Exhibit 10.21

 

FURIEX PHARMACEUTICALS, INC.

 

2010 STOCK PLAN, AS AMENDED

 

Approved by the Board: March 1, 2013

Approved by the Stockholders: May 24, 2013

 

1.     Purpose. This 2010 Stock Plan (the “Plan”) is intended to provide
incentives:

 

(a)     to employees of Furiex Pharmaceuticals, Inc. (the “Company”), or its
parent (if any) or any of its present or future subsidiaries (collectively,
“Related Corporations”), by providing them with opportunities to purchase Common
Stock (as defined in Section 4) of the Company pursuant to options granted
hereunder that qualify as “incentive stock options” (“ISOs”) under Section 422
of the Internal Revenue Code of 1986, as amended, or any successor statute (the
“Code”);

 

(b)     to directors, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase Common Stock of
the Company pursuant to options granted hereunder that do not qualify as ISOs
(Nonstatutory Stock Options, or “NSOs”);

 

(c)     to employees and consultants of the Company and Related Corporations by
providing them with a right to receive the appreciation on Common Stock (“Stock
Appreciation Rights” or “SARs”);

 

(d)     to employees and consultants of the Company and Related Corporations by
providing them with restricted stock or bonus awards of Common Stock of the
Company (“Stock Bonuses”); and

 

(e)     to employees and consultants of the Company and Related Corporations by
providing them with opportunities to make direct purchases of Common Stock of
the Company (“Purchase Rights”).

 

Both ISOs and NSOs are referred to hereafter individually as “Options”, and
Options, SARs, Stock Bonuses and Purchase Rights are referred to hereafter
collectively as “Stock Rights”. As used herein, the terms “parent” and
“subsidiary” mean “parent corporation” and “subsidiary corporation”,
respectively, as those terms are defined in Section 424 of the Code.

 

2.     Administration of the Plan.

 

(a)     The Plan shall be administered by (i) the Board of Directors of the
Company (the “Board”) or (ii) a committee consisting of directors or other
persons appointed by the Board (the “Committee”). The appointment of the members
of, and the delegation of powers to, the Committee by the Board shall be
consistent with applicable laws and regulations (including, without limitation,
the Code, Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or any successor rule thereto (“Rule 16b-3”), the
rules of the Company’s primary stock exchange and any applicable state law
(collectively, the “Applicable Laws”)). Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time, the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws.

 

 

 
 

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(b)     Subject to ratification of the grant or authorization of each Stock
Right by the Board (if so required by an Applicable Law), and subject to the
terms of the Plan, the Committee, if so appointed, and further subject to
stockholder approval in respect of the matters described in Section 17, shall
have the authority, in its discretion, to:

 

(i)       determine the employees of the Company and Related Corporations (from
among the class of employees eligible under Section 3 to receive ISOs) to whom
ISOs may be granted, and to determine (from among the classes of individuals and
entities eligible under Section 3 to receive NSOs, Stock Bonuses and Purchase
Rights) to whom NSOs, Stock Bonuses and Purchase Rights may be granted;

 

(ii)      determine the time or times at which Options, Stock Bonuses or
Purchase Rights may be granted (which may be based on performance criteria);

 

(iii)     determine the number of shares of Common Stock subject to any Stock
Right granted by the Committee;

 

(iv)     determine the option price of shares subject to each Option, which
price shall not be less than the minimum price specified in Section 6 hereof, as
appropriate, and the purchase price of shares subject to each Purchase Right and
to determine the form of consideration to be paid to the Company for exercise of
such Option or purchase of shares with respect to a Purchase Right;

 

(v)      determine whether each Option granted shall be an ISO or NSO;

 

(vi)     determine (subject to Section 7) the time or times when each Option
shall become exercisable and the duration of the exercise period;

 

(vii)    determine whether restrictions such as repurchase options are to be
imposed on shares subject to Options, Stock Bonuses and Purchase Rights and the
nature of such restrictions, if any;

 

(viii)   approve forms of agreement for use under the Plan;

 

(ix)     determine the fair market value of a Stock Right or the Common Stock
underlying a Stock Right;

 

(x)       accelerate vesting on any Stock Right or to waive any forfeiture
restrictions, or to waive any other limitation or restriction with respect to a
Stock Right;

 

 

 
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(xi)     reduce the exercise price of any Stock Right if the fair market value
of the Common Stock covered by such Stock Right shall have declined since the
date the Stock Right was granted;

 

(xii)    modify or amend each Stock Right (subject to Section 8(d) of the Plan)
including the discretionary authority to extend the post-termination
exercisability period of Stock Rights longer than is otherwise provided for by
terms of the Plan or the Stock Right;

 

(xiii)   construe and interpret the Plan and Stock Rights granted hereunder and
prescribe and rescind rules and regulations relating to the Plan; and

 

(xiv)   make all other determinations necessary or advisable for the
administration of the Plan.

 

If the Committee determines to issue a NSO, it shall take whatever actions it
deems necessary, under Section 422 of the Code and the regulations promulgated
thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Stock Right granted under it.

 

(c)     The Committee may select one of its members as its chairman, and shall
hold meetings at such times and places as it may determine. Acts by a majority
of the Committee, approved in person at a meeting or in writing, shall be the
valid acts of the Committee. All references in this Plan to the Committee shall
mean the Board if no Committee has been appointed. From time to time the Board
may increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members thereof and
thereafter directly administer the Plan.

 

(d)     Those provisions of the Plan that make express reference to Rule 16b-3
shall apply to the Company only at such time as the Company’s Common Stock is
registered under the Exchange Act, and then only to such persons as are required
to file reports under Section 16(a) of the Exchange Act (a “Reporting Person”).

 

(e)     To the extent that Stock Rights are to be qualified as
“performance-based” compensation within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a committee consisting of two or more
“outside directors” as determined under Section 162(m) of the Code.

 

3.     Eligible Employees and Others.

 

(a)     Eligibility. ISOs may be granted to any employee of the Company or any
Related Corporation. Those officers of the Company who are not employees may not
be granted ISOs under the Plan. NSOs, Stock Bonuses and Purchase Rights may be
granted to any director, employee or consultant of the Company or any Related
Corporation. Granting of any Stock Right to any individual or entity shall
neither entitle that individual or entity to, nor disqualify him or her from,
participation in any other grant of Stock Rights.

 

 

 
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(b)     Special Rule for Grant of Stock Rights to Reporting Persons. The
selection of a director or an officer who is a Reporting Person (as the terms
“director” and “officer” are defined for purposes of Rule 16b-3) as a recipient
of a Stock Right, the timing of the Stock Right grant, the exercise price, if
any, of the Stock Right and the number of shares subject to the Stock Right
shall be determined either (i) by the Board, or (ii) by a committee of the Board
that is composed solely of two or more Non-Employee Directors having full
authority to act in the matter. For the purposes of the Plan, a director shall
be deemed to be a “Non-Employee Director” only if such person is defined as such
under Rule 16b-3(b)(3), as interpreted from time to time.

 

4.     Stock. The stock subject to Stock Rights shall be authorized but unissued
shares of Common Stock of the Company, par value $0.001 per share, or such
shares of the Company’s capital stock into which such class of shares may be
converted pursuant to any reorganization, recapitalization, merger,
consolidation or the like (the “Common Stock”), or shares of Common Stock
reacquired by the Company in any manner. The aggregate number of shares that may
be issued pursuant to the Plan is 2,178,641 shares of Common Stock, subject to
adjustment as provided herein. Any such shares may be issued as ISOs, NSOs or
Stock Bonuses, or to persons or entities making purchases pursuant to Purchase
Rights, so long as the number of shares so issued does not exceed such aggregate
number, as adjusted.

 

(a)     If any Option granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, or if the Company shall reacquire any shares
issued pursuant to Stock Rights, the unpurchased shares subject to such Options
and any shares so reacquired by the Company shall again be available for grants
of Stock Rights under the Plan.

 

(b)     In the event any Stock Option or other Award granted under the Plan is
exercised through the tendering of shares of Common Stock (either actually or
through attestation), or in the event tax withholding obligations are satisfied
by tendering or withholding shares of Common Stock, any shares of Common Stock
so tendered or withheld shall not again be available for Awards under the Plan.

 

(c)     The aggregate number of shares of Common Stock awarded to any
Participant pursuant to Stock Rights intended to be “performance-based
compensation” within the meaning of Section 162(m) of the Code shall not exceed
750,000 shares in any three-year period.

 

(d)     Shares of Common Stock available for awards under the
stockholder-approved plan of a company acquired by the Company (as adjusted, to
the extent appropriate, using the exchange ratio or other adjustment or
valuation ratio or formula used in such acquisition) may be used for Awards
under the Plan to individuals who were not Eligible Participants prior to such
acquisition and shall not count against the limit on the aggregate number of
shares of Common Stock which are authorized for issuance under the Plan.

 

 

 
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(e)      Shares of Common Stock reacquired by the Company on the open market or
otherwise using cash proceeds from exercise of Stock Options shall not be
available for Awards under the Plan.

 

5.     Granting of Stock Rights. Stock Rights may be granted under the Plan at
any time after the Effective Date, as set forth in Section 17, and prior to ten
years thereafter. The date of grant of a Stock Right under the Plan will be the
date specified by the Board or Committee at the time it grants the Stock Right;
provided, however, that such date shall not be prior to the date on which the
Board or Committee acts. The Board or Committee shall have the right, with the
consent of the optionee, to convert an ISO granted under the Plan to an NSO
pursuant to Section 18.

 

6.     Minimum Price; ISO Limitations.

 

(a)     The price per share specified in the agreement relating to each NSO,
Stock Bonus or Purchase Right granted under the Plan shall be established by the
Board or Committee, taking into account any noncash consideration to be received
by the Company from the recipient of Stock Rights.

 

(b)     The price per share specified in the agreement relating to each Option
granted under the Plan shall not be less than the fair market value per share of
Common Stock on the date of such grant. In the case of an ISO to be granted to
an employee owning stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Related Corporation, the
price per share specified in the agreement relating to such ISO shall not be
less than 110% of the fair market value per share of Common Stock on the date of
the grant.

 

(c)     To the extent that the aggregate fair market value (determined at the
time an ISO is granted) of Common Stock for which ISOs granted to any employee
are exercisable for the first time by such employee during any calendar year
(under all stock option plans of the Company and any Related Corporation)
exceeds $100,000, or such higher value as permitted under Code Section 422 at
the time of determination, such Options will be treated as NSOs, provided that
this Section shall have no force or effect to the extent that its inclusion in
the Plan is not necessary for Options issued as ISOs to qualify as ISOs pursuant
to Section 422 of the Code. The rule of this Section 6(c) shall be applied by
taking Options in the order in which they were granted.

 

(d)     If, at the time a Stock Right is granted under the Plan, the Company’s
Common Stock is publicly traded, “fair market value” shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the time such a Stock Right is granted and shall mean:

 

 

 
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(i)     if the Common Stock is then traded on a national securities exchange,
the closing sale price for the Common Stock (or the closing bid, if no sales
were reported as quoted on such exchange or market); or

 

(ii)    the closing bid price or average of bid prices last quoted on that date
by an established quotation service, if the Common Stock is not reported on a
national securities exchange.

 

However, if the Common Stock is not publicly traded at the time a Stock Right is
granted under the Plan, “fair market value” shall be deemed to be the fair value
of the Common Stock as determined by the Board or Committee after taking into
consideration all factors that it deems appropriate.

 

7.     Option Duration. Subject to earlier termination as provided in Sections
10 and 11, each Option shall expire on the date specified by the Board or
Committee, but not more than:

 

(a)     ten (10) years from the date of grant in the case of NSOs;

 

(b)     ten (10) years from the date of grant in the case of ISOs generally; and

 

(c)     five (5) years from the date of grant in the case of ISOs granted to an
employee owning stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Related Corporation.

 

Subject to earlier termination as provided in Sections 10 and 11, the term of
each ISO shall be the term set forth in the original instrument granting such
ISO, except with respect to any part of such ISO that is converted into an NSO
pursuant to Section 18.

 

8.     Exercise of Options. Subject to the provisions of Section 10 through
Section 13 of the Plan, each Option granted under the Plan shall be exercisable
as follows:

 

(a)     the Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Board or
Committee may specify;

 

(b)     once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by the
Board or Committee;

 

(c)     each Option or installment may be exercised at any time or from time to
time, in whole or in part, for up to the total number of shares with respect to
which it is then exercisable; and

 

(d)     the Board or Committee shall have the right to accelerate the date of
exercise of any installment of any Option, provided that the Board or Committee
shall not accelerate the exercise date of any installment of any ISO granted to
any employee (and not previously converted into an NSO pursuant to Section 18)
without the prior consent of such employee if such acceleration would violate
the annual vesting limitation contained in Section 422 of the Code, as described
in Section 6(c).

 

 

 
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9.     Stock Appreciation Rights. Each SAR agreement shall be in such form and
shall contain such terms and conditions as the Board or Committee shall deem
appropriate. SARs may be granted as stand-alone Stock Rights or in tandem with
other Stock Rights. The terms and conditions of SAR agreements may change from
time to time, and the terms and conditions of separate SAR agreements need not
be identical; provided, however, that each SAR agreement shall conform to
(through incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

 

(a)     Term.  No SAR shall be exercisable after the expiration of ten
(10) years from the date of its grant or such shorter period specified in the
SAR agreement.

 

(b)     Strike Price.  Each SAR will be denominated in shares of Common Stock
equivalents. The strike price of each SAR shall not be less than one hundred
percent (100%) of the fair market value of the Common Stock equivalents subject
to the SAR on the date of grant.

 

(c)     Calculation of Appreciation.  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 shares 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 strike
price.

 

(d)     Vesting.  At the time of the grant of a SAR, the Board or Committee may
impose such restrictions or conditions to the vesting of such SAR as it, in its
sole discretion, deems appropriate.

 

(e)     Exercise.  To exercise any outstanding SAR, the participant must provide
written notice of exercise to the Company in compliance with the provisions of
the SAR agreement evidencing such SAR.

 

(f)     Payment.  The appreciation distribution in respect of a SAR 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 or Committee and set forth in the SAR
agreement evidencing SAR.

 

(g)    Termination of Continuous Service.  In the event that a participant’s
continuous service terminates (other than For Cause, as defined in Section 10),
the participant may exercise his or her SAR (to the extent that the participant
was entitled to exercise such SAR as of the date of termination of continuous
service) but only within such period of time ending on the earlier of (A) the
date three (3) months following the termination of the participant’s continuous
service (or such longer or shorter period specified in the SAR agreement), or
(B) the expiration of the term of the SAR as set forth in the SAR agreement. If,
after termination of continuous service, the participant does not exercise his
or her SAR within the time specified herein or in the SAR agreement (as
applicable), the SAR shall terminate.

 

 

 
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(h)     Compliance with Section 409A of the Code.  Notwithstanding anything to
the contrary set forth herein, any SARs granted under the Plan that are not
exempt from the requirements of Section 409A of the Code shall incorporate terms
and conditions necessary to avoid the consequences described in
Section 409A(a)(1) of the Code. Such restrictions, if any, shall be determined
by the Board and contained in the SAR agreement evidencing such SAR.

 

10.     Termination of Employment or Affiliation. If a grantee ceases to be
employed by the Company and all Related Corporations other than by reason of
death or disability as defined in Section 11, or by reason of a termination “For
Cause” as defined in this Section 10, unless otherwise specified in Section 9
(in the case of SARs) or in the instrument granting such Stock Right, the
grantee shall have the continued right to exercise any Stock Right held by him
or her, to the extent of the number of shares with respect to which he or she
could have exercised it on the date of termination until the date set forth in
the Stock Right; provided, however, in the event the grantee exercises any ISO
after the date that is three months following the date of termination of
employment, such ISO will automatically be converted into an NSO subject to the
terms of the Plan. Employment shall be considered as continuing uninterrupted
during any bona fide leave of absence (such as those attributable to illness,
military obligations or governmental service) provided that the period of such
leave does not exceed ninety (90) days or, if longer, any period during which
such grantee’s right to reemployment with the Company is guaranteed by statute
or by contract. A bona fide leave of absence with the written approval of the
Company shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Company or any
Related Corporation to continue the employment of the grantee after the approved
period of absence; provided that the foregoing approval requirement shall not
apply to a leave of absence guaranteed by statute or contract. ISOs granted
under the Plan shall not be affected by any change of employment within or among
the Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation.

 

For purposes of this Plan, a change in status from employee to a consultant, or
from a consultant to employee, will not constitute a termination of employment,
provided that a change in status from an employee to consultant may cause an ISO
to become an NSO under the Code. In the event of a termination “For Cause,” the
right of a grantee to exercise a Stock Right shall terminate as of the date of
termination. For purposes of this Plan, “For Cause” shall mean the termination
of a grantee’s status as an employee, a director or consultant (as applicable)
for any of the following reasons, as determined by the Committee; provided,
that, with respect to an employee that is party to an agreement with the Company
where a termination for cause is defined in such agreement, the definition in
such agreement shall govern the determination under this Section 10:

 

(i)     A grantee who is a consultant and who commits a material breach of any
consulting, noncompetition, confidentiality or similar agreement with the
Company or a subsidiary, as determined under such agreement;

 

 

 
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(ii)     A grantee who is an employee or a consultant and who is convicted
(including a trial, plea of guilty or plea of nolo contendere) for committing an
act of fraud, embezzlement, theft, or other act constituting a felony;

 

(iii)     A grantee who is an employee or a consultant and who willfully engages
in gross misconduct or willfully violates a Company or a subsidiary policy which
is materially and demonstrably injurious to the Company and/or a subsidiary
after a written demand to cease such misconduct or violation has been delivered
by the Committee to the grantee that specifically identifies the manner in which
the Committee believes that the grantee has violated this Paragraph (iii), and
the grantee fails to cease such misconduct or violation and remedy any injury
suffered by the Company or the subsidiary as a result thereof within thirty (30)
calendar days after receiving such notice, unless the Board determines that a
shorter period of time is reasonable under the circumstances, provided, however,
that no act or failure to act, on the grantee’s part shall be considered
“willful” unless done, or omitted to be done, by the grantee not in good faith
and without reasonable belief that the grantee’s action or omission was in the
best interest of the Company or the subsidiary; or

 

(iv)     A grantee who is a Company or Related Corporation employee and who
commits a material breach of any noncompetition, confidentiality or similar
agreement with the Company or a Related Corporation, as determined under such
agreement.

 

NOTHING IN THE PLAN SHALL BE DEEMED TO GIVE ANY GRANTEE OF ANY STOCK RIGHT THE
RIGHT TO BE RETAINED IN EMPLOYMENT OR OTHER SERVICE BY THE COMPANY OR ANY
RELATED CORPORATION FOR ANY PERIOD OF TIME OR TO AFFECT THE AT-WILL NATURE OF
ANY EMPLOYEE’S EMPLOYMENT.

 

11.     Death; Disability.

 

(a)     If a grantee ceases to be employed by or otherwise affiliated with the
Company and all Related Corporations by reason of death, or if a grantee dies
within three (3) months of the date his or her employment or other affiliation
with the Company has been terminated, any Stock Right held by him or her may be
exercised to the extent of the number of shares with respect to which he or she
could have exercised said Stock Right on the date of death, by his or her
estate, personal representative or beneficiary who has acquired the Stock Right
by will or by the laws of descent and distribution (the “Successor Grantee”),
unless otherwise specified in the instrument granting such Stock Right, prior to
the earlier of (i) one (1) year after the date of termination or (ii) the Stock
Right’s specified expiration date, provided, however, that a Successor Grantee
shall be entitled to ISO treatment under Section 421 of the Code only if the
deceased optionee would have been entitled to like treatment had he or she
exercised such Option on the date of his or her death provided, however, in the
event the Successor Grantee exercises an ISO after the date that is one (1) year
following the date of termination by reason of death, such ISO will
automatically be converted into a NSO subject to the terms of the Plan.

 

(b)     If a grantee ceases to be employed by or otherwise affiliated with the
Company and all Related Corporations by reason of disability, he or she shall
continue to have the right to exercise any Stock Right held by him or her on the
date of termination until unless otherwise specified in the instrument granting
such Stock Right, the earlier of (i) one (1) year after the date of termination
or (ii) the Stock Right’s specified expiration date, provided, however, in the
event the grantee exercises an ISO after the date that is one (1) year following
the date of termination by reason of disability, such ISO will automatically be
converted into a NSO subject to the terms of the Plan. For the purposes of the
Plan, the term “disability” shall mean “permanent and total disability” as
defined in Section 22(e)(3) of the Code.

 

 

 
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(c)     The provisions of subsections (a) and (b) of this Section 11 regarding
the exercise period of a Stock Right may be waived, extended or further limited,
in the discretion of the Board or Committee, in an instrument granting a Stock
Right that is not an ISO.

 

12.     Transferability and Assignability of Stock Rights.

 

(a)     No ISO granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will or by the laws of descent and
distribution. An ISO may be exercised during the lifetime of the optionee only
by the optionee.

 

(b)     Any vested NSO or Purchase Right may be transferable by the grantee to
the grantee’s family members by will or by the laws of descent and distribution.
For purposes of the Plan, a grantee’s “family members” shall be deemed to
consist of his or her spouse, parents, children, grandparents, grandchildren and
any trusts created for the benefit of such individuals. A family member to whom
any such Stock Right has been transferred pursuant to this Section 12(b) shall
be hereinafter referred to as a “Permitted Transferee”. A Stock Right shall be
transferred to a Permitted Transferee in accordance with the foregoing
provisions, and subject to all the provisions of the Stock Right Agreement and
this Plan, by the execution by the grantee and the transferee of an assignment
in writing in such form approved by the Board or the Committee. The Company
shall not be required to recognize the rights of a Permitted Transferee until
such time as it receives a copy of the assignment from the grantee.

 

13.     Terms and Conditions of Stock Rights. Stock Rights shall be evidenced by
instruments (which need not be identical) in such forms as the Board or
Committee may from time to time approve. Such instruments shall conform to the
terms and conditions set forth in Sections 6 through 12 hereof and may contain
such other provisions as the Board or Committee deems advisable that are not
inconsistent with the Plan, including restrictions (or other conditions deemed
by the Board or Committee to be in the best interests of the Company) applicable
to the exercise of Options or to shares of Common Stock issuable upon exercise
of Options. In granting any NSO, the Board or Committee may specify that such
NSO shall be subject to the restrictions set forth herein with respect to ISOs,
or to such other termination and cancellation provisions as the Board or
Committee may determine. The Board or Committee may from time to time confer
authority and responsibility on one or more of its own members and/or one or
more officers of the Company to execute and deliver such instruments. The proper
officers of the Company are authorized and directed to take any and all action
necessary or advisable from time to time to carry out the terms of such
instruments.

 

 

 
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14.     Adjustments. Upon the occurrence of any of the following events, the
rights of a recipient of a Stock Right granted hereunder shall be adjusted as
hereinafter provided, unless otherwise provided in the written agreement between
the recipient and the Company relating to such Stock Right.

 

(a)     If the shares of Common Stock shall be subdivided or combined into a
greater or smaller number of shares or if the Company shall issue shares of
Common Stock as a stock dividend on its outstanding Common Stock, the number of
shares of Common Stock deliverable upon the exercise of outstanding Stock Rights
shall be appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price (if any) per share to reflect
such subdivision, combination or stock dividend.

 

(b)     If the Company is to be consolidated with or acquired by another entity
in a merger, sale of all or substantially all of the Company’s assets or
otherwise (an “Acquisition”), unless otherwise provided by the Board or
Committee, in its sole discretion, the Board or Committee or the board of
directors of any entity assuming the obligations of the Company hereunder (the
“Successor Board”) shall, as to outstanding Stock Rights, make appropriate
provision for the continuation of such Stock Rights by either assumption of such
Stock Rights or by substitution of such Stock Rights with an equivalent award.
For Stock Rights that are so assumed or substituted, in the event of a
termination of grantee’s employment or consulting relationship by the Company or
its successor other than For Cause or by grantee for Good Reason (as defined
below) within sixty (60) days prior to and one hundred and eighty (180) days
after an Acquisition, all Stock Rights held by such grantee shall become vested
and immediately and fully exercisable and all forfeiture restrictions shall be
waived. If the Board, the Committee, or the Successor Board does not make
appropriate provisions for the continuation of such Stock Rights by either
assumption or substitution, unless otherwise provided by the Board or Committee
in its sole discretion, Stock Rights shall become vested and fully and
immediately exercisable and all forfeiture restrictions shall be waived and all
Stock Rights not exercised at the time of the closing of such Acquisition shall
terminate notwithstanding anything to the contrary in Section 10 hereof. For
purposes of this Plan, a termination for “Good Reason” shall mean the
resignation of an employee within thirty (30) days after the following actions:
(i) without the express written consent of employee, the Company assigns duties
which are materially inconsistent with employee’s position, duties and status;
(ii) any action by the Company which results in a material diminution in the
position, duties or status of employee or any transfer or proposed transfer of
employee for any extended period to a location more than fifty (50) miles away
from such employees’ principal place of employment, except for a transfer or
proposed transfer for strategic reallocations of the personnel reporting to
employee; or (iii) the Company reduces the base annual salary of employee, as
then in effect.

 

(c)     In the event of a transaction, including without limitation, a
recapitalization or reorganization of the Company (other than a transaction
described in subsection (b) above) pursuant to which securities of the Company
are exchanged for other securities, an optionee or grantee upon exercising an a
Stock Rights shall be entitled to receive for the purchase price paid upon such
exercise the securities he or she would have received if he or she had exercised
the Stock Right immediately prior to such recapitalization or reorganization.

 

 

 
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(d)     In the event of a spin-off from the Company or other non-cash dividend
on the outstanding shares of Common Stock, the Company will make appropriate
equitable adjustments to the exercise price of all outstanding Options and SARs,
and to the number of shares underlying such awards.

 

(e)     In the event of the proposed dissolution or liquidation of the Company,
each Stock Right will terminate immediately prior to the consummation of such
proposed action or at such other time and subject to such other conditions as
shall be determined by the Board or Committee.

 

(f)     Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Stock Right. No adjustments
shall be made for dividends paid in cash or in property other than Common Stock
of the Company, nor shall cash dividends or dividend equivalents accrue or be
paid in respect of unexercised Options or unvested Stock Rights hereunder.

 

(g)     No fractional shares shall be issued under the Plan and any optionee who
would otherwise be entitled to receive a fraction of a share upon exercise of a
Stock Right shall receive from the Company cash in lieu of such fractional
shares in an amount equal to the fair market value of such fractional shares, as
determined in the sole discretion of the Board or Committee.

 

(h)     Upon the happening of any of the foregoing events described in
subsections (a), (b) or (c) above, the class and aggregate number of shares set
forth in Section 4 hereof that are subject to Stock Rights that previously have
been or subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect the events described. The Board or Committee or the
Successor Board shall determine the specific adjustments to be made under this
Section 14 and, subject to Section 2, its determination shall be conclusive.

 

15.     Means of Exercising Stock Rights. Except as otherwise provided in this
Plan or the instrument evidencing the Stock Right, a Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address to the attention of its President. Such notice
shall identify the Stock Right being exercised and specify the number of shares
as to which such Stock Right is being exercised, accompanied by full payment of
the exercise price therefor, if any, payable as follows (a) in United States
dollars in cash or by check, (b) at the discretion of the Board or Committee,
through the delivery of already-owned shares of Common Stock having a fair
market value equal as of the date of the exercise to the cash exercise price of
the Stock Right and, in the case of such already-owned shares of Common Stock,
having been owned by the participant for more than six (6) months from the date
of surrender, (c) at the discretion of the Board or Committee, by delivery of
the grantee’s personal recourse note bearing interest payable not less than
annually at a market rate that is no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Board or Committee, through the surrender of shares of Common Stock then
issuable upon exercise of the Stock Right having a fair market value on the date
of exercise equal to the aggregate price of the Stock Right, (e) at the
discretion of the Board of Committee, delivery of a notice that the grantee has
placed a market sell order with a broker with respect to shares of Common Stock
then issuable upon exercise of the Stock Right and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Stock Right Exercise Price, provided that payment
of such proceeds is then made to the Company upon settlement of the sale, or (f)
at the discretion of the Board or Committee, by any combination of (a), (b),
(c), (d) and (e) or such other consideration and method of payment for the
issuance of shares to the extent permitted by applicable law or the Plan. If the
Board or Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b), (c) (d), (e)
or (f) of the preceding sentence, such discretion shall be exercised in writing
at the time of the grant of the ISO in question and such exercise shall also be
governed by any terms set forth in the written agreement evidencing the grant of
the Stock Right. The holder of a Stock Right shall not have the rights of a
stockholder with respect to the shares covered by the Stock Right until the date
of issuance of a stock certificate for such shares. Except as expressly provided
above in Section 14 with respect to changes in capitalization and stock
dividends, no adjustment shall be made for dividends or similar rights for which
the record date is before the date such stock certificate is issued.

 

 

 
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16.     Surrender of Stock Rights for Cash or Stock. The Board or Committee may,
in its sole and absolute discretion and subject to such terms and conditions as
it deems appropriate, accept the surrender by an optionee or grantee of a Stock
Right granted to him under the Plan and authorize payment in consideration
therefor of an amount equal to the difference between the purchase price payable
for the shares of Common Stock under the instrument granting the Option and the
fair market value of the shares subject to the Stock Right (determined as of the
date of such surrender of the Stock Right). Such payment shall be made in shares
of Common Stock valued at fair market value on the date of such surrender, or in
cash, or partly in such shares of Common Stock and partly in cash as the Board
or Committee shall determine. The surrender shall be permitted only if the Board
or Committee determines that such surrender is consistent with the purpose set
forth in Section 1, and only to the extent that the Stock Right is exercisable
under Section 8 on the date of surrender. In no event shall an optionee or
grantee surrender his or her Stock Right under this Section if the fair market
value of the shares on the date of such surrender is less than the purchase
price payable for the shares of Common Stock subject to the Stock Right. Any ISO
surrendered pursuant to the provisions of this Section 16 shall be deemed to
have been converted into a NSO immediately prior to such surrender.

 

17.     Term and Amendment of Plan. This Plan was adopted by the Board and sole
stockholder of the Company on February 19, 2010 (the “Effective Date”). The Plan
shall expire ten (10) years after the Effective Date (except as to Stock Rights
outstanding on that date). The Board may terminate or amend the Plan in any
respect at any time, except that it may not, without the approval of the
stockholders obtained within twelve (12) months before or after the Board adopts
a resolution authorizing any of the following actions, do any of the following:

 

(a)     the total number of shares that may be issued under the Plan may not be
increased (except by adjustment pursuant to Section 14);

 

 

 
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(b)     the provisions of Section 3 regarding eligibility for grants of ISOs may
not be modified;

 

(c)     the provisions of Section 6(b) regarding the exercise price at which
shares may be offered pursuant to Options may not be modified (except by
adjustment pursuant to Section 14);

 

(d)     the expiration date of the Plan may not be extended; and

 

(e)     except as provided in Section 14, (including, without limitation, any
stock dividend, stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination, or
exchange of shares), the Company may not amend a Stock Right awarded under the
Plan to reduce its exercise price per share, cancel and regrant new Stock Rights
with lower prices per share than the original prices per share of the cancelled
Stock Rights, or cancel any Stock Rights in exchange for cash or the grant of
replacement Stock Rights with an exercise price that is less than the exercise
price of the original Stock Rights, essentially having the effect of a repricing
without approval by the Company’s stockholders.

 

Except as provided in Section 14(b) and this Section 17, in no event may action
of the Board or stockholders adversely alter or impair the rights of a grantee,
without his or her consent, under any Stock Right previously granted.

 

18.     Conversion of ISOs into NSOs; Termination of ISOs. The Board or
Committee, with the consent of any optionee, may in its discretion take such
actions as may be necessary to convert an optionee’s ISOs (or any installments
or portions of installments thereof) that have not been exercised on the date of
conversion into NSOs at any time prior to the expiration of such ISOs. These
actions may include, but not be limited to, accelerating the exercisability,
extending the exercise period or reducing the exercise price of the appropriate
installments of optionee’s Options. At the time of such conversion, the Board or
Committee (with the consent of the optionee) may impose these conditions on the
exercise of the resulting NSOs as the Board or Committee in its discretion may
determine, provided that the conditions shall not be inconsistent with the Plan.
Nothing in the Plan shall be deemed to give any optionee the right to have such
optionee’s ISOs converted into NSOs, and no conversion shall occur until and
unless the Board or Committee takes appropriate action. The Board or Committee,
with the consent of the optionee, may also terminate any portion of any ISO that
has not been exercised at the time of termination.

 

19.     Governmental Regulation. The Company’s obligation to sell and deliver
shares of the Common Stock under the Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.

 

20.     Withholding of Additional Income Taxes.

 

(a)     Upon the exercise of an NSO, or the grant of a Stock Bonus or Purchase
Right for less than the fair market value of the Common Stock, the making of a
Disqualifying Disposition (as defined in Section 21), the vesting of restricted
Common Stock acquired on the exercise of a Stock Right hereunder or the
surrender of an Option pursuant to Section 16, the Company, in accordance with
Section 3402(a) of the Code and any applicable state statute or regulation, may
require the optionee, Stock Bonus recipient or purchaser to pay to the Company
additional withholding taxes in respect of the amount that is considered
compensation includable in such person’s gross income. With respect to (a) the
exercise of an Option, (b) the grant of a Stock Bonus, (c) the grant of a
Purchase Right of Common Stock for less than its fair market value, (d) the
vesting of restricted Common Stock acquired by exercising a Stock Right, or
(e) the acceptance of a surrender of an Option, the Committee in its discretion
may condition such event on the payment by the optionee, Stock Bonus recipient
or purchaser of any such additional withholding taxes.

 

 

 
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(b)     At the sole and absolute discretion of the Committee, the holder of
Stock Rights may pay all or any part of the total estimated federal and state
income tax liability arising out of the exercise or receipt of such Stock
Rights, the making of a Disqualifying Disposition, or the vesting of restricted
Common Stock acquired on the exercise of a Stock Right hereunder (each of the
foregoing, a “Tax Event”) by tendering already-owned shares of Common Stock or
(except in the case of a Disqualifying Disposition) by directing the Company to
withhold shares of Common Stock otherwise to be transferred to the holder of
such Stock Rights as a result of the exercise or receipt thereof in an amount
equal to the estimated federal and state income tax liability arising out of
such event, provided that no more shares may be withheld than are necessary to
satisfy the holder’s actual minimum withholding obligation with respect to the
exercise of Stock Rights. In such event, the holder of Stock Rights must,
however, notify the Committee of his or her desire to pay all or any part of the
total estimated federal and state income tax liability arising out of a Tax
Event by tendering already-owned shares of Common Stock or having shares of
Common Stock withheld prior to the date that the amount of federal or state
income tax to be withheld is to be determined. For purposes of this Section
20(b), shares of Common Stock shall be valued at their fair market value on the
date that the amount of the tax withholdings is to be determined.

 

21.     Notice to Company of Disqualifying Disposition. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition (as defined below) of any Common
Stock acquired pursuant to the exercise of an ISO. A “Disqualifying Disposition”
is any disposition (including any sale) of such Common Stock before either (a)
two (2) years after the date the employee was granted the ISO, or (b) one (1)
year after the date the employee acquired Common Stock by exercising the ISO. If
the employee has died before such Common Stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.

 

22.     Governing Law; Construction. The validity and construction of the Plan
and the instruments evidencing Stock Rights shall be governed by the laws of the
State of Delaware. In construing this Plan, the singular shall include the
plural and the masculine gender shall include the feminine and neuter, unless
the context otherwise requires.

 

 

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