Exhibit 10.8

 

ARENA PHARMACEUTICALS, INC.
AMENDED AND RESTATED 2017 LONG-TERM INCENTIVE PLAN

 

Arena Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, hereby
adopts the following Amended and Restated 2017 Long-Term Incentive Plan (the
“Restatement”) which amends and restates the terms of the Company’s Amended and
Restated 2017 Long-Term Incentive Plan that was previously in effect (the
“Plan”) effective as set forth in Section 13.13.

1.PURPOSE OF THE PLAN

The purpose of the Plan is to assist the Company and its Affiliates in
attracting and retaining employees, directors, consultants and advisors of the
Company and its Affiliates who are expected to contribute to the Company’s
success and achieve long-term objectives that will benefit the stockholders of
the Company through the additional incentives inherent in the Awards hereunder.

2.DEFINITIONS

2.1.“Affiliate” shall mean, 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 or the Committee shall have the authority to determine
the time or times at which “parent” or “subsidiary” status is determined within
the foregoing definition.

2.2.“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award, Performance Award or any other right,
interest or option relating to Shares or other property (including cash) granted
pursuant to the provisions of the Plan.

2.3.“Award Agreement” shall mean any written agreement, contract or other
instrument or document evidencing any Award granted hereunder, including through
an electronic medium.

2.4.“Board” shall mean the Board of Directors of the Company.

2.5.“Cause” shall mean, unless otherwise provided in an Award Agreement or
another agreement between the Participant and the Company or an Affiliate or a
plan maintained by the Company or an Affiliate in which the Participant
participates, a determination by the Committee that the Participant has breached
his or her employment or service contract with the Company, or has been engaged
in disloyalty to the Company, including, without limitation, fraud,
embezzlement, theft, commission of a felony or proven dishonesty in the course
of his or her employment or service, or has disclosed trade secrets or
confidential information of the Company to persons not entitled to receive such
information, or has breached any written noncompetition or nonsolicitation
agreement between the Participant and the Company or has engaged in such other
behavior detrimental to the interests of the Company as the Committee determines
in its sole discretion. Any determination of “cause” for the purposes of
outstanding Awards held by such Participant shall have no effect upon any
determination of the rights or obligations of the Company or such Participant
for any other purpose. Notwithstanding the foregoing, neither this provision nor
the Plan is intended to, and neither shall be interpreted in a manner that
limits or restricts a participant from exercising any legally protected
whistleblower rights (including pursuant to Rule 21F under the Securities
Exchange Act of 1934).

2.6.“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

2.7.“Committee” shall mean the Compensation Committee of the Board or a
subcommittee thereof formed by the Compensation Committee to act as the
Committee hereunder. The Committee shall consist of no fewer than two Directors,
each of whom is (i) a “Non-Employee Director” within the meaning of Rule 16b-3
of the Exchange Act, (ii) an “outside director” within the meaning of Section
162(m) of the Code to the extent applicable, and (iii) an “independent director”
for purpose of the rules of the Nasdaq Stock Market (or such other principal
U.S. national securities exchange on which the Shares are traded) to the extent
required by such rules.

2.8.“Consultant” shall mean any consultant or advisor who is a natural person
and who provides services to the Company or any Affiliate, so long as such
person (i) renders bona fide services that are not in connection with the offer
and sale of the Company’s securities in a capital raising transaction and (ii)
does not directly or indirectly promote or maintain a market for the Company’s
securities.

2.9.INTENTIONALLY RESERVED

 

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2.10.“Director” shall mean a non-employee member of the Board.

2.11.“Dividend Equivalents” shall have the meaning set forth in Section 12.5.

2.12.“Employee” shall mean any employee of the Company or any Affiliate and any
prospective employee conditioned upon, and effective not earlier than, such
person becoming an employee of the Company or any Affiliate.

2.13.“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

2.14.“Fair Market Value” shall mean, with respect to Shares as of any date, (i)
the per Share closing price of the Shares as reported on the Nasdaq Stock Market
on that date (or if there was no reported closing price on such date, on the
last preceding date on which the closing price was reported), (ii) if the Shares
are not then listed on the Nasdaq Stock Market, the closing price on such other
principal U.S. national securities exchange on which the Shares are listed (or
if there was no reported closing price on such date, on the last preceding date
on which the closing price was reported); or (iii) if the Shares are not listed
on a U.S. national securities exchange, the Fair Market Value of Shares shall be
determined by the Committee in its sole discretion using appropriate criteria.
The Fair Market Value of any property other than Shares shall mean the market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee.

2.15.“Incentive Stock Option” shall mean an Option which when granted is
intended to be, and qualifies as, as an incentive stock option for purposes of
Section 422 of the Code.

2.16.“Inducement Award” shall mean an Award that is granted pursuant to Section
3.3 of the Plan.

2.17.“Inducement Award Rules” shall mean Nasdaq Listing Rule 5635(c)(4), the
related guidance under Nasdaq IM 5635-1 and any successor rule or guidance.

2.18.“Inducement Shares” shall have the meaning set forth in Section 3.3.

2.19.“Limitations” shall have the meaning set forth in Section 10.5.

2.20.“Option” shall mean any right granted to a Participant under the Plan
allowing such Participant to purchase Shares at such price or prices and during
such period or periods as the Committee shall determine.

2.21.“Participant” shall mean an Employee, Director or Consultant who is
selected by the Committee to receive an Award under the Plan.

2.22.“Payee” shall have the meaning set forth in Section 13.1.

2.23.“Performance Award” shall mean any Award of Performance Cash, Performance
Shares or Performance Units granted pursuant to Article 9.

2.24.“Performance Cash” shall mean any cash incentives granted pursuant to
Article 9 payable to the Participant upon the achievement of such performance
goals as the Committee shall establish.

2.25.“Performance Period” shall mean that period established by the Committee at
the time any Performance Award is granted or at any time thereafter during which
any performance goals specified by the Committee with respect to such Award are
to be measured.

2.26.“Performance Share” shall mean any grant pursuant to Article 9 of a unit
valued by reference to a designated number of Shares, which value may be paid to
the Participant by delivery of such property as the Committee shall determine,
including cash, Shares, other property, or any combination thereof, upon
achievement of such performance goals during the Performance Period as the
Committee shall establish.

2.27.“Performance Unit” shall mean any grant pursuant to Section 9 of a unit
valued by reference to a designated amount of property other than Shares (or
cash), which value may be paid to the Participant by delivery of such property
as the Committee shall determine, including cash, Shares, other property, or any
combination thereof, upon achievement of such performance goals during the
Performance Period as the Committee shall establish.

2.28.“Permitted Assignee” shall have the meaning set forth in Section 12.3.

 

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2.29.“Prior Plans” shall mean, collectively, the Company’s 2006 Long-Term
Incentive Plan, as amended, 2009 Long-Term Incentive Plan, 2012 Long-Term
Incentive Plan and 2013 Long-Term Incentive Plan. Awards granted under the Prior
Plans continue to be governed under the terms of those Prior Plans.

2.30.“Restricted Stock” shall mean any Share issued with the restriction that
the holder may not sell, transfer, pledge or assign such Share and with such
other restrictions as the Committee, in its sole discretion, may impose
(including any restriction on the right to vote such Share and the right to
receive any dividends), which restrictions may lapse separately or in
combination at such time or times, in installments or otherwise, as the
Committee may deem appropriate.

2.31.“Restricted Stock Award” shall have the meaning set forth in Section 7.1.

2.32.“Restricted Stock Unit Award” shall have the meaning set forth in Section
8.1.

2.33.“Restricted Stock Unit” means an Award that is valued by reference to a
Share, which value may be paid to the Participant by delivery of cash, Shares or
such other property as the Committee shall determine, which restrictions may
lapse separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.

2.34.“Returning Shares” means any shares subject to stock options or other stock
awards granted under our Prior Plans that are released because the awards
expire, are forfeited or are settled for cash.

2.35.“Shares” shall mean the shares of common stock, $0.0001 par value, of the
Company.

2.36.“Stock Appreciation Right” shall mean the right granted to a Participant
pursuant to Section 6.

2.37.“Substitute Awards” shall mean Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted, or the right or obligation to make future awards, in each case by a
company acquired by the Company or any Affiliate or with which the Company or
any Affiliate combines.

2.38.“Vesting Period” shall mean the period of time specified by the Committee
during which vesting restrictions for an Award are applicable.

3.SHARES SUBJECT TO THE PLAN

3.1.Number of Shares.

(a)Subject to adjustment as provided in Section 3.1(b) and Section 12.2, as of
the effective date of the 2019 Restatement of the Plan, a total of 3,520,170
Shares were available for issuance under the Plan, less one (1) Share for every
one (1) Share that was subject to an Option or Stock Appreciation Right granted
under the Plan after March 31, 2019, and prior to the effective date of the 2019
Restatement, and 1.75 Shares for every one (1) Share that was subject to an
award other than an Option or Stock Appreciation Right granted under the Plan
after March 31, 2019, and prior to the effective date of the 2019 Restatement.
Any Shares that are subject to Options or Stock Appreciation Rights granted
under the Plan after the effective date of the 2019 Restatement, including after
the effective date of this Restatement, are counted against this limit as one
(1) Share for every one (1) Share granted, and any Shares that are subject to
Awards other than Options or Stock Appreciation Rights granted under the Plan
after the effective date of the 2019 Restatement, including after the effective
date of this Restatement, are counted against this limit as 1.75 Shares for
every one (1) Share granted. After the original effective date of the Plan (as
provided in Section 13.13), no awards may be granted under the Prior Plans.

(b)If after March 31, 2019, (i) any Shares subject to an Award are forfeited, an
Award expires or an Award is settled for cash (in whole or in part), or (ii)
after March 31, 2019, any Shares subject to an award under the Prior Plans are
forfeited, or an award under the Prior Plans expires or is settled for cash (in
whole or in part), the Shares subject to such Award or award under the Prior
Plans shall, to the extent of such forfeiture, expiration or cash settlement,
again be available for Awards under the Plan, in accordance with Section 3.1(d)
below. Notwithstanding anything to the contrary contained herein, the following
Shares shall not be added to the Shares authorized for grant under paragraph (a)
of this Section: (i) Shares tendered by the Participant or withheld by the
Company in payment of the purchase price of an Option, or to satisfy any tax
withholding obligation with respect to any Award, (ii) Shares subject to a Stock
Appreciation Right that are not issued in connection with the stock settlement
of the Stock Appreciation Right on exercise thereof, and (iii) Shares reacquired
by the Company on the open market or otherwise using cash proceeds from the
exercise of Options or options granted under the Prior Plans.

 

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(c)Shares issued under Substitute Awards that qualify for an exemption from the
applicable stockholder-approval requirements under Nasdaq Listing Rule 5635(c)
or its successor shall not reduce the Shares authorized for grant under the Plan
and shall not be subject to the applicable Limitations authorized for grant to a
Participant under Section 10.5, nor shall Shares subject to a Substitute Award
again be available for Awards under the Plan to the extent of any forfeiture,
expiration or cash settlement as provided in paragraph (b) above.

(d)Any Shares that again become available for grant pursuant to this Section
shall be added back as (i) one (1) Share if such Shares were subject to Options
or Stock Appreciation Rights granted under the Plan or options or stock
appreciation rights granted under the Prior Plans, and (ii) as 1.75 Shares if
such Shares were subject to Awards other than Options or Stock Appreciation
Rights granted under the Plan or awards other than options or stock appreciation
rights granted under the Prior Plans.

3.2.Character of Shares.  Any Shares issued hereunder may consist, in whole or
in part, of authorized and unissued shares, treasury shares or shares purchased
in the open market or otherwise. The Company will keep available at all times
the number of Shares reasonably required to satisfy then-outstanding Awards.

3.3.Inducement Share Pool and Inducement Award Rules.  Subject to adjustment as
provided under Section 12.2., an additional 491,460 Shares are reserved under
the Plan exclusively for the grant of Inducement Awards in compliance with the
Inducement Award Rules (the “Inducement Shares”).  The Inducement Shares that
may be awarded under this Section 3.3 shall be in addition to and shall not
reduce the Shares available for issuance under Section 3.1(a) of the Plan.

The following rules and restrictions shall apply to any Inducement Award granted
pursuant to the Plan:

(a) An Inducement Award may be granted only to an Employee who has not
previously been an Employee or a Director of the Company or an Affiliate, except
following a bona fide period of non-employment, as an inducement material to the
individual’s entering into employment with the Company within the meaning of the
Inducement Award Rules.  

(b) No Inducement Award may be designated as an Incentive Stock Option.

(c) All Inducement Awards must be granted by a Committee consisting of the
majority of the Company’s independent directors or the Company’s Compensation
Committee, in each case in accordance with the requirements of the Inducement
Award Rules.  

(d) The Inducement Shares underlying any Inducement Awards shall be subject to
the same share counting and share reversion provisions as described in Section
3.1, except that such Inducement Shares shall count against, or shall be added
back to, the reserve of Inducement Shares available for grant under this Section
3.3, and shall not count against, or be added back to, the Shares available for
issuance under Section 3.1(a) of the Plan.

(e)Inducement Awards shall not be amended without stockholder approval to the
extent required by the Inducement Award Rules.

3.4.Non-Employee Director Aggregate Compensation Limit. The aggregate value of
all compensation granted or paid, as applicable, to any individual for service
as a Director with respect to any period commencing on the date of the Company’s
annual meeting of stockholders for a particular year and ending on the day
immediately prior to the date of the Company’s annual meeting of stockholders
for the next subsequent year, including Awards granted and cash fees paid or
payable by the Company to such Director, will not exceed (i) $750,000 in total
value or (ii) in the event such Director is first appointed or elected to the
Board during such period, or with respect to a lead director or chairman role
$1,000,000 in total value, in each case calculating the value of any Awards
based on the grant date fair value of such Awards for financial reporting
purposes. For the avoidance of doubt, any compensation shall be counted towards
this limit for the service year in which it is earned (and not when settled or
paid in the event it is deferred).

3.5.Minimum Vesting Period.  Notwithstanding any other provision of the Plan to
the contrary, equity-based Awards granted under the Plan shall vest no earlier
than the first anniversary of the date the Award is granted (excluding, for this
purpose, any (i) Substitute Awards, (ii) Shares delivered in lieu of fully
vested cash Awards, and (iii) Awards to Directors that vest on the earlier of
the one year anniversary of the date of grant or the next annual meeting of
stockholders which is at least 50 weeks after the immediately preceding year’s
annual meeting); provided, that, the Committee may grant equity-based Awards
without regard to the foregoing minimum Vesting Period with respect to a maximum
of five percent (5%) of the available share reserve authorized for issuance
under the Plan pursuant to Section 3.1(a) (subject to adjustment under Section
12.2); and, provided further, for the avoidance of doubt, that the foregoing
restriction does not apply to the Committee’s discretion to provide for
accelerated exercisability or vesting of any Award, including in cases of
retirement, death, disability or a Change in Control, in the terms of the Award
or otherwise.

 

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4.ELIGIBILITY AND ADMINISTRATION

4.1.Eligibility.  Any Employee, Director or Consultant shall be eligible to be
selected as a Participant.

4.2.Administration.

(a)The Plan shall be administered by the Committee. The Committee shall have
full power and authority, subject to the provisions of the Plan and subject to
such orders or resolutions not inconsistent with the provisions of the Plan as
may from time to time be adopted by the Board, to: (i) select the Employees,
Directors and Consultants to whom Awards may from time to time be granted
hereunder; (ii) determine the type or types of Awards, not inconsistent with the
provisions of the Plan, to be granted to each Participant hereunder; (iii)
determine the number of Shares (or dollar value) to be covered by each Award
granted hereunder; (iv) determine the terms and conditions, not inconsistent
with the provisions of the Plan, of any Award granted hereunder (including the
power to amend outstanding Awards waive or accelerate any vesting terms or
restrictions, subject to any stockholder approval requirement applicable under
the Inducement Award Rules for amendment of an Inducement Award); (v) determine
whether, to what extent and under what circumstances Awards may be settled in
cash, Shares or other property; (vi) determine whether, to what extent, and
under what circumstances cash, Shares, other property and other amounts payable
with respect to an Award made under the Plan shall be deferred either
automatically or at the election of the Participant; (vii) determine whether, to
what extent and under what circumstances any Award shall be canceled or
suspended; (viii) interpret and administer the Plan and any instrument or
agreement entered into under or in connection with the Plan, including any Award
Agreement; (ix) correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent that the
Committee shall deem desirable to carry it into effect; (x) establish such rules
and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; (xi) determine whether any Award, other than
an Option or Stock Appreciation Right, will have Dividend Equivalents; and (xii)
make any other determination and take any other action that the Committee deems
necessary or desirable for administration of the Plan.

(b)Decisions of the Committee shall be final, conclusive and binding on all
persons or entities, including the Company, any Participant, and any Affiliate.
A majority of the members of the Committee may determine its actions, including
fixing the time and place of its meetings.

(c)To the extent not inconsistent with applicable law, including the Delaware
General Corporation Law, or the rules and regulations of the Nasdaq Stock Market
(or such other principal U.S. national securities exchange on which the Shares
are traded) including the Inducement Award Rules, the Committee may delegate to:
(i) a committee of one or more members of the Board the authority to take action
on behalf of the Committee under the Plan including the right to grant, cancel,
suspend or amend Awards and (ii) one or more “executive officers” within the
meaning of Rule 16a-1(f) of the Exchange Act or a committee of executive
officers the right to grant Awards to Employees who are not executive officers
of the Company (provided that the Committee resolutions regarding such
delegation will specify the total number of Shares that may be subject to the
Awards granted by such person or persons) and the authority to take action on
behalf of the Committee pursuant to the Plan to cancel or suspend Awards to
Employees who are not directors or executive officers of the Company.

(d)The Board in its discretion may ratify and approve actions taken by the
Committee. In addition, to the extent not inconsistent with applicable law or
the rules and regulations of the Nasdaq Stock Market or such other principal
U.S. national securities exchange on which the Shares are traded, the Board may
take any action under the Plan that the Committee is authorized to take. In the
event the Board takes such action references to the Committee hereunder shall be
understood to refer to the Board.

5.OPTIONS

5.1.Grant of Options.  Options may be granted hereunder to Participants either
alone or in addition to other Awards granted under the Plan. Any Option shall be
subject to the terms and conditions of this Article and to such additional terms
and conditions, not inconsistent with the provisions of the Plan, as the
Committee shall deem desirable.

5.2.Award Agreements.  All Options granted pursuant to this Article shall be
evidenced by a written Award Agreement in such form and containing such terms
and conditions as the Committee shall determine which are not inconsistent with
the provisions of the Plan. The terms of Options need not be the same with
respect to each Participant. Granting an Option pursuant to the Plan shall
impose no obligation on the recipient to exercise such Option. Any individual
who is granted an Option pursuant to this Article may hold more than one Option
granted pursuant to the Plan at the same time.

5.3.Option Price.  Other than in connection with Substitute Awards, the option
price per each Share purchasable under any Option granted pursuant to this
Article shall not be less than 100% of the Fair Market Value of one Share on the
date of grant of

 

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such Option; provided, however, that in the case of an Incentive Stock Option
granted to a Participant who, at the time of the grant, owns stock representing
more than 10% of the voting power of all classes of stock of the Company or any
Affiliate, the option price per share shall be no less than 110% of the Fair
Market Value of one Share on the date of grant. Other than pursuant to Section
12.2, the Committee shall not without the approval of the Company’s stockholders
(a) lower the option price per Share of an Option after it is granted, (b)
cancel an Option when the option price per Share exceeds the Fair Market Value
of one Share in exchange for cash or another Award (other than in connection
with a Change in Control as defined in Section 11.3 or Substitute Awards), and
(c) take any other action with respect to an Option that would be treated as a
repricing under the rules and regulations of the Nasdaq Stock Market (or such
other principal U.S. national securities exchange on which the Shares are
traded).

5.4.Option Term.  The term of each Option shall be fixed by the Committee in its
sole discretion; provided that no Option shall be exercisable after the
expiration of seven (7) years from the date the Option is granted, except in the
event of death or disability; provided, however, that the term of the Option
shall not exceed five (5) years from the date the Option is granted in the case
of an Incentive Stock Option granted to a Participant who, at the time of the
grant, owns stock representing more than 10% of the voting power of all classes
of stock of the Company or any Affiliate.

5.5.Exercise of Options.

(a)Vested Options granted under the Plan may be exercised by the Participant or
by a Permitted Assignee thereof (or by the Participant’s executors,
administrators, guardian or legal representative, as may be provided in an Award
Agreement) as to all or part of the Shares covered thereby, by the giving of
notice of exercise to the Company or its designated agent, specifying the number
of Shares to be purchased. The notice of exercise shall be in such form, made in
such manner, and shall comply with such other requirements consistent with the
provisions of the Plan as the Committee may from time to time prescribe.

(b)Unless otherwise provided in an Award Agreement, full payment of such
purchase price shall be made at the time of exercise and shall be made (i) in
cash or cash equivalents (including certified check or bank check or wire
transfer of immediately available funds), (ii) by tendering previously acquired
Shares (either actually or by attestation), valued at their then Fair Market
Value, (iii) with the consent of the Committee, by delivery of other
consideration (including, where permitted by law and the Committee, other
Awards) having a Fair Market Value on the exercise date equal to the total
purchase price, (iv) with the consent of the Committee, by withholding Shares
otherwise issuable in connection with the exercise of the Option, (v) through
any other method specified in an Award Agreement (including same-day sales
through a broker), or (vi) any combination of any of the foregoing. In no event
may any Option granted hereunder be exercised for a fraction of a Share. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date of such issuance.

(c)Notwithstanding the foregoing, an Award Agreement may provide that if on the
last day of the term of an Option the Fair Market Value of one Share exceeds the
option price per Share, the Participant has not exercised the Option and the
Option has not expired, the Option shall be deemed to have been exercised by the
Participant on such day with payment made by withholding Shares otherwise
issuable in connection with the exercise of the Option. In such event, the
Company shall deliver to the Participant the number of Shares for which the
Option was deemed exercised, less the number of Shares required to be withheld
for the payment of the total purchase price and required withholding taxes (in
accordance with Section 13.1); provided, however, any fractional Share shall be
settled in cash.

(d)No Option granted to an Employee who is a non-exempt employee for purposes of
the Fair Labor Standards Act of 1938, as amended, shall be first exercisable for
any Shares until at least six months following the date of grant of the Option.
Notwithstanding the foregoing, consistent with the provisions of the Worker
Economic Opportunity Act, (i) in the event of the Employee’s death or
disability, (ii) upon a corporate transaction in which such Option is not
assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon
the Employee’s retirement (as such term may be defined in the Employee’s Award
Agreement or in another applicable agreement or in accordance with the Company’s
then current employment policies and guidelines), any such vested Options 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 will be exempt
from his or her regular rate of pay.

5.6.Form of Settlement.  In its sole discretion, the Committee may provide in
the form of Award Agreement that the Shares to be issued upon an Option’s
exercise shall be in the form of Restricted Stock or other similar securities.

5.7.Incentive Stock Options.  The Committee may grant Options intended to
qualify as “incentive stock options” as defined in Section 422 of the Code, to
any employee of the Company or any Affiliate, subject to the requirements of
Section 422 of the Code; provided, however, that “incentive stock options” may
not be granted as Inducement Awards. Notwithstanding anything in Section 3.1 to
the contrary and solely for the purposes of determining whether Shares are
available for the grant of “incentive stock options” under the Plan, the maximum
aggregate number of Shares that may be issued pursuant to “incentive stock
options” granted

 

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under the Plan on and after the date the 2019 Restatement became effective is
3,520,170 Shares less the number of Shares issued pursuant to “incentive stock
options” granted under the Plan after March 31, 2019, and prior to the date the
2019 Restatement became effective, subject to adjustment as provided in Section
12.2.

5.8.Extension of Termination Date.  Unless otherwise provided in a Participant’s
Award Agreement and in the sole determination of the Committee, if the sale of
any Common Stock received on exercise of an Option following the termination of
the Participant’s employment by or services to the Company (other than for
Cause) would be prohibited at any time solely because the issuance of Shares
would violate (i) the registration requirements under the Securities Act, (ii)
the Company’s insider trading policy, or (iii) a “lock-up” agreement undertaken
in connection with an issuance of securities by the Company, then the Option
will terminate on the earlier of (a) the expiration of a total period of 90 days
(that need not be consecutive) after the termination of the Participant’s
employment by or services to the Company during which the exercise of the Option
would not be in violation of any of such registration requirement, insider
trading policy or lock-up agreement, and (b) the expiration of the term of the
Option as set forth in the applicable Award Agreement.

6.STOCK APPRECIATION RIGHTS

6.1.Grant and Exercise.  The Committee may provide Stock Appreciation Rights (a)
in conjunction with all or part of any Option granted under the Plan or at any
subsequent time during the term of such Option, (b) in conjunction with all or
part of any Award (other than an Option) granted under the Plan or at any
subsequent time during the term of such Award, or (c) without regard to any
Option or other Award, in each case upon such terms and conditions as the
Committee may establish in its sole discretion.

6.2.Terms and Conditions.  Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, including the following:

(a)Upon the exercise of a Stock Appreciation Right, the holder shall have the
right to receive the excess of (i) the Fair Market Value of one Share on the
date of exercise (or such amount less than such Fair Market Value as the
Committee shall so determine at any time during a specified period before the
date of exercise) over (ii) the grant price of the Stock Appreciation Right.

(b)Upon the exercise of a Stock Appreciation Right, the Committee shall
determine in its sole discretion whether payment shall be made in cash, in whole
Shares or other property, or any combination thereof.

(c)The terms and conditions of Stock Appreciation Rights need not be the same
with respect to each recipient.

(d)The Committee may impose such other conditions on the exercise of any Stock
Appreciation Right, as it shall deem appropriate. A Stock Appreciation Right
shall have (i) a grant price per Share of not less than the Fair Market Value of
one Share (x) on the date of grant or (y) if applicable, on the date of grant of
an Option with respect to a Stock Appreciation Right granted in exchange for or
in tandem with, but subsequent to, the Option (subject to the requirements of
Section 409A of the Code with respect to a Stock Appreciation Right granted in
exchange for or in conjunction with, but subsequent to, an Option), except in
the case of Substitute Awards or in connection with an adjustment provided in
Section 12.2, and (ii) a term not greater than seven (7) years. In addition to
the foregoing, but subject to Section 12.2, the Committee shall not without the
approval of the Company’s stockholders (x) lower the grant price per Share of
any Stock Appreciation Right after it is granted, (y) cancel any Stock
Appreciation Right when the grant price per Share exceeds the Fair Market Value
of the underlying Shares in exchange for cash or another Award (other than in
connection with a Change in Control as defined in Section 11.3 or Substitute
Awards), and (z) take any other action with respect to any Stock Appreciation
Right that would be treated as a repricing under the rules and regulations of
the Nasdaq Stock Market (or such other principal U.S. national securities
exchange on which the Shares are traded).

(e)In no event may any Stock Appreciation Right granted hereunder be exercised
for a fraction of a Share. No adjustment shall be made for cash dividends or
other rights for which the record date is prior to the date of such issuance.

(f)An Award Agreement may provide that if on the last day of the term of a Stock
Appreciation Right the Fair Market Value of one Share exceeds the grant price
per Share of the Stock Appreciation Right, the Participant has not exercised the
Stock Appreciation Right or the tandem Option (if applicable), and neither the
Stock Appreciation Right nor the Option has expired, the Stock Appreciation
Right shall be deemed to have been exercised by the Participant on such day. In
such event, the Company shall make payment to the Participant in accordance with
this Section, reduced by the number of Shares (or cash) required for withholding
taxes (in accordance with Section 13.1); any fractional Share shall be settled
in cash.

(g)No Stock Appreciation Right granted to an Employee who is a non-exempt
employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall
be first exercisable for any Shares until at least six months following the date
of grant of the Stock Appreciation Right. Notwithstanding the foregoing,
consistent with the provisions of the Worker Economic

 

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Opportunity Act, (i) in the event of the Employee’s death or disability, (ii)
upon a corporate transaction in which such Stock Appreciation Right is not
assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon
the Employee’s retirement (as such term may be defined in the Employee’s Award
Agreement or in another applicable agreement or in accordance with the Company’s
then current employment policies and guidelines), any such vested Stock
Appreciation Rights 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 a
Stock Appreciation Right will be exempt from his or her regular rate of pay.

(h)Extension of Termination Date.  Unless otherwise provided in a Participant’s
Award Agreement and in the sole determination of the Committee, if the sale of
any Common Stock received on exercise of a Stock Appreciation Right following
the termination of the Participant’s employment by or services to the Company
(other than for Cause) would be prohibited at any time solely because the
issuance of Shares would violate (i) the registration requirements under the
Securities Act, (ii) the Company’s insider trading policy, or (iii) a “lock-up”
agreement undertaken in connection with an issuance of securities by the
Company, then the Stock Appreciation Right will terminate on the earlier of (a)
the expiration of a total period of 90 days (that need not be consecutive) after
the termination of the Participant’s employment by or services to the Company
during which the exercise of the Stock Appreciation Right would not be in
violation of any of such registration requirement, insider trading policy or
lock-up agreement, and (b) the expiration of the term of the Stock Appreciation
Right as set forth in the applicable Award Agreement.

7.RESTRICTED STOCK AWARDS

7.1.Grants.  Awards of Restricted Stock may be issued hereunder to Participants
either alone or in addition to other Awards granted under the Plan (a
“Restricted Stock Award”), and such Restricted Stock Awards may also be
available as a form of payment of Performance Awards and other earned cash-based
incentive compensation. A Restricted Stock Award shall be subject to vesting
restrictions imposed by the Committee covering a period of time specified by the
Committee. The Committee has absolute discretion to determine whether any
consideration (other than services) is to be received by the Company or any
Affiliate as a condition precedent to the issuance of Restricted Stock.

7.2.Award Agreements.  The terms of any Restricted Stock Award granted under the
Plan shall be set forth in an Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with the Plan. The terms of
Restricted Stock Awards need not be the same with respect to each Participant.

7.3.Rights of Holders of Restricted Stock.  Unless otherwise provided in the
Award Agreement, beginning on the date of grant of the Restricted Stock Award
and subject to execution of the Award Agreement, the Participant shall become a
stockholder of the Company with respect to all Shares subject to the Award
Agreement and shall have all of the rights of a stockholder, including the right
to vote such Shares and the right to receive distributions made with respect to
such Shares; provided, however, that any Shares or any other property
distributable as a dividend or otherwise with respect to any Restricted Stock as
to which the restrictions have not yet lapsed shall be subject to the same
restrictions as such Restricted Stock and shall not be paid until and unless the
underlying award vests.

8.RESTRICTED STOCK UNIT AWARDS

8.1.Grants.  Other Awards of units having a value equal to an identical number
of Shares (“Restricted Stock Unit Awards”) may be granted hereunder to
Participants either alone or in addition to other Awards granted under the Plan.
Restricted Stock Unit Awards shall also be available as a form of payment of
other Awards granted under the Plan and other earned cash-based incentive
compensation.

8.2.Award Agreements.  The terms of Restricted Stock Unit Award granted under
the Plan shall be set forth in a written Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with the Plan.
Restricted Stock Unit Awards shall be subject to vesting restrictions imposed by
the Committee covering a period of time specified by the Committee. The terms of
such Awards need not be the same with respect to each Participant.
Notwithstanding anything contained herein to the contrary, cash dividends, stock
and any other property (other than cash) distributed as a dividend or otherwise
with respect to any Restricted Stock Unit Award shall either (i) not be paid at
all, or (ii) be accumulated, and be subject to restrictions and risk of
forfeiture to the same extent as the underlying Award and shall not be paid
until and unless such restrictions and risk of forfeiture lapse.

8.3.Payment.  Except as provided in Article 10 or as may be provided in an Award
Agreement, Restricted Stock Unit Awards may be paid in cash, Shares, other
property, or any combination thereof, in the sole discretion of the Committee.
Restricted Stock Unit Awards may be paid in a lump sum or in installments or, in
accordance with procedures established by the Committee, on a deferred basis
subject to the requirements of Section 409A of the Code.

 

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9.PERFORMANCE AWARDS

9.1.Grants. Performance Awards in the form of Performance Cash, Performance
Shares or Performance Units, as determined by the Committee in its sole
discretion, may be granted hereunder to Participants, for no consideration or
for such minimum consideration as may be required by applicable law, either
alone or in addition to other Awards granted under the Plan. The performance
goals to be achieved for each Performance Period shall be conclusively
determined by the Committee and may be based upon the criteria set forth in
Section 10.2.

9.2.Award Agreements.  The terms of any Performance Award granted under the Plan
shall be set forth in an Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with the Plan, including
whether such Awards shall have Dividend Equivalents. The terms of Performance
Awards need not be the same with respect to each Participant. Notwithstanding
anything contained herein to the contrary, cash dividends, stock and any other
property (other than cash) distributed as a dividend or otherwise with respect
to any Award of Performance Shares shall either (i) not be paid at all, or (ii)
be accumulated, and be subject to restrictions and risk of forfeiture to the
same extent as the underlying Award, and shall not be paid unless and until the
restrictions and risk of forfeiture lapse.

9.3.Terms and Conditions.  The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined
by the Committee upon the grant of each Performance Award. The amount of the
Award to be distributed shall be conclusively determined by the Committee.

9.4.Payment.  Except as provided in Article 11 or as may be provided in an Award
Agreement, Performance Awards will be distributed only after the end of the
relevant Performance Period. Performance Awards may be paid in cash, Shares,
other property, or any combination thereof, in the sole discretion of the
Committee. Performance Awards may be paid in a lump sum or in installments
following the close of the Performance Period or, in accordance with procedures
established by the Committee, on a deferred basis subject to the requirements of
Section 409A of the Code.

10.PROVISIONS APPLICABLE TO PERFORMANCE-VESTING AWARDS

10.1.INTENTIONALLY RESERVED

10.2.Performance Criteria.  If the Committee determines that an Award shall be
subject to the achievement of one or more objective performance goals
established by the Committee, then such Award may be based on the attainment of
specified levels of one or any combination of the following (or any other metric
or goal as the Committee may determine): net sales; revenue; revenue or product
revenue growth; bookings; operating income or loss (before or after taxes); pre-
or after-tax income or loss (before or after allocation of corporate overhead
and bonus); net earnings or loss; earnings or loss per share; net income or loss
(before or after taxes); return on equity; total stockholder return; return on
assets or net assets; attainment of strategic and operational initiatives;
appreciation in and/or maintenance of the price of the Shares or any other
publicly-traded securities of the Company; market share; gross profits; earnings
or losses (including earnings or losses before taxes, earnings or losses before
interest and taxes, earnings or losses before interest, taxes and depreciation
or earnings or losses before interest, taxes, depreciation and amortization);
economic value-added models (or equivalent metrics); comparisons with various
stock market indices; reductions in costs; cash flow or cash flow per share
(before or after dividends); return on capital (including return on total
capital or return on invested capital); cash flow return on investment;
improvement in or attainment of expense levels or working capital levels;
operating margin; gross margin; year-end cash; cash margin; debt reduction;
stockholder’s equity; market share; achievement of drug development milestones;
regulatory achievements including approval of a drug candidate; progress of
internal research or clinical programs; progress of partnered programs;
implementation or completion of projects and processes; partner satisfaction;
budget management; clinical achievements; completing phases of a clinical study
(including the treatment phase) or announcing or presenting preliminary or final
data from clinical studies, in each case, whether on particular timelines or
generally; timely completion of clinical trials; submission of INDs and NDAs and
other regulatory achievements; partner or collaborator achievements; internal
controls, including those related to the Sarbanes-Oxley Act of 2002; research
progress, including the development of programs; financing; investor relations,
analysts and communication; manufacturing achievements (including obtaining
particular yields from manufacturing runs and other measurable objectives
related to process development activities); strategic partnerships or
transactions (including in-licensing and out-licensing of intellectual
property); establishing relationships with commercial entities with respect to
the marketing, distribution and sale of the Company’s products (including with
group purchasing organizations, distributors and other vendors); supply chain
achievements (including establishing relationships with manufacturers or
suppliers of active pharmaceutical ingredients and other component materials and
manufacturers of the Company’s products); co-development, co-marketing, profit
sharing, joint venture or other similar arrangements; financing and other
capital raising transactions (including sales of the Company’s equity or debt
securities); sales or licenses of the Company’s assets, including its
intellectual property (whether in a particular jurisdiction or territory or
globally or through partnering transactions); implementation, completion or
attainment of measurable objectives with respect to research, development,
manufacturing, commercialization, products or projects, production volume
levels, acquisitions and divestitures;

 

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factoring transactions; and recruiting and maintaining personnel. Any
performance goals that are financial metrics, may be determined in accordance
with U.S. Generally Accepted Accounting Principles (“GAAP”), in accordance with
accounting principles established by the International Accounting Standards
Board (“IASB Principles”), or may be adjusted when established to include or
exclude any items otherwise includable or excludable under GAAP or under IASB
Principles. Such performance goals also may be based solely by reference to the
Company’s performance or the performance of an Affiliate, division, business
segment or business unit of the Company, or based upon the relative performance
of other companies or upon comparisons of any of the indicators of performance
relative to other companies. The Committee may also exclude charges related to
an event or occurrence which the Committee determines should appropriately be
excluded, including (a) restructurings or discontinued operations, (b) items
that are “unusual” in nature or occur “infrequently” as determined under
generally accepted accounting principles, (c) an event either not directly
related to the operations of the Company or not within the reasonable control of
the Company’s management, or (d) the cumulative effects of tax or accounting
changes in accordance with U.S. generally accepted accounting principles.
Notwithstanding the foregoing, the Committee, in its sole discretion, may grant
performance-based Awards that are not intended to, and do not, meet the
requirements set forth in this Section 10.2.

10.3.Adjustments.  Notwithstanding any provision of the Plan (other than Article
11), with respect to any Award that is subject to this Section 10, the Committee
may adjust the amount payable pursuant to such Award.

10.4.Restrictions.  The Committee shall have the power to impose such other
restrictions on Awards subject to this Article as it may deem necessary or
appropriate.

10.5.Limitations on Grants to Individual Participants.  Subject to adjustment as
provided in Section 12.2, no Participant may be granted (i) Options or Stock
Appreciation Rights during any calendar year with respect to more than 800,000
Shares or (ii) Restricted Stock Awards, Performance Awards and/or Restricted
Stock Unit Awards during any calendar year that are denominated in Shares and
are subject to performance-based vesting under which more than 800,000 Shares
may be earned (collectively, the “Limitations”). In addition to the foregoing,
during any calendar year no Participant may be granted performance-based vesting
Awards that are denominated in cash under which more than $10,000,000 may be
earned.  

11.CHANGE IN CONTROL PROVISIONS

11.1.Impact on Certain Awards.  The Committee, in its discretion, may determine
that in the event of a Change in Control of the Company (as defined in Section
11.3) Options and Stock Appreciation Rights outstanding as of the date of the
Change in Control shall be cancelled and terminated without payment therefor if
the Fair Market Value of one Share as of the date of the Change in Control is
less than the Option per Share option price or Stock Appreciation Right per
Share grant price.

11.2.Assumption or Substitution of Certain Awards.

(a)To the extent provided in an Award Agreement, in the event of a Change in
Control of the Company in which the successor company assumes or substitutes for
an Option, Stock Appreciation Right, Restricted Stock Award or Restricted Stock
Unit Award (or in which the Company is the ultimate parent corporation and
continues the Award), if a Participant’s employment with such successor company
(or the Company) or a subsidiary thereof terminates within the time period
following such Change in Control set forth in the Award Agreement (or prior
thereto if applicable) and under the circumstances specified in the Award
Agreement: (i) Options and Stock Appreciation Rights outstanding as of the date
of such termination of employment will immediately vest, become fully
exercisable, and may thereafter be exercised for the period of time set forth in
the Award Agreement, (ii) the restrictions, limitations and other conditions
applicable to Restricted Stock shall lapse and the Restricted Stock shall become
free of all restrictions, limitations and conditions and become fully vested,
and (iii) the restrictions, limitations and other conditions applicable to any
Restricted Stock Unit Awards or any other Awards shall lapse, and such
Restricted Stock Unit Awards or such other Awards shall become free of all
restrictions, limitations and conditions and become fully vested and
transferable to the full extent of the original grant. For the purposes of this
Section, an Option, Stock Appreciation Right, Restricted Stock Award or
Restricted Stock Unit Award shall be considered assumed or substituted for if
following the Change in Control the Award confers the right to purchase or
receive, for each Share subject to the Option, Stock Appreciation Right,
Restricted Stock Award or Restricted Stock Unit Award immediately prior to the
Change in Control, the consideration (whether stock, cash or other securities or
property) received in the transaction constituting a Change in Control by
holders of Shares for each Share held on the effective date of such transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the transaction
constituting a Change in Control is not solely common stock of the successor
company, the Committee may, with the consent of the successor company, provide
that the consideration to be received upon the exercise or vesting of an Option,
Stock Appreciation Right, Restricted Stock Award or Restricted Stock Unit Award,
for each Share subject thereto, will be solely common stock of the successor
company substantially equal in fair market value to the per Share consideration
received by holders of Shares in the transaction constituting a Change in

 

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Control. The determination of such substantial equality of value of
consideration shall be made by the Committee in its sole discretion and its
determination shall be conclusive and binding.

(b)Unless otherwise provided in an Award Agreement, in the event of a Change in
Control of the Company, to the extent that the successor company does not assume
or substitute for an Option, Stock Appreciation Right, Restricted Stock Award,
Restricted Stock Unit Award or Performance Award (or in which the Company is the
ultimate parent corporation and does not continue the Award), then immediately
prior to the Change in Control: (i) those Options and Stock Appreciation Rights
outstanding as of the date of the Change in Control that are not assumed or
substituted for (or continued) shall immediately vest and become fully
exercisable, (ii) restrictions, limitations and conditions on Restricted Stock
not assumed or substituted for (or continued) shall lapse and the Restricted
Stock shall become free of all restrictions, limitations and conditions and
become fully vested, (iii) the restrictions limitations and conditions
applicable to any Restricted Stock Unit Awards or any other Awards not assumed
or substituted for (or continued) shall lapse, and such Restricted Stock Unit
Awards or such other Awards shall become free of all restrictions, limitations
and conditions and become fully vested and transferable to the full extent of
the original grant, (iv) all Performance Awards not assumed or substituted for
(or continued) shall be considered to be earned and payable in full, and any
deferral or other restriction shall lapse and such Performance Awards shall be
immediately settled or distributed, and (v) all Awards not assumed or
substituted for (or continued) shall terminate immediately after the Change in
Control.

(c)The Committee, in its discretion, may determine that, upon the occurrence of
a Change in Control of the Company, each Option and Stock Appreciation Right
outstanding shall terminate within a specified number of days after notice to
the Participant, and/or that each Participant shall receive, with respect to
each Share subject to such Option or Stock Appreciation Right, an amount equal
to the excess (if any) of the Fair Market Value of such Share immediately prior
to the occurrence of such Change in Control over the exercise price per Share of
such Option and/or Stock Appreciation Right; such amount to be payable in cash,
in one or more kinds of stock or property (including the stock or property, if
any, payable in the transaction) or in a combination thereof, as the Committee,
in its discretion, shall determine.

11.3.Change in Control.  For purposes of the Plan, unless otherwise provided in
an Award Agreement, Change in Control means the occurrence of any one of the
following events:

(i)During any twenty-four (24) month period, individuals who, as of the
beginning of such period, constitute the Board (the “Incumbent Directors”) cease
for any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the beginning of such period whose
election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors then on the Board (either by a specific vote
or by approval of the proxy statement of the Company in which such person is
named as a nominee for director, without written objection to such nomination)
shall be an Incumbent Director; provided, however, that no individual initially
elected or nominated as a director of the Company as a result of an actual or
threatened election contest with respect to directors or as a result of any
other actual or threatened solicitation of proxies by or on behalf of any person
other than the Board shall be deemed to be an Incumbent Director;

(ii)Any “person” (as such term is defined in the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial
owner” (as defined in Rule 13d 3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities eligible to
vote for the election of the Board (the “Company Voting Securities”); provided,
however, that the event described in this paragraph (ii) shall not be deemed to
be a Change in Control by virtue of any of the following acquisitions: (A) by
the Company or any Affiliate, (B) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Affiliate, (C) by any
underwriter temporarily holding securities pursuant to an offering of such
securities, (D) pursuant to a Non-Qualifying Transaction, as defined in
paragraph (iii), or (E) by any person of Voting Securities from the Company, if
a majority of the Incumbent Board approves in advance the acquisition of
beneficial ownership of 50% or more of Company Voting Securities by such person;

(iii)The consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company or any of its
Affiliates that requires the approval of the Company’s stockholders, whether for
such transaction or the issuance of securities in the transaction (a “Business
Combination”), unless immediately following such Business Combination: (A) more
than 60% of the total voting power of (x) the corporation resulting from such
Business Combination (the “Surviving Corporation”), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has beneficial ownership
of 100% of the voting securities eligible to elect directors of the Surviving
Corporation (the “Parent Corporation”), is represented by Company Voting
Securities that were outstanding immediately prior to such Business Combination
(or, if applicable, is represented by shares into which such Company Voting
Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportion
as the voting power of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (B) no person (other than any
employee benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or

 

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becomes the beneficial owner, directly or indirectly, of 50% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the members of the board
of directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board’s approval of the
execution of the initial agreement providing for such Business Combination (any
Business Combination which satisfies all of the criteria specified in (A), (B)
and (C) above shall be deemed to be a “Non‑Qualifying Transaction”); or

(iv)The stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or the consummation of a sale, lease, exclusive
license or other disposition of all or substantially all of the Company’s
assets.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any person acquires beneficial ownership of more than 50% of the
Company Voting Securities as a result of the acquisition of Company Voting
Securities by the Company which reduces the number of Company Voting Securities
outstanding; provided, that if after such acquisition by the Company such person
becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control of the Company shall then occur.

12.GENERALLY APPLICABLE PROVISIONS

12.1.Amendment and Termination of the Plan.  Each of the Board and the Committee
may, from time to time, alter, amend, suspend or terminate the Plan as it shall
deem advisable, subject to any requirement for stockholder approval imposed by
applicable law, including the rules and regulations of the Nasdaq Stock Market
(or such other principal U.S. national securities exchange on which the Shares
are traded) and the Inducement Award Rules; provided that neither the Board or
the Committee may amend the Plan in any manner that would result in
noncompliance with Rule 16b-3 of the Exchange Act; and further provided that the
Board and Committee may not, without the approval of the Company’s stockholders
to the extent required by such applicable law, amend the Plan to (a) increase
the number of Shares that may be the subject of Awards granted pursuant to the
share reserve established in Section 3.1 of the Plan (except for adjustments
pursuant to Section 12.2); (b) expand the types of awards available under the
Plan; (c) materially expand the class of persons eligible to participate in the
Plan; (d) amend any provision of Section 5.3 or the last sentence of Section
6.2(d); or (e) increase the maximum permissible term of the Plan or of any
Option specified by Section 5.4 or the maximum permissible term of a Stock
Appreciation Right specified by Section 6.2(d). The Board may not without the
approval of the Company’s stockholders cancel an Option or Stock Appreciation
Right in exchange for cash or take any action with respect to an Option or Stock
Appreciation Right that may be treated as a repricing under the rules and
regulations of the Nasdaq Stock Market (or such other principal U.S. national
securities exchange on which the Shares are traded), including a reduction of
the exercise price of an Option or the grant price of a Stock Appreciation Right
or the exchange of an Option or Stock Appreciation Right for cash or another
Award when the option price or grant price per Share exceeds the Fair Market
Value of one Share. In addition, no amendments to, or termination of, the Plan
shall in any way impair the rights of a Participant under any Award previously
granted without such Participant’s consent.

12.2.Adjustments.  In the event of any merger, reorganization, consolidation,
recapitalization, dividend or distribution (whether in cash, shares or other
property, other than a regular cash dividend), stock split, reverse stock split,
spin-off or similar transaction or other change in corporate structure affecting
the Shares or the value thereof, such adjustments and other substitutions shall
be made to the Plan and to Awards as the Committee deems equitable or
appropriate taking into consideration the accounting and tax consequences,
including such adjustments in the aggregate number, class and kind of securities
that may be delivered under the Plan under Section 3.1 and Section 3.3 and
pursuant to Section 3.4, the Limitations, the maximum number of Shares that may
be issued pursuant to Incentive Stock Options and, in the aggregate or to any
one Participant, in the number, class, kind and option or exercise price of
securities subject to outstanding Awards granted under the Plan (including, if
the Committee deems appropriate, the substitution of similar options to purchase
the shares of, or other awards denominated in the shares of, another company) as
the Committee may determine to be appropriate in its sole discretion; provided,
however, that the number of Shares subject to any Award shall always be a whole
number.

12.3.Transferability of Awards.  Except as provided below, no Award and no
Shares subject to Awards described in Article 8 that have not been issued or as
to which any applicable restriction, performance or deferral period has not
lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered,
other than by will or the laws of descent and distribution, and such Award may
be exercised during the life of the Participant only by the Participant or the
Participant’s guardian or legal representative. To the extent and under such
terms and conditions as determined by the Committee, a Participant may assign or
transfer an Award (each transferee thereof, a “Permitted Assignee”) to a “family
member” as such term is defined in the General Instructions to Form S-8 (whether
by gift or a domestic relations order for no consideration); provided that such
Permitted Assignee shall be bound by and subject to all of the terms and
conditions of the Plan and the Award Agreement relating to the transferred Award
and shall execute an agreement satisfactory to the Company evidencing such
obligations; and provided further that such Participant shall remain bound by

 

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the terms and conditions of the Plan. The Company shall cooperate with any
Permitted Assignee and the Company’s transfer agent in effectuating any transfer
permitted under this Section. Options and Stock Appreciation Rights may not be
transferred to a third party financial institution for value.

12.4.Termination of Employment.  The Committee shall determine and set forth in
each Award Agreement whether any Awards granted in such Award Agreement will
continue to be exercisable, continue to vest or be earned and the terms of such
exercise, vesting or earning, on and after the date that a Participant ceases to
be employed by or to provide services to the Company or any Affiliate (including
as a Director), whether by reason of death, disability, voluntary or involuntary
termination of employment or services, or otherwise. The date of termination of
a Participant’s employment or services will be determined by the Committee,
which determination will be final.

12.5.Deferral; Dividend Equivalents.  The Committee shall be authorized to
establish procedures pursuant to which the payment of any Award may be deferred.
Subject to the provisions of the Plan and any Award Agreement, the recipient of
an Award (including any deferred Award) other than an Option or Stock
Appreciation Right may, if so determined by the Committee, be entitled to
receive, currently or on a deferred basis, cash, stock or other property
dividends, or cash payments in amounts equivalent to cash, stock or other
property dividends on Shares (“Dividend Equivalents”) with respect to the number
of Shares covered by the Award, as determined by the Committee, in its sole
discretion. The Committee may provide that such amounts and Dividend Equivalents
(if any) shall be deemed to have been reinvested in additional Shares or
otherwise reinvested. Notwithstanding the foregoing, Dividend Equivalents shall
in all events be subject to restrictions and risk of forfeiture to the same
extent as the Award with respect to which such Dividend Equivalents have been
credited and shall not be paid until and unless the underlying Award vests.

13.MISCELLANEOUS

13.1.Tax Withholding.  The Company shall have the right to make all payments or
distributions pursuant to the Plan to a Participant (or a Permitted Assignee
thereof) (any such person, a “Payee”) net of any applicable federal, state and
local taxes required to be paid or withheld as a result of (a) the grant of any
Award, (b) the exercise of an Option or Stock Appreciation Right, (c) the
delivery of Shares or cash, (d) the lapse of any restrictions in connection with
any Award or (e) any other event occurring pursuant to the Plan. The Company or
any Affiliate shall have the right to withhold from wages or other amounts
otherwise payable to such Payee such withholding taxes as may be required by
law, or to otherwise require the Payee to pay such withholding taxes. If the
Payee shall fail to make such tax payments as are required, the Company or its
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to such Payee or to take
such other action as may be necessary to satisfy such withholding obligations.
The Committee shall be authorized to establish procedures for election by
Participants to satisfy such obligation for the payment of such taxes by
tendering previously acquired Shares (either actually or by attestation, valued
at their then Fair Market Value), or by directing the Company to retain Shares
(up to the Participant’s maximum statutory tax withholding rate or such other
rate that will not cause an adverse accounting consequence or cost) otherwise
deliverable in connection with the Award, subject to the discretion of the
Committee and in accordance with Company policies.

13.2.Right of Discharge Reserved; Claims to Awards.  Nothing in the Plan nor the
grant of an Award hereunder shall confer upon any Employee, Director or
Consultant the right to continue in the employment or service of the Company or
any Affiliate or affect any right that the Company or any Affiliate may have to
terminate the employment or service of (or to demote or to exclude from future
Awards under the Plan) any such Employee, Director or Consultant at any time for
any reason. Except as specifically provided by the Committee, the Company shall
not be liable for the loss of existing or potential profit from an Award granted
in the event of termination of an employment or other relationship. No Employee,
Director or Consultant shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of Employees,
Directors or Consultants under the Plan. In addition, 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) after
the date of grant of any Award to the Participant, the Compensation Committee
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 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 Award. In the event of any
such reduction, the Participant will have no right with respect to any portion
of the Award that is so reduced.

13.3.Prospective Recipient.  The prospective recipient of any Award under the
Plan shall not, with respect to such Award, be deemed to have become a
Participant, or to have any rights with respect to such Award, until and unless
such recipient shall have accepted the Award in accordance with the procedures
established by the Company, and otherwise complied with the then applicable
terms and conditions.

 

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13.4.Substitute Awards.  Notwithstanding any other provision of the Plan, the
terms of Substitute Awards may vary from the terms set forth in the Plan to the
extent the Committee deems appropriate to conform, in whole or in part, to the
provisions of the awards in substitution for which they are granted.

13.5.Cancellation of Award.

(a)Notwithstanding anything to the contrary contained herein, an Award Agreement
may provide that the Award shall be canceled if the Participant, without the
consent of the Company, while employed by, or providing services to, the Company
or any Affiliate or after termination of such employment or services,
establishes a relationship with a competitor of the Company or any Affiliate or
engages in activity that is in conflict with or adverse to the interest of the
Company or any Affiliate (including conduct contributing to any financial
restatements or financial irregularities), as determined by the Committee in its
sole discretion. The Committee may provide in an Award Agreement that if within
the time period specified in the Agreement the Participant establishes a
relationship with a competitor or engages in an activity referred to in the
preceding sentence, the Participant will forfeit any gain realized on the
vesting or exercise of the Award and must repay such gain to the Company. In
addition, all Awards granted under the Plan will be subject to recoupment in
accordance with any clawback policy that the Company adopts, including any
clawback policy the Company 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 Dodd-Frank
Wall Street Reform and Consumer Protection Act or other applicable law. In
addition, the Board may impose such other clawback, recovery or recoupment
provisions in an Award Agreement as the Board determines necessary or
appropriate.

(b)In the event the Participant ceases to be employed by, or provide services
to, the Company on account of a termination for Cause by the Company, any Award
held by the Participant shall terminate as of the date the Participant ceases to
be employed by, or provide services to, the Company. In addition,
notwithstanding any other provisions of this Section, if the Committee
determines that the Participant has engaged in conduct that constitutes Cause at
any time while the Participant is employed by, or providing services to, the
Company or after the Participant’s termination of employment or services, any
Awards held by the Participant shall immediately terminate. In the event a
Participant’s employment or services is terminated for Cause, in addition to the
immediate termination of all Awards, the Participant shall automatically forfeit
all shares underlying any exercised portion of an Option for which the Company
has not yet delivered the share certificates, upon refund by the Company of the
option price paid by the Participant for such shares.

13.6.Stop Transfer Orders.  All certificates for Shares delivered under the Plan
pursuant to any Award shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Shares are then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.

13.7.Nature of Payments.  All Awards made pursuant to the Plan are in
consideration of services performed or to be performed for the Company or any
Affiliate, division or business unit of the Company. Any income or gain realized
pursuant to Awards under the Plan constitutes a special incentive payment to the
Participant and shall not be taken into account, to the extent permissible under
applicable law, as compensation for purposes of any of the employee benefit
plans of the Company or any Affiliate except as may be determined by the
Committee or by the Board or board of directors of the applicable Affiliate.

13.8.Other Plans.  Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.

13.9.Severability.  The provisions of the Plan shall be deemed severable. If any
provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part by a court of competent jurisdiction or by
reason of a change in a law or regulation, such provision shall (a) be deemed
limited to the extent that such court of competent jurisdiction deems it lawful,
valid and/or enforceable and as so limited shall remain in full force and
effect, and (b) not affect any other provision of the Plan or part thereof, each
of which shall remain in full force and effect. If the making of any payment or
the provision of any other benefit required under the Plan shall be held
unlawful or otherwise invalid or unenforceable by a court of competent
jurisdiction, such unlawfulness, invalidity or unenforceability shall not
prevent any other payment or benefit from being made or provided under the Plan,
and if the making of any payment in full or the provision of any other benefit
required under the Plan in full would be unlawful or otherwise invalid or
unenforceable, then such unlawfulness, invalidity or unenforceability shall not
prevent such payment or benefit from being made or provided in part, to the
extent that it would not be unlawful, invalid or unenforceable, and the maximum
payment or benefit that would not be unlawful, invalid or unenforceable shall be
made or provided under the Plan.

 

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13.10.Construction.  As used in the Plan, the words “include” and “including,”
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words “without limitation”

13.11.Unfunded Status of the Plan.  The Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver the Shares or payments in lieu of or with
respect to Awards hereunder; provided, however, that the existence of such
trusts or other arrangements is consistent with the unfunded status of the Plan.

13.12.Governing Law.  The Plan and all determinations made and actions taken
thereunder, to the extent not otherwise governed by the Code or the laws of the
United States, shall be governed by the laws of the State of Delaware, without
reference to principles of conflict of laws, and construed accordingly.

13.13.Effective Date of Plan; Effective Dates of Plan Restatements; Termination
of Plan.  The Plan originally became effective on June 13, 2017. The Plan was
previously amended and restated effective on June 13, 2019 (the “2019
Restatement”) and again on February 10, 2020, and March 12, 2020.  This
Restatement of the Plan is adopted effective April 3, 2020. Awards may be
granted under the Plan at any time and from time to time on or prior to the
tenth anniversary of the effective date of the Plan, on which date the Plan will
expire except as to Awards then outstanding under the Plan. Such outstanding
Awards shall remain in effect until they have been exercised or terminated, or
have expired.

13.14.Foreign Employees and Consultants.  Awards may be granted to Participants
who are foreign nationals or employed or providing services outside the United
States, or both, on such terms and conditions different from those applicable to
Awards to Employees employed or providing services in the United States as may,
in the judgment of the Committee, be necessary or desirable in order to
recognize differences in local law or tax policy. The Committee also may impose
conditions on the exercise or vesting of Awards in order to minimize the
Company’s obligation with respect to tax equalization for Employees or
Consultants on assignments outside their home country.

13.15.Compliance with Section 409A of the Code. This Plan is intended to comply
and shall be administered in a manner that is intended to comply with Section
409A of the Code and shall be construed and interpreted in accordance with such
intent. To the extent that an Award or the payment, settlement or deferral
thereof is subject to Section 409A of the Code, the Award shall be granted,
paid, settled or deferred in a manner that will comply with Section 409A of the
Code, including regulations or other guidance issued with respect thereto,
except as otherwise determined by the Committee. Any provision of this Plan that
would cause the grant of an Award or the payment, settlement or deferral thereof
to fail to satisfy Section 409A of the Code shall be amended to comply with
Section 409A of the Code on a timely basis, which may be made on a retroactive
basis, in accordance with regulations and other guidance issued under Section
409A of the Code.

Should any payments made in accordance with the Plan to a “specified employee”
(as defined under Section 409A of the Code) be determined to be payments from a
nonqualified deferred compensation plan and are payable in connection with a
Participant’s “separation from service” (as defined under Section 409A of the
Code), that are not exempt from Section 409A of the Code as a short-term
deferral or otherwise, these payments, to the extent otherwise payable within
six (6) months after the Participant’s separation from service, and to the
extent necessary to avoid the imposition of taxes under Section 409A of the
Code, will be paid in a lump sum on the earlier of the date that is six (6)
months and one day after the Participant’s date of separation from service or
the date of the Participant’s death. For purposes of Section 409A of the Code,
the payments to be made to a Participant in accordance with this Plan shall be
treated as a right to a series of separate payments.

13.16.Captions.  The captions in the Plan are for convenience of reference only,
and are not intended to narrow, limit or affect the substance or interpretation
of the provisions contained herein.