
recovery of compensation under such a clawback policy will be an event giving
rise to a right to resign for “good reason” or “constructive termination” (or
similar term) under any agreement with the Company or an Affiliate.

 

12

 

 

9.             ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.

 

(a)           Capitalization Adjustments. In the event of a Capitalization
Adjustment, the Board will 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), and (iii) the class(es) and number of securities and price per share of
stock subject to outstanding Stock Awards. The Board will make such adjustments,
and its determination will 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) will terminate immediately prior
to the completion of such dissolution or liquidation, and the shares of Common
Stock subject to the Company’s repurchase rights or subject to a forfeiture
condition may be repurchased or reacquired 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 will apply to
Stock Awards in the event of a Corporate Transaction unless otherwise provided
in the Stock Award Agreement or any other written agreement between the Company
or any Affiliate and the Participant or unless otherwise expressly provided by
the Board at the time of grant of a Stock Award. In the event of a Corporate
Transaction, then, notwithstanding any other provision of the Plan, the Board
may take one or more of the following actions with respect to Stock Awards:

 

(i)                arrange for the surviving corporation or acquiring
corporation (or the surviving or acquiring corporation’s parent company) to
assume or continue the Stock Award or to substitute a similar stock award for
the Stock Award (including, but not limited to, an award to acquire
substantially similar consideration paid to the stockholders of the Company
pursuant to the Corporate Transaction, after taking into account the existing
provisions of the Awards);

 

(ii)              arrange for the assignment of any reacquisition or repurchase
rights held by the Company in respect of Common Stock issued pursuant to the
Stock Award to the surviving corporation or acquiring corporation (or the
surviving or acquiring corporation’s parent company);

 

(iii)             accelerate the vesting, in whole or in part, of the Stock
Award (and, if applicable, the time at which the Stock Award may be exercised)
to a date prior to the effective time of such Corporate Transaction as the Board
determines (or, if the Board does not determine such a date, to the date that is
five days prior to the effective date of the Corporate Transaction), with such
Stock Award terminating if not exercised (if applicable) at or prior to the
effective time of the Corporate Transaction; provided, however, that the Board
may require Participants to complete and deliver to the Company a notice of
exercise before the effective date of a Corporate Transaction; 

 

(iv)             arrange for the lapse, in whole or in part, of any
reacquisition or repurchase rights held by the Company with respect to the Stock
Award;

 

(v)             cancel or arrange for the cancellation of the Stock Award, to
the extent not vested or not exercised prior to the effective time of the
Corporate Transaction, in exchange for such cash consideration, if any, as the
Board, in its sole discretion, may consider appropriate. For clarity, this
payment may be $0.00 if the amount per share (or value of property per share)
payable to the holders of Common Stock is equal to or less than the exercise
price of the Stock Award. Payments under this provision may be delayed to the
same extent that payment of consideration to the holders of Common Stock in
connection with the Corporate Transaction is delayed as a result of escrows,
earn outs, holdbacks or any other contingencies. In addition, the Board, in its
sole discretion, may condition a Participant’s right to receive such payment
upon the Participant’s delivery of an agreement (x) acknowledging such escrows,
earn outs, holdbacks or other contingencies, (y) appointing a representative to
act on the Participant’s behalf following the Corporate Transaction with respect
to matters relating to the Corporate Transaction, and/or (z) agreeing to or
acknowledging any indemnification obligations required of holders of Common
Stock pursuant to the Corporate Transaction; and

 

13

 

 

(vi)            make a payment, in such form as may be determined by the Board
equal to the excess, if any, of (A) the per share amount (or value of property
per share) payable to holders of Common Stock in connection with the Corporate
Transaction, over (B) the per share exercise price under the applicable Stock
Award, multiplied by the number of shares subject to the Stock Award. For
clarity, this payment may be zero (U.S. $0) if the amount per share (or value of
property per share) payable to the holders of the Common Stock is equal to or
less than the exercise price of the Stock Award. In addition, any escrow,
holdback, earnout or similar provisions in the definitive agreement for the
Corporate Transaction may apply to such payment to the holder of the Stock Award
to the same extent and in the same manner as such provisions apply to the
holders of Common Stock. Payments under this provision may be delayed to the
same extent that payment of consideration to the holders of Common Stock in
connection with the Corporate Transaction is delayed as a result of escrows,
earn outs, holdbacks or any other contingencies.

 

(vii)           Except as otherwise stated in a Stock Award Agreement, in the
event of a Corporate Transaction, the vesting of Stock Awards (and, with respect
to Options and SARs, the time at which such Stock Awards may be exercised) shall
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 if 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, then with respect to Stock Awards that have not been assumed, continued
or substituted, 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. 

 

(viii)           Notwithstanding any provision to the contrary herein, in the
event of a Corporate Transaction, the vesting of all Awards granted to
Non-Employee Directors will accelerate and such Awards will become exercisable
(as applicable) in full prior to the consummation of such event at such times
and on such conditions as the Committee determines.

 

The Board need not take the same action or actions with respect to all Stock
Awards or portions thereof or with respect to all Participants. The Board may
take different actions with respect to different Participants and the vested and
unvested portions of a Stock Award.

 

(d)           Assumption of Awards by the Company. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either: (a) granting an Award under this Plan in substitution of
such other company’s award, or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the Purchase Price or the Exercise Price, as the case may be, and
the number and nature of Shares issuable upon exercise or settlement of any such
Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In
the event the Company elects to grant a new Option in substitution rather than
assuming an existing option, such new Option may be granted with a similarly
adjusted Exercise Price. Substitute Awards will not reduce the number of Shares
authorized for grant under the Plan or authorized for grant to a Participant in
a calendar year.

 

14

 

 

(e)           Additional Provisions. A Stock Award may be subject to additional
acceleration of vesting and exercisability upon or after a Corporate Transaction
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
will occur.

 

(f)            Appointment of Stockholder Representative. As a condition to the
receipt of an Award under this Plan, a Participant will be deemed to have agreed
that the Award will be subject to the terms of any agreement governing a
Corporate Transaction involving the Company, including, without limitation, a
provision for the appointment of a shareholder representative that is authorized
to act on the Participant’s behalf with respect to any escrow or other
contingent consideration.

 

(g)           No Restriction on Right to Undertake Transactions. The grant of
any Award under the Plan and the issuance of shares pursuant to any Award does
not affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, Options or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

 

10.           TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)           Plan Term. The Board may suspend or terminate the Plan at any
time. Unless terminated sooner by the Board, the Plan will automatically
terminate on the day before the 10th anniversary of the earlier of (i) the
Adoption Date, or (ii) the date the Plan is approved by the stockholders of the
Company. No Stock 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
will 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 or
as otherwise permitted in the Plan.

 

11.           EFFECTIVE DATE OF THE PLAN; FIRST AWARD, GRANT OR EXERCISE.

 

The Plan will become effective on the Effective Date; provided, however, that no
Awards may be granted prior to the Effective Date. In addition: (a) no Stock
Award will be exercised (or, in the case of a Restricted Stock Award, Restricted
Stock Unit Award, Performance Stock Award, or Other Stock Award, will be
granted) unless and until the Plan has been approved by the stockholders of the
Company, which approval will be within 12 months before or after the Adoption
Date; and (b) no Award may be granted, issued or made under the Plan until such
time as the Fair Market Value of the Common Stock has been equal to or greater
than $3.00 per share (as proportionately adjusted for any stock splits, reverse
stock splits, stock dividends or similar events affecting the Common Stock) for
at least ten (10) consecutive Trading Days, after which time Awards may be made
under the Plan without regard to any subsequent increase or decrease in the Fair
Market Value of the Common Stock.

 

12.           CHOICE OF LAW.

 

The law of the State of Delaware shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to that
state’s conflict of laws rules.

 

13.           AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.

 

(a)           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.

 

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 (b)          Initial Grant. Subject in all events to the provisions of Section
11 above, 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(b) shall be called an “Initial Grant.”

 

(c)           Succeeding Grant. Subject in all events to the provisions of
Section 11 above, 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 thirty
thousand (30,000) Shares. Each Option granted pursuant to this Section 13(c)
shall be called a “Succeeding Grant”.

 

(d)           Vesting and Exercisability.

 

(i)            Initial Grants. Initial Grants shall vest and become exercisable
as to 1/36 of the total Shares subject to the Initial Grant 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.

 

(ii)           Succeeding Grants. Succeeding Grants shall vest and become
exercisable as to 1/12 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 first anniversary of the date of grant, so
long as the Non-Employee Director continuously remains a director, consultant or
employee of the Company.

 

(iii)         Corporate Transaction. In the event of a Corporate Transaction,
the vesting of all Options granted to Non-Employee Directors pursuant to this
Section 13 whose service as a director has not terminated before the
consummation of the Corporate Transaction shall accelerate and such Options will
become exercisable in full immediately prior to the consummation of the
Corporate Transaction at such times and on such conditions as the Committee
determines.

 

(e)           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.

 

(f)            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.

 

(g)           Termination of Option. Except as provided in Section 13.(d)(iii)
or this Section 13(g), 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(g). An Option may be exercised after the
Non-Employee Director Termination Date only as set forth below:

 

(i)            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 a Corporate Transaction, each Initial Grant and
Succeeding Grant, to the extent then vested pursuant to Section 13(d) 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.

 

(ii)           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(d) 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.

 

16

 

 

(iii)         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(d) 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.

 

(iv)           Corporate Transaction. If the Non-Employee Director ceases to be
a member of the Board, consultant or employee of the Company because of a
Corporate Transaction, then unless otherwise determined by the Board pursuant to
the provisions of Section 9(c) above, each Initial Grant and Succeeding Grant,
to the extent then vested pursuant to Section 13(d) 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 (unless otherwise determined by the Board pursuant to
Section 9(c) above), but in no event later than the Expiration Date.

 

14.         CASH AWARDS.

 

A Cash Award (“Cash Award ”) is an award that is denominated in, or payable to
an eligible Participant solely in, cash, as deemed by the Committee to be
consistent with the purposes of the Plan. Cash Awards shall be subject to the
terms, conditions, restrictions and limitations determined by the Committee, in
its sole discretion, from time to time. Awards granted pursuant to this Section
may be granted with value and payment contingent upon the achievement of
Performance Goals.

 

15.         DEFINITIONS.

 

As used in the Plan, the definitions contained in this Section 15 shall apply to
the capitalized terms indicated below:

 

(a)           “Adoption Date”  means the date the Plan is adopted by the Board.

 

(b)           “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 will have the authority to determine the time or times
at which “parent” or “subsidiary” status is determined within the foregoing
definition.

 

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

 

(d)           “Capital Stock”  means each and every class of common stock of the
Company, regardless of the number of votes per share.

 

(e)           “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 Adoption Date without the receipt of
consideration by the Company through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, large nonrecurring cash dividend, stock split, reverse stock split,
liquidating dividend, combination of shares, exchange of shares, change in
corporate structure or any similar equity restructuring transaction, as that
term is used in Statement of Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (or any successor thereto). Notwithstanding the
foregoing, the conversion of any convertible securities of the Company will not
be treated as a Capitalization Adjustment.

 

(f)            “Cause” will have the meaning ascribed to such term in any
written agreement between the Participant and the Company defining such term
and, in the absence of such agreement, such term 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, any state thereof, or
any applicable foreign jurisdiction; (ii) such Participant’s attempted
commission of, or participation in, a fraud or act of dishonesty against the
Company or any Affiliate; (iii) such Participant’s intentional, material
violation of any contract or agreement between the Participant and the Company
or any Affiliate, of any policy of the Company or any Affiliate applicable to
Participant or of any statutory or fiduciary duty owed to the Company or any
Affiliate; (iv) such Participant’s unauthorized use or disclosure of the
Company’s or any Affiliate’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 Stock 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.

 

17

 

 

(g)           “Code” means the Internal Revenue Code of 1986, as amended,
including any applicable regulations and guidance thereunder.

 

(h)           “Committee”  means a committee of one 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, 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, 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, will not
cause a Director to be considered a “Consultant” for purposes of the Plan.
Notwithstanding the foregoing, a person is treated as a Consultant under this
Plan only if a Form S-8 Registration Statement under the Securities Act is
available to register either the offer or the sale of the Company’s securities
to such person.

 

(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, will not terminate a
Participant’s Continuous Service; provided, however, that if the Entity for
which a Participant is rendering services ceases to qualify as an Affiliate, as
determined by the Board, in its sole discretion, such Participant’s Continuous
Service will be considered to have terminated on the date such Entity ceases to
qualify as an Affiliate. For example, a change in status from an Employee of the
Company to a Consultant of an Affiliate or to a Director will 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 will be considered interrupted in the case
of (i) any leave of absence approved by the Board or chief executive officer,
including sick leave, military leave or any other personal leave, or (ii)
transfers between the Company, an Affiliate, or their successors.
Notwithstanding the foregoing, a leave of absence will 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. In addition, to the extent required for exemption
from or compliance with Section 409A of the Code, the determination of whether
there has been a termination of Continuous Service will be made, and such term
will be construed, in a manner that is consistent with the definition of
“separation from service” as defined under Treasury Regulation Section
1.409A-1(h) (without regard to any alternative definition thereunder).

 

(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 change in the ownership of the Company which occurs on the date
that any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company that, together with stock held by such Exchange Act
Person, represents more than 50% of the total combined voting power of the
Company’s then outstanding securities other than by virtue of a merger,
consolidation or similar transaction, provided, however, that for purposes of
this subclause (i) the acquisition of additional securities by any one Exchange
Act Person who is considered to own more than 50% of the combined voting power
of the securities of the Company will not be considered a Corporate Transaction.
Notwithstanding the foregoing, a Corporate Transaction will not be deemed to
occur (A) on account of the acquisition of securities of the Company directly
from the Company, (B) on account of the acquisition of securities of the Company
by an investor, any affiliate thereof or any other Exchange Act Person that
acquires the Company’s securities 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 (C) 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 Corporate
Transaction 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 Corporate
Transaction will be deemed to occur;

 

 

18

 

 

(ii)           a change in the ownership of the Company which occurs when 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 50% of the combined
outstanding voting power of the surviving Entity in such merger, consolidation
or similar transaction or (B) more than 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 as their
Ownership of the outstanding voting securities of the Company immediately prior
to such transaction;

 

(iii)         a change in the ownership of all or substantially all of the
Company’s assets which occurs when there is consummated a sale 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 50% of the combined voting
power of the voting securities of which are Owned by stockholders of the Company
in substantially the same proportions as their Ownership of the outstanding
voting securities of the Company immediately prior to such sale, lease, license
or other disposition; or

 

(iv)          a change in the effective control of the Company that occurs when
individuals who, on the date the Plan is adopted by the Board, 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 will, for purposes of this Plan, be
considered as a member of the Incumbent Board. For purpose of this subclause
(iv), if any Person is considered to be in effective control of the Company, the
acquisition of additional control of the Company by the same Person will not be
considered a Corporate Transaction. For purposes of this definition, Persons
will be considered to be acting as a group if they are owners of a corporation
that enters into a merger, consolidation, purchase, or acquisition of stock, or
similar business transaction with the Company.

 

Notwithstanding the foregoing or any other provision of the Plan, the term
Corporate Transaction will not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company and the definition of Corporate Transaction (or any analogous term,
including without limitation Change in Control or Change of Control) in an
individual written agreement between the Company or any Affiliate and the
Participant will supersede the foregoing definition with respect to Stock Awards
subject to such agreement; provided, however, that if no definition of Corporate
Transaction or any analogous term is set forth in such an individual written
agreement, the foregoing definition will apply. To the extent required for
compliance with Section 409A of the Code, in no event will a Corporate
Transaction be deemed to have occurred if such transaction is not also a “change
in the ownership or effective control of” the Company or “a change in the
ownership of a substantial portion of the assets of” the Company as determined
under Treasury Regulations Section 1.409A-3(i)(5) (without regard to any
alternative definition thereunder). The Board may, in its sole discretion and
without a Participant’s consent, amend the definition of “Corporate Transaction”
to conform to the definitions of change in control or other similar terms under
Section 409A of the Code, and the regulations thereunder. Notwithstanding the
foregoing, to the extent that any amount constituting deferred compensation (as
defined in Section 409A of the Code) would become payable under this Plan by
reason of a Corporate Transaction, such amount will become payable only if the
event constituting a Corporate Transaction would also qualify as a change in
ownership or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company, each as defined within the
meaning of Code Section 409A, as it has been and may be amended from time to
time, and any proposed or final Treasury Regulations and IRS guidance that has
been promulgated or may be promulgated thereunder from time to time.

 

19

 

 

(n)           “Director ” means a member of the Board.

 

(o)           “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 that can be expected to
result in death or that has lasted 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, and will be determined by the Board on the basis
of such medical evidence as the Board deems warranted under the circumstances.

 

(p)           “Effective Date” means the date on which this Plan is approved by
the Board or by the stockholders of the Company, whichever occurs earlier.

 

(q)           “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, will not cause a Director to be considered an “Employee” for purposes
of the Plan.

 

(r)            “Entity” means a corporation, partnership, limited liability
company or other entity.

 

(s)           “Exchange Act ” means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

 

(t)            “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” will 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 a registered
public 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 50% of the
combined voting power of the Company’s then outstanding securities.

 

(u)           “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 will be, unless otherwise determined by the Board, the closing sales price
for such stock 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 a source the Board deems reliable.

 

(ii)           Unless otherwise provided by the Board, if there is no closing
sales price for the Common Stock on the date of determination, then the Fair
Market Value will be the closing selling price on the last preceding date for
which such quotation exists.

 

(iii)         In the absence of such markets for the Common Stock, the Fair
Market Value will be determined by the Board in good faith and in a manner that
complies with Sections 409A and 422 of the Code.

 

(v)           “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.

 

20

 

 

(w)          “IPO Date ” means the date of the underwriting agreement between
the Company and the underwriter(s) managing the initial public offering of the
Common Stock, pursuant to which the Common Stock is priced for the initial
public offering.

 

(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 designated by the Company as an
officer within the meaning of Section 16 of the Exchange Act.

 

(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 will 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 applicable, 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(d).

 

(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 will be subject
to the terms and conditions of the Plan.

 

(ff)           “Own,” “Owned,” “Owner,” “Ownership” means a person or Entity
will 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.

 

(gg)         “Parent ” means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.

 

(hh)         “Participant” means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

 

21

 

 

(ii)           “Performance Criteria ” means the one or more criteria that the
Board or Committee (as applicable) will select for purposes of establishing the
Performance Goals for a Performance Period. The Performance Criteria that will
be used to establish such Performance Goals may be based on any one of, or
combination of, the following as determined by the Board or Committee (as
applicable): (1) earnings (including earnings per share and net earnings); (2)
earnings before interest, taxes, depreciation and amortization; (3) total
stockholder return; (4) return on equity or average stockholder’s equity; (5)
return on assets, investment, or capital employed; (6) stock price; (7) margin
(including gross margin); (8) income (before or after taxes); (9) operating
income; (10) operating income after taxes; (11) pre-tax profit; (12) operating
cash flow; (13) sales or revenue targets; (14) increases in revenue or product
revenue; (15) expenses and cost reduction goals; (16) improvement in or
attainment of working capital levels; (17) economic value added (or an
equivalent metric); (18) market share; (19) cash flow; (20) cash flow per share;
(21) share price performance; (22) debt reduction; (23) customer satisfaction;
(24) stockholders’ equity; (25) capital expenditures; (26) debt levels; (27)
operating profit or net operating profit; (28) workforce diversity; (29) growth
of net income or operating income; (30) billings; (31) implementation or
completion of projects or processes; (32) financing; (33) regulatory milestones;
(34) stockholder liquidity; (35) corporate governance and compliance; (36)
product commercialization; (37) intellectual property; (38) personnel matters;
(39) progress of internal research or clinical programs; (40) progress of
partnered programs; (41) partner satisfaction; (42) budget management; (43)
clinical achievements; (44) completing phases of a clinical study (including the
treatment phase); (45) announcing or presenting preliminary or final data from
clinical studies; in each case, whether on particular timelines or generally;
(46) timely completion of clinical trials; (47) submission of Device Master
File(s) and other regulatory achievements; (48) partner or collaborator
achievements; (49) internal controls, including those related to the
Sarbanes-Oxley Act of 2002; (50) research progress, including the development of
programs; (51) investor relations, analysts and communication; (52)
manufacturing achievements (including obtaining particular yields from
manufacturing runs and other measurable objectives related to process
development activities); (53) strategic partnerships or transactions (including
in-licensing and out-licensing of intellectual property; (54) establishing
relationships with commercial entities with respect to the marketing,
distribution and sale of the Company’s products and services (including with
group purchasing organizations, distributors and other vendors); (55) supply
chain achievements (including establishing relationships with manufacturers,
suppliers and other services providers of the Company’s products and services);
(56) co-development, co-marketing, profit sharing, joint venture or other
similar arrangements; (57) individual performance goals; (58) corporate
development and planning goals; and (59) other measures of performance selected
by the Board or Committee.

 

(jj)           “Performance Goals ” means, for a Performance Period, the one or
more goals established by the Board or Committee (as applicable) for the
Performance Period based upon 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. Unless specified otherwise by the
Board or Committee (as applicable) (i) in the Stock Award Agreement at the time
the Stock Award is granted or (ii) in such other document setting forth the
Performance Goals at the time the Performance Goals are established, the Board
or Committee (as applicable) will appropriately make adjustments in the method
of calculating the attainment of Performance Goals for a Performance Period as
follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to
exclude exchange rate effects; (3) to exclude the effects of changes to
generally accepted accounting principles; (4) to exclude the effects of any
statutory adjustments to corporate tax rates; (5) to exclude the effects of
items that are “unusual” in nature or occur “infrequently” as determined under
generally accepted accounting principles; (6) to exclude the dilutive effects of
acquisitions or joint ventures; (7) to assume that any business divested by the
Company achieved performance objectives at targeted levels during the balance of
a Performance Period following such divestiture; (8) to exclude the effect of
any change in the outstanding shares of common stock of the Company by reason of
any stock dividend or split, stock repurchase, reorganization, recapitalization,
merger, consolidation, spin-off, combination or exchange of shares or other
similar corporate change, or any distributions to common stockholders other than
regular cash dividends; (9) to exclude the effects of stock based compensation
and the award of bonuses under the Company’s bonus plans; (10) to exclude costs
incurred in connection with potential acquisitions or divestitures that are
required to be expensed under generally accepted accounting principles; (11) to
exclude the goodwill and intangible asset impairment charges that are required
to be recorded under generally accepted accounting principles and (12) to
exclude the effect of any other unusual, nonrecurring gain or loss or other
extraordinary item. In addition, the Board or Committee (as applicable) retains
the discretion to reduce or eliminate the compensation or economic benefit due
upon attainment of Performance Goals and to define the manner of calculating the
Performance Criteria it selects to use for such Performance Period. 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.

 

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(kk)         “Performance Period ” means the period of time selected by the
Board or Committee (as applicable) 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. Performance Periods may
be of varying and overlapping duration, at the sole discretion of the Board or
Committee (as applicable).

 

(ll)           “Performance Stock Award ” means a Stock Award granted under the
terms and conditions of Section 6(c)(i).

 

(mm)       “Plan” means this Adamis Pharmaceuticals Corporation 2020 Equity
Incentive Plan, as it may be amended from time to time.

 

(nn)         “Restricted Stock Award ” means an award of shares of Common Stock
which is granted pursuant to the terms and conditions of Section 6(a).

 

(oo)         “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 will be subject to the terms and conditions of the Plan.

 

(pp)         “Restricted Stock Unit Award ” means a right to receive shares of
Common Stock which is granted pursuant to the terms and conditions of Section
6(b).

 

(qq)         “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 will be subject to the terms and conditions of the
Plan.

 

(rr)          “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.

 

(ss)         “Securities Act ” means the Securities Act of 1933, as amended.

 

(tt)           “Stock Appreciation Right ” or “SAR ” means a right to receive
the appreciation on Common Stock that is granted pursuant to the terms and
conditions of Section 5.

 

(uu)         “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 will be subject to the terms and conditions of the
Plan.

 

(vv)         “Stock Award ” or “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.

 

(ww)       “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 will be subject to the terms and conditions of
the Plan.

 

(xx)         “Subsidiary” means, with respect to the Company, (i) any
corporation of which more than 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 will 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
50%.

 

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(yy)         “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 10% of
the total combined voting power of all classes of stock of the Company or any
Affiliate.

 

(zz)          “Trading Day ” means a day on which the principal Trading Market
is open for trading, and “Trading Market ” means any of the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE MKT, the Nasdaq Capital Market, the SNasdaq Global Market,
the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or
any successors to any of the foregoing).

 

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