Exhibit 10.1

 

 

Protagonist Therapeutics, Inc.

 

Amended and Restated 2018 Inducement Plan

 

Adopted by the Board of Directors: May 29, 2018

Effective Date: May 29, 2018

As Amended on: February 18, 2020

 

1.             General.

 

(a)               Purpose. This Plan, through the granting of Awards, is
intended to provide (1) an inducement material for certain individuals to enter
into employment with the Company within the meaning of Rule 5635(c)(4) of the
Nasdaq Listing Rules, (2) incentives for such persons to exert maximum efforts
for the success of the Company and any Affiliate, and (3) a means by which such
persons shall have an opportunity to share in the financial success of the
Company.

 

(b)               Eligible Award Recipients. The only persons eligible to
receive grants of Awards under this Plan are individuals who satisfy the
standards for inducement grants under Nasdaq Marketplace Rule 5635(c)(4) and the
related guidance under Nasdaq IM 5635-1. A person who previously served as an
Employee or Director will not be eligible to receive Awards under the Plan,
other than following a bona fide period of non-employment. Persons eligible to
receive grants of Awards under this Plan are referred to in this Plan as
“Eligible Employees”. These Awards must be approved by either a majority of the
Company's “Independent Directors” (as such term is defined in Nasdaq Listing
Rule 5605(a)(2)) or the Company’s compensation committee, provided such
committee is comprised solely of Independent Directors (the “Independent
Compensation Committee”) in order to comply with the exemption from the
stockholder approval requirement for “inducement grants” provided under Rule
5635(c)(4) of the Nasdaq Listing Rules. Nasdaq Marketplace Rule 5635(c)(4) and
the related guidance under Nasdaq IM 5635-1 are referred to in this Plan as the
“Inducement Award Rules”.

 

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

 

2.             Administration.

 

(a)            Administration by Board. The Board will administer the Plan;
provided, however, that Awards may only be granted by either (i) a majority of
the Company's Independent Directors or (ii) the Independent Compensation
Committee. Subject to those constraints and the other constraints of the
Inducement Award Rules, the Board may delegate some of its powers of
administration of the Plan to a Committee, as provided in Section 2(c).

 

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

 

1.

 

 

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

 

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

 

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

 

(iv)              To accelerate, in whole or in part, the time at which an Award
may be exercised or vest (or at which cash or shares of Common Stock may be
issued).

 

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

 

(vi)             To amend the Plan in any respect the Board deems necessary or
advisable, including, without limitation, by adopting amendments relating to
certain nonqualified deferred compensation under Section 409A of the Code and/or
to make the Plan or Awards granted under the Plan exempt from or compliant with
the requirements for nonqualified deferred compensation under Section 409A of
the Code, subject to the limitations, if any, of applicable law. However, if
required by applicable law or listing requirements, and except as provided in
Section 9(a) relating to Capitalization Adjustments, the Company will seek
stockholder approval of any amendment of the Plan that (A) materially increases
the number of shares of Common Stock available for issuance under the Plan,
(B) materially expands the class of individuals eligible to receive Awards under
the Plan, (C) materially increases the benefits accruing to Participants under
the Plan, (D) materially reduces the price at which shares of Common Stock may
be issued or purchased under the Plan, (E) materially extends the term of the
Plan, or (F) materially expands the types of Awards available for issuance under
the Plan. Except as provided in the Plan (including subsection (viii) below) or
an Award Agreement, no amendment of the Plan will impair a Participant’s rights
under an outstanding Award unless (1) the Company requests the consent of the
affected Participant, and (2) such Participant consents in writing.

 

2.

 

 

(vii)          To approve forms of Award Agreements for use under the Plan and
to amend the terms of any one or more Awards, including, but not limited to,
amendments to provide terms more favorable to the Participant than previously
provided in the Award Agreement, subject to any specified limits in the Plan
that are not subject to Board discretion; provided however, that a Participant’s
rights under any Award will not be impaired by any such amendment unless (A) the
Company requests the consent of the affected Participant, and (B) such
Participant consents in writing. Notwithstanding the foregoing, (1) a
Participant’s rights will not be deemed to have been impaired by any such
amendment if the Board, in its sole discretion, determines that the amendment,
taken as a whole, does not materially impair the Participant’s rights, and (2)
subject to the limitations of applicable law, if any, the Board may amend the
terms of any one or more Awards without the affected Participant’s consent
(A)  to clarify the manner of exemption from, or to bring the Award into
compliance with, Section 409A of the Code; or (B) to comply with other
applicable laws or listing requirements.

 

(viii)          Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company and that are not in conflict with the provisions of the Plan or Awards.

 

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

 

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

 

(c)            Delegation to Committee.

 

(i)               General. The Board may delegate some or all of the
administration of the Plan to a Committee or Committees. If administration of
the Plan is delegated to a Committee, the Committee will have, in connection
with the administration of the Plan, the powers theretofore possessed by the
Board that have been delegated to the Committee, including the power to delegate
to a subcommittee of the Committee any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to the Board
will thereafter be to the Committee or subcommittee). Any delegation of
administrative powers will be reflected in resolutions, not inconsistent with
the provisions of the Plan, adopted from time to time by the Board or Committee
(as applicable). The Committee may, at any time, abolish the subcommittee and/or
revest in the Committee any powers delegated to the subcommittee. The Board may
retain the authority to concurrently administer the Plan with the Committee and
may, at any time, revest in the Board some or all of the powers previously
delegated.

 

(ii)              Rule 16b-3 Compliance. The Committee may consist solely of two
or more Non-Employee Directors, in accordance with Rule 16b-3.

 

3.

 

 

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

 

3.             Shares Subject to the Plan.

 

Share Reserve. Subject to Section 9(a) relating to Capitalization Adjustments,
the aggregate number of shares of Common Stock that may be issued pursuant to
Stock Awards will not exceed 1,250,000 shares (the “Share Reserve”). For
clarity, the Share Reserve in this Section 3(a) is a limitation on the number of
shares of Common Stock that may be issued pursuant to the Plan. Accordingly,
this Section 3(a) does not limit the granting of Stock Awards except as provided
in Section 7(a). Shares may be issued in connection with a merger or acquisition
as permitted by Nasdaq Listing Rule 5635(c) or, if applicable, or, if
applicable, Nasdaq Marketplace Rule 4350(i)(1)(A)(iii), NYSE Listed Company
Manual Section 303A.08, AMEX Company Guide Section 711 or other applicable rule,
and such issuance will not reduce the number of shares available for issuance
under the Plan.

 

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

 

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

 

4.             Eligibility.

 

(a)            Eligibility for Specific Stock Awards. Awards may only be granted
to persons who are Eligible Employees described in Section 1(b) of this Plan,
where the Award is an inducement material to the individual’s entering into
employment with the Company or an Affiliate within the meaning of Rule
5635(c)(4) of the Nasdaq Listing Rules, provided however, that Awards may not be
granted to Eligible Employees who are providing Continuous Service only to any
“parent” of the Company, as such term is defined in Rule 405 of the Securities
Act, unless (i) the stock underlying such Awards is treated as “service
recipient stock” under Section 409A of the Code (for example, because the Awards
are granted pursuant to a corporate transaction such as a spin off transaction),
or (ii) the Company, in consultation with its legal counsel, has determined that
such Awards are otherwise exempt from or comply with the distribution
requirements of Section 409A of the Code..

 

4.

 

 

(b)            Approval Requirements. All Awards must be granted either by a
majority of the Company’s independent directors or by the Independent
Compensation Committee.

 

5.             Provisions Relating to Options and Stock Appreciation Rights.

 

Each Option or SAR will be in such form and will contain such terms and
conditions as the Board deems appropriate. All Options will be Nonstatutory
Stock Options. The provisions of separate Options or SARs need not be identical;
provided, however, that each Award Agreement will conform to (through
incorporation of provisions hereof by reference in the applicable Award
Agreement or otherwise) the substance of each of the following provisions:

 

(a)            Term. No Option or SAR will be exercisable after the expiration
of ten years from the date of its grant or such shorter period specified in the
Award Agreement.

 

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

 

(c)            Purchase Price for Options. The purchase price of Common Stock
acquired pursuant to the exercise of an Option may be paid, to the extent
permitted by applicable law and as determined by the Board in its sole
discretion, by any combination of the methods of payment set forth below. The
Board will have the authority to grant Options that do not permit all of the
following methods of payment (or otherwise restrict the ability to use certain
methods) and to grant Options that require the consent of the Company to use a
particular method of payment. The permitted methods of payment are as follows:

 

(i)               by cash, check, bank draft or money order payable to the
Company;

 

(ii)             pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of the
stock subject to the Option, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds;

 

(iii)            by delivery to the Company (either by actual delivery or
attestation) of shares of Common Stock;

 

(iv)             by a “net exercise” arrangement pursuant to which the Company
will reduce the number of shares of Common Stock issuable upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price; provided, however, that the Company will accept a cash
or other payment from the Participant to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of
whole shares to be issued. Shares of Common Stock will no longer be subject to
an Option and will not be exercisable thereafter to the extent that (A) shares
issuable upon exercise are used to pay the exercise price pursuant to the “net
exercise,” (B) shares are delivered to the Participant as a result of such
exercise, and (C) shares are withheld to satisfy tax withholding obligations; or

 

5.

 

 

(v)               in any other form of legal consideration that may be
acceptable to the Board and specified in the applicable Award Agreement.

 

(d)           Exercise and Payment of a SAR. To exercise any outstanding SAR,
the Participant must provide written notice of exercise to the Company in
compliance with the provisions of the Award Agreement evidencing such SAR. The
appreciation distribution payable on the exercise of a SAR will be not greater
than an amount equal to the excess of (A) the aggregate Fair Market Value (on
the date of the exercise of the SAR) of a number of shares of Common Stock equal
to the number of Common Stock equivalents in which the Participant is vested
under such SAR, and with respect to which the Participant is exercising the SAR
on such date, over (B) the aggregate strike price of the number of Common Stock
equivalents with respect to which the Participant is exercising the SAR on such
date. The appreciation distribution may be paid in Common Stock, in cash, in any
combination of the two or in any other form of consideration, as determined by
the Board and contained in the Award Agreement evidencing such SAR.

 

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

 

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

 

(ii)              Domestic Relations Orders. Subject to the approval of the
Board or a duly authorized Officer, an Option or SAR may be transferred pursuant
to the terms of a domestic relations order, official marital settlement
agreement or other divorce or separation instrument.

 

(iii)            Beneficiary Designation. Subject to the approval of the Board
or a duly authorized Officer, a Participant may, by delivering written notice to
the Company, in a form approved by the Company (or the designated broker),
designate a third party who, upon the death of the Participant, will thereafter
be entitled to exercise the Option or SAR and receive the Common Stock or other
consideration resulting from such exercise. In the absence of such a
designation, upon the death or the Participant, the executor or administrator of
the Participant’s estate will be entitled to exercise the Option or SAR and
receive the Common Stock or other consideration resulting from such exercise.
However, the Company may prohibit designation of a beneficiary at any time,
including due to any conclusion by the Company that such designation would be
inconsistent with the provisions of applicable laws.

 

6.

 

 

(f)             Vesting Generally. The total number of shares of Common Stock
subject to an Option or SAR may vest and therefore become exercisable in
periodic installments that may or may not be equal. The Option or SAR may be
subject to such other terms and conditions on the time or times when it may or
may not be exercised (which may be based on the satisfaction of Performance
Goals or other criteria) as the Board may deem appropriate. The vesting
provisions of individual Options or SARs may vary. The provisions of this
Section 5(f) are subject to any Option or SAR provisions governing the minimum
number of shares of Common Stock as to which an Option or SAR may be exercised.

 

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

 

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

 

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

 

7.

 

 

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

 

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

 

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

 

8.

 

 

 

6.             Provisions of Stock Awards Other than Options and SARs.

 

(a)           Restricted Stock Awards. Each Restricted Stock Award Agreement
will be in such form and will contain such terms and conditions as the Board
deems appropriate. To the extent consistent with the Company’s bylaws, at the
Board’s election, shares of Common Stock may be (i) held in book entry form
subject to the Company’s instructions until any restrictions relating to the
Restricted Stock Award lapse; or (ii) evidenced by a certificate, which
certificate will be held in such form and manner as determined by the Board. The
terms and conditions of Restricted Stock Award Agreements may change from time
to time, and the terms and conditions of separate Restricted Stock Award
Agreements need not be identical. Each Restricted Stock Award Agreement will
conform to (through incorporation of the provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

 

(i)                 Consideration. A Restricted Stock Award may be awarded in
consideration for (A) cash, check, bank draft or money order payable to the
Company, (B) past services to the Company or an Affiliate, or (C) any other form
of legal consideration (including future services) that may be acceptable to the
Board, in its sole discretion, and permissible under applicable law.

 

(ii)               Vesting. Shares of Common Stock awarded under the Restricted
Stock Award Agreement may be subject to forfeiture to the Company in accordance
with a vesting schedule to be determined by the Board.

 

(iii)              Termination of Participant’s Continuous Service. If a
Participant’s Continuous Service terminates, the Company may receive through a
forfeiture condition or a repurchase right any or all of the shares of Common
Stock held by the Participant that have not vested as of the date of termination
of Continuous Service under the terms of the Restricted Stock Award Agreement.

 

(iv)               Transferability. Rights to acquire shares of Common Stock
under the Restricted Stock Award Agreement will be transferable by the
Participant only upon such terms and conditions as are set forth in the
Restricted Stock Award Agreement, as the Board will determine in its sole
discretion, so long as Common Stock awarded under the Restricted Stock Award
Agreement remains subject to the terms of the Restricted Stock Award Agreement.

 

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

 

(b)            Restricted Stock Unit Awards. Each Restricted Stock Unit Award
Agreement will be in such form and will contain such terms and conditions as the
Board deems appropriate. The terms and conditions of Restricted Stock Unit Award
Agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Unit Award Agreements need not be identical. Each
Restricted Stock Unit Award Agreement will conform to (through incorporation of
the provisions hereof by reference in the Agreement or otherwise) the substance
of each of the following provisions:

 

9.

 

 

(i)                 Consideration. At the time of grant of a Restricted Stock
Unit Award, the Board will determine the consideration, if any, to be paid by
the Participant upon delivery of each share of Common Stock subject to the
Restricted Stock Unit Award. The consideration to be paid (if any) by the
Participant for each share of Common Stock subject to a Restricted Stock Unit
Award may be paid in any form of legal consideration that may be acceptable to
the Board, in its sole discretion, and permissible under applicable law.

 

(ii)                Vesting. At the time of the grant of a Restricted Stock Unit
Award, the Board may impose such restrictions on or conditions to the vesting of
the Restricted Stock Unit Award as it, in its sole discretion, deems
appropriate.

 

(iii)              Payment. A Restricted Stock Unit Award may be settled by the
delivery of shares of Common Stock, their cash equivalent, any combination
thereof or in any other form of consideration, as determined by the Board and
contained in the Restricted Stock Unit Award Agreement.

 

(iv)               Additional Restrictions. At the time of the grant of a
Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such
restrictions or conditions that delay the delivery of the shares of Common Stock
(or their cash equivalent) subject to a Restricted Stock Unit Award to a time
after the vesting of such Restricted Stock Unit Award.

 

(v)                 Dividend Equivalents. Dividend equivalents may be credited
in respect of shares of Common Stock covered by a Restricted Stock Unit Award,
as determined by the Board and contained in the Restricted Stock Unit Award
Agreement. At the sole discretion of the Board, such dividend equivalents may be
converted into additional shares of Common Stock covered by the Restricted Stock
Unit Award in such manner as determined by the Board. Any additional shares
covered by the Restricted Stock Unit Award credited by reason of such dividend
equivalents will be subject to all of the same terms and conditions of the
underlying Restricted Stock Unit Award Agreement to which they relate.

 

(vi)               Termination of Participant’s Continuous Service. Except as
otherwise provided in the applicable Restricted Stock Unit Award Agreement, such
portion of the Restricted Stock Unit Award that has not vested will be forfeited
upon the Participant’s termination of Continuous Service.

 

(c)           Performance Awards.

 

(i)                 Performance Stock Awards. A Performance Stock Award is a
Stock Award that is payable (including that may be granted, vest or exercised)
contingent upon the attainment during a Performance Period of certain
Performance Goals. A Performance Stock Award may, but need not, require the
completion of a specified period of Continuous Service. The length of any
Performance Period, the Performance Goals to be achieved during the Performance
Period, and the measure of whether and to what degree such Performance Goals
have been attained will be conclusively determined by the Committee or the
Board, in its sole discretion. In addition, to the extent permitted by
applicable law and the applicable Award Agreement, the Board may determine that
cash may be used in payment of Performance Stock Awards.

 

10.

 

 

(ii)                Performance Cash Awards. A Performance Cash Award is a cash
award that is payable contingent upon the attainment during a Performance Period
of certain Performance Goals. A Performance Cash Award may also require the
completion of a specified period of Continuous Service. At the time of grant of
a Performance Cash Award, the length of any Performance Period, the Performance
Goals to be achieved during the Performance Period, and the measure of whether
and to what degree such Performance Goals have been attained will be
conclusively determined by the Committee or the Board, in its sole discretion.
The Board may specify the form of payment of Performance Cash Awards, which may
be cash or other property, or may provide for a Participant to have the option
for his or her Performance Cash Award, or such portion thereof as the Board may
specify, to be paid in whole or in part in cash or other property.

 

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

 

(d)           Other Stock Awards. Other forms of Stock Awards valued in whole or
in part by reference to, or otherwise based on, Common Stock, including the
appreciation in value thereof (e.g., options or stock rights with an exercise
price or strike price less than 100% of the Fair Market Value of the Common
Stock at the time of grant) may be granted either alone or in addition to Stock
Awards provided for under Section 5 and the preceding provisions of this Section
6. Subject to the provisions of the Plan, the Board will have sole and complete
authority to determine the persons to whom and the time or times at which such
Other Stock Awards will be granted, the number of shares of Common Stock (or the
cash equivalent thereof) to be granted pursuant to such Other Stock Awards and
all other terms and conditions of such Other Stock Awards.

 

7.             Covenants of the Company.

 

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

 

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

 

11.

 

 

(c)            No Obligation to Notify or Minimize Taxes. The Company will have
no duty or obligation to any Participant to advise such holder as to the time or
manner of exercising such Stock Award. Furthermore, the Company will have no
duty or obligation to warn or otherwise advise such holder of a pending
termination or expiration of an Award or a possible period in which the Award
may not be exercised. The Company has no duty or obligation to minimize the tax
consequences of an Award to the holder of such Award.

 

8.             Miscellaneous.

 

(a)            Use of Proceeds from Sales of Common Stock. Proceeds from the
sale of shares of Common Stock pursuant to Stock Awards will constitute general
funds of the Company.

 

(b)            Corporate Action Constituting Grant of Awards. Corporate action
constituting a grant by the Company of an Award to any Participant will be
deemed completed as of the date of such corporate action, unless otherwise
determined by the Board, regardless of when the instrument, certificate, or
letter evidencing the Award is communicated to, or actually received or accepted
by, the Participant. In the event that the corporate records (e.g., Board
consents, resolutions or minutes) documenting the corporate action approving the
grant contain terms (e.g., exercise price, vesting schedule or number of shares)
that are inconsistent with those in the Award Agreement or related grant
documents as a result of a clerical error in the papering of the Award Agreement
or related grant documents, the corporate records will control and the
Participant will have no legally binding right to the incorrect term in the
Award Agreement or related grant documents.

 

(c)            Stockholder Rights. No Participant will be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to an Award unless and until (i) such Participant has
satisfied all requirements for exercise of, or the issuance of shares of Common
Stock under, the Award pursuant to its terms, and (ii) the issuance of the
Common Stock subject to such Award has been entered into the books and records
of the Company.

 

(d)            No Employment or Other Service Rights. Nothing in the Plan, any
Award Agreement or any other instrument executed thereunder or in connection
with any Award granted pursuant thereto will confer upon any Participant any
right to continue employment with the Company or an Affiliate in the capacity in
effect at the time the Award was granted or will affect the right of the Company
or an Affiliate to terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a Consultant pursuant to
the terms of such Consultant’s agreement with the Company or an Affiliate, or
(iii) the service of a Director pursuant to the bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be.

 

12.

 

 

(e)            Change in Time Commitment. In the event a Participant’s regular
level of time commitment in the performance of his or her services for the
Company and any Affiliates is reduced (for example, and without limitation, if
the Participant has a change in status from a full-time Employee to a part-time
Employee or takes an extended leave of absence) after the date of grant of any
Award to the Participant, the Board has the right in its sole discretion to (x)
make a corresponding reduction in the number of shares or cash amount subject to
any portion of such 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 or extended.

 

(f)             Investment Assurances. The Company may require a Participant, as
a condition of exercising or acquiring Common Stock under any Award, (i) to give
written assurances satisfactory to the Company as to the Participant’s knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Award; and (ii) to give written assurances satisfactory
to the Company stating that the Participant is acquiring Common Stock subject to
the Award for the Participant’s own account and not with any present intention
of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, will be
inoperative if (A) the issuance of the shares upon the exercise or acquisition
of Common Stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act, or (B) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common
Stock.

 

(g)            Withholding Obligations. Unless prohibited by the terms of an
Award Agreement, the Company may, in its sole discretion, satisfy any federal,
state or local tax withholding obligation relating to an Award by any of the
following means or by a combination of such means: (i) causing the Participant
to tender a cash payment; (ii)  withholding shares of Common Stock from the
shares of Common Stock issued or otherwise issuable to the Participant in
connection with the Stock Award; provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to
be withheld by law (or such lesser amount as may be necessary to avoid
classification of the Stock Award as a liability for financial accounting
purposes); (iii) withholding cash from an Award settled in cash; (iv)
withholding payment from any amounts otherwise payable to the Participant; or
(v) by such other method as may be set forth in the Award Agreement.

 

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

 

13.

 

 

(i)             Deferrals. To the extent permitted by applicable law, the Board,
in its sole discretion, may determine that the delivery of Common Stock or the
payment of cash, upon the exercise, vesting or settlement of all or a portion of
any Award may be deferred and may establish programs and procedures for deferral
elections to be made by Participants. Deferrals by Participants will be made in
accordance with Section 409A of the Code. Consistent with Section 409A of the
Code, the Board may provide for distributions while a Participant is still an
employee or otherwise providing services to the Company. The Board is authorized
to make deferrals of Awards and determine when, and in what annual percentages,
Participants may receive payments, including lump sum payments, following the
Participant’s termination of Continuous Service, and implement such other terms
and conditions consistent with the provisions of the Plan and in accordance with
applicable law.

 

(j)             Clawback/Recovery. All Awards granted under the Plan will be
subject to recoupment in accordance with any clawback policy that 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, including but not limited to a
reacquisition right in respect of previously acquired shares of Common Stock or
other cash or property upon the occurrence of Cause. No recovery of compensation
under such a clawback policy will be an event giving rise to a right to
voluntary terminate employment upon a “resignation for good reason,” or for a
“constructive termination” or any similar term under any plan of or agreement
with the Company.

 

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

 

14.

 

 

9.              Adjustments upon Changes in Common Stock; Other Corporate
Events.

 

(a)           Capitalization Adjustments. In the event of a Capitalization
Adjustment, the Board will appropriately and proportionately adjust: (i) the
class(es) and maximum number of securities subject to the Plan pursuant to
Section 3(a), and (ii) the class(es) and number of securities and price per
share of stock subject to outstanding Stock Awards. The Board will make such
adjustments, and its determination will be final, binding and conclusive.

 

(b)           Dissolution. Except as otherwise provided in the Stock Award
Agreement, in the event of a Dissolution of the Company, all outstanding Stock
Awards (other than Stock Awards consisting of vested and outstanding shares of
Common Stock not subject to a forfeiture condition or the Company’s right of
repurchase) will terminate immediately prior to the completion of such
Dissolution, and the shares of Common Stock subject to the Company’s repurchase
rights or subject to a forfeiture condition may be repurchased or reacquired by
the Company notwithstanding the fact that the holder of such Stock Award is
providing Continuous Service; provided, however, that the Board may, in its sole
discretion, cause some or all Stock Awards to become fully vested, exercisable
and/or no longer subject to repurchase or forfeiture (to the extent such Stock
Awards have not previously expired or terminated) before the Dissolution is
completed but contingent on its completion.

 

(c)           Transactions. The following provisions will apply to Stock Awards
in the event of a Transaction unless otherwise provided in the Stock Award
Agreement or any other written agreement between the Company or any Affiliate
and the Participant or unless otherwise expressly provided by the Board at the
time of grant of a Stock Award. In the event of a Transaction, then,
notwithstanding any other provision of the Plan, the Board may take one or more
of the following actions with respect to Stock Awards, contingent upon the
closing or completion of the Transaction:

 

(i)                 arrange for the surviving corporation or acquiring
corporation (or the surviving or acquiring corporation’s parent company) to
assume or continue the Stock Award or to substitute a similar stock award for
the Stock Award (including, but not limited to, an award to acquire the same
consideration paid to the stockholders of the Company pursuant to the
Transaction);

 

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

 

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

 

15.

 

 

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

 

(v)                 cancel or arrange for the cancellation of the Stock Award,
to the extent not vested or not exercised prior to the effective time of the
Transaction, in exchange for such cash consideration or no consideration as the
Board, in its sole discretion, may consider appropriate; and

 

(vi)                make a payment, in such form as may be determined by the
Board equal to the excess, if any, of (A) the value of the property the
Participant would have received upon the exercise of the Stock Award immediately
prior to the effective time of the Transaction, over (B) any exercise price
payable by such holder in connection with such exercise. For clarity, this
payment may be zero ($0) if the value of the property is equal to or less than
the exercise price. Payments under this provision may be delayed to the same
extent that payment of consideration to the holders of Common Stock in
connection with the Transaction is delayed as a result of escrows, earn outs,
holdbacks or any other contingencies.

 

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

 

(d)           Change in Control. A Stock Award may be subject to additional
acceleration of vesting and exercisability upon or after a Change in Control as
may be provided in the Stock Award Agreement for such Stock Award or as may be
provided in any other written agreement between the Company or any Affiliate and
the Participant, but in the absence of such provision, no such acceleration will
occur.

 

10.          Termination or Suspension of the Plan.

 

(a)            The Board may suspend or terminate the Plan at any time. No
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated. Suspension or termination of the Plan will not impair rights and
obligations under any Award granted while the Plan is in effect except with the
written consent of the affected Participant or as otherwise permitted in the
Plan.

 

11.          Effective Date of Plan.

 

The Plan will come into existence on the Effective Date. No Award may be granted
prior to the Effective Date.

 

12.          Choice of Law.

 

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

 

13.          Definitions. As used in the Plan, the following definitions will
apply to the capitalized terms indicated below:

 

16.

 

 

 

(a)               “Affiliate” means, at the time of determination, any “parent”
or “subsidiary” of the Company as such terms are defined in Rule 405. The Board
will have the authority to determine the time or times at which “parent” or
“subsidiary” status is determined within the foregoing definition.

 

(b)               “Award” means a Stock Award or a Performance Cash Award.

 

(c)               “Award Agreement” means a written agreement between the
Company and a Participant evidencing the terms and conditions of an Award.

 

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

 

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

 

(f)                “Cause” will have the meaning ascribed to such term in any
written agreement between the Participant and the Company defining such term
and, in the absence of such agreement, such term means, with respect to a
Participant, the occurrence of any of the following events: (i) such
Participant’s commission, indictment or conviction of, or plea of no contest
with respect to, any felony or crime involving dishonesty or moral turpitude;
(ii) such Participant’s failure to satisfactorily perform his or her job duties
as assigned by the Board or the officers of the Company, inability to meet
documented performance goals, willful neglect of his or her duties, or refusal
or failure to follow the lawful and reasonable directions of the Board or the
officers of the Company, provided that the Company first provides the
Participant with written notice of such conduct and 30 days to cure the conduct
(if curable), and the Participant has failed to cure such conduct within such 30
day period; (iii) such Participant’s disloyalty, gross negligence, willful
misconduct, dishonesty, fraud or breach of fiduciary duty to the Company; (iv)
such Participant’s violation of any rule or policy of the Company, or breach of
an employment, consulting or other agreement with the Company, which could
reasonably result in direct or indirect loss, damage or injury to the Company;
(v) such Participant’s disclosure of any trade secret or confidential
information of the Company; (vi) such Participant’s commission of an act which
could at the discretion of the Company be reasonably deemed to constitute unfair
competition with the Company or induce any customer or supplier to breach a
contract with the Company; or (vii) such Participant’s intentional acts on the
part of the Participant that have generated material adverse publicity toward or
about the Company. Any determination by the Company that the Continuous Service
of a Participant was terminated with or without Cause for the purposes of
outstanding Awards held by such Participant will have no effect upon any
determination of the rights or obligations of the Company or such Participant
for any other purpose.

 

17.

 

 

(g)               “Change in Control” means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:

 

(i)                 any Exchange Act Person becomes the Owner, directly or
indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities other than by
virtue of a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control will not be deemed to occur (A) on account of the
acquisition of securities of the Company directly from the Company, (B) on
account of the acquisition of securities of the Company by an investor, any
affiliate thereof or any other Exchange Act Person that acquires the Company’s
securities in a transaction or series of related transactions the primary
purpose of which is to obtain financing for the Company through the issuance of
equity securities, (C) on account of the acquisition of securities of the
Company by any individual who is, on the IPO Date, either an executive officer
or a Director (either, an “IPO Investor”) and/or any entity in which an IPO
Investor has a direct or indirect interest (whether in the form of voting rights
or participation in profits or capital contributions) of more than 50%
(collectively, the “IPO Entities”) or on account of the IPO Entities continuing
to hold shares that come to represent more than 50% of the combined voting power
of the Company’s then outstanding securities as a result of the conversion of
any class of the Company’s securities into another class of the Company’s
securities having a different number of votes per share pursuant to the
conversion provisions set forth in the Company’s Amended and Restated
Certificate of Incorporation; or (D) solely because the level of Ownership held
by any Exchange Act Person (the “Subject Person”) exceeds the designated
percentage threshold of the outstanding voting securities as a result of a
repurchase or other acquisition of voting securities by the Company reducing the
number of shares outstanding, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the acquisition of
voting securities by the Company, and after such share acquisition, the Subject
Person becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control will be deemed to
occur;

 

(ii)                there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than 50%
of the combined outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than 50% of the combined
outstanding voting power of the parent of the surviving Entity in such merger,
consolidation or similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction; provided, however, that a merger,
consolidation or similar transaction will not constitute a Change in Control
under this prong of the definition if the outstanding voting securities
representing more than 50% of the combined voting power of the surviving Entity
or its parent are owned by the IPO Entities;

 

18.

 

 

(iii)              there is consummated a sale, lease, exclusive license or
other disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than 50% of the combined voting
power of the voting securities of which are Owned by stockholders of the Company
in substantially the same proportions as their Ownership of the outstanding
voting securities of the Company immediately prior to such sale, lease, license
or other disposition; provided, however, that a sale, lease, exclusive license
or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries will not constitute a Change in Control under
this prong of the definition if the outstanding voting securities representing
more than 50% of the combined voting power of the acquiring Entity or its parent
are owned by the IPO Entities; or

 

(iv)               individuals who, on the date the Plan is adopted by the
Board, are members of the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the members of the Board; provided, however,
that if the appointment or election (or nomination for election) of any new
Board member was approved or recommended by a majority vote of the members of
the Incumbent Board then still in office, such new member will, for purposes of
this Plan, be considered as a member of the Incumbent Board.

 

Notwithstanding the foregoing or any other provision of this Plan, (A) the term
Change in Control will not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company,
and (B) the definition of Change in Control (or any analogous term) in an
individual written agreement between the Company or any Affiliate and the
Participant will supersede the foregoing definition with respect to Awards
subject to such agreement; provided, however, that if no definition of Change in
Control or any analogous term is set forth in such an individual written
agreement, the foregoing definition will apply. To the extent required for
compliance with Section 409A of the Code, in no event will a Change in Control
be deemed to have occurred if such transaction is not also a “change in the
ownership or effective control of” the Company or “a change in the ownership of
a substantial portion of the assets of” the Company as determined under Treasury
Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition
thereunder). The Board may, in its sole discretion and without a Participant’s
consent, amend the definition of “Change in Control” to conform to the
definition of “Change in Control” under Section 409A of the Code, and the
regulations thereunder.

 

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

 

(i)                “Committee” means a committee of one or more Independent
Directors to whom authority has been delegated by the Board in accordance with
Section 2(c).

 

(j)                “Common Stock” means the common stock of the Company.

 

(k)              “Company” means Protagonist Therapeutics, Inc., a Delaware
corporation.

 

(l)                “Consultant” means any person, including an advisor, who is
(i) engaged by the Company or an Affiliate to render consulting or advisory
services and is compensated for such services, or (ii) serving as a member of
the board of directors of an Affiliate and is compensated for such services.
However, service solely as a Director, or payment of a fee for such service,
will not cause a Director to be considered a “Consultant” for purposes of the
Plan. Notwithstanding the foregoing, a person is treated as a Consultant under
this Plan only if a Form S-8 Registration Statement under the Securities Act is
available to register either the offer or the sale of the Company’s securities
to such person.

 

19.

 

 

(m)              “Continuous Service” means that the Participant’s service with
the Company or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Director or
Consultant or a change in the Entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s service with the Company or an Affiliate, will not terminate a
Participant’s Continuous Service; provided, however, that if the Entity for
which a Participant is rendering services ceases to qualify as an Affiliate, as
determined by the Board, in its sole discretion, such Participant’s Continuous
Service will be considered to have terminated on the date such Entity ceases to
qualify as an Affiliate. For example, a change in status from an Employee of the
Company to a Consultant of an Affiliate or to a Director will not constitute an
interruption of Continuous Service. To the extent permitted by law, the Board or
the chief executive officer of the Company, in that party’s sole discretion, may
determine whether Continuous Service will be considered interrupted in the case
of (i) any leave of absence approved by the Board or chief executive officer,
including sick leave, military leave or any other personal leave, or (ii)
transfers between the Company, an Affiliate, or their successors.
Notwithstanding the foregoing, a leave of absence will be treated as Continuous
Service for purposes of vesting in an Award only to such extent as may be
provided in the Company’s leave of absence policy, in the written terms of any
leave of absence agreement or policy applicable to the Participant, or as
otherwise required by law. In addition, to the extent required for exemption
from or compliance with Section 409A of the Code, the determination of whether
there has been a termination of Continuous Service will be made, and such term
will be construed, in a manner that is consistent with the definition of
“separation from service” as defined under Treasury Regulation Section
1.409A-1(h) (without regard to any alternative definition thereunder).

 

(n)               “Corporate Transaction” means the consummation, in a single
transaction or in a series of related transactions, of any one or more of the
following events:

 

(i)                 a sale or other disposition of all or substantially all, as
determined by the Board, in its sole discretion, of the consolidated assets of
the Company and its Subsidiaries;

 

(ii)                a sale or other disposition of more than 50% of the
outstanding securities of the Company;

 

(iii)              a merger, consolidation or similar transaction following
which the Company is not the surviving corporation; or

 

(iv)               a merger, consolidation or similar transaction following
which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of securities, cash
or otherwise.

 

20.

 

 

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

 

(p)               “Disability” means, with respect to a Participant, the
inability of such Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to last for a
continuous period of not less than 12 months, as provided in Sections 22(e)(3)
and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the
basis of such medical evidence as the Board deems warranted under the
circumstances.

 

(q)              “Dissolution” means when the Company, after having executed a
certificate of dissolution with the State of Delaware, has completely wound up
its affairs. Conversion of the Company into a Limited Liability Company (or any
other pass-through entity) will not be considered a “Dissolution” for purposes
of the Plan.

 

(r)               “Effective Date” means the date this Plan is approved by the
Board.

 

(s)               “Employee” means any person employed by the Company or an
Affiliate. However, service solely as a Director, or payment of a fee for such
services, will not cause a Director to be considered an “Employee” for purposes
of the Plan.

 

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

 

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

 

(v)               “Exchange Act Person” means any natural person, Entity or
“group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act),
except that “Exchange Act Person” will not include (i) the Company or any
Subsidiary of the Company, (ii) any employee benefit plan of the Company or any
Subsidiary of the Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsidiary of the Company,
(iii) an underwriter temporarily holding securities pursuant to a registered
public offering of such securities, (iv) an Entity Owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their Ownership of stock of the Company; or (v) any natural
person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act) that, as of the Effective Date, is the Owner, directly or
indirectly, of securities of the Company representing more than50% of the
combined voting power of the Company’s then outstanding securities.

 

(w)              “Fair Market Value” means, as of any date, the value of the
Common Stock determined as follows:

 

(i)                 If the Common Stock is listed on any established stock
exchange or traded on any established market, the Fair Market Value of a share
of Common Stock will be, unless otherwise determined by the Board, the closing
sales price for such stock as quoted on such exchange or market (or the exchange
or market with the greatest volume of trading in the Common Stock) on the date
of determination, as reported in a source the Board deems reliable.

 

21.

 

 

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

 

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

 

(x)               “Non-Employee Director” means a Director who either (i) is not
a current employee or officer of the Company or an Affiliate, does not receive
compensation, either directly or indirectly, from the Company or an Affiliate
for services rendered as a consultant or in any capacity other than as a
Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
(“Regulation S-K”)), does not possess an interest in any other transaction for
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.

 

(y)               “Nonstatutory Stock Option” means any option granted pursuant
to Section 5 of the Plan that does not qualify as an “incentive stock option”
within the meaning of Section 422 of the Code.

 

(z)               “Officer” means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act.

 

(aa)             “Option” means a Nonstatutory Stock Option to purchase shares
of Common Stock granted pursuant to the Plan.

 

(bb)             “Option Agreement” means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of an Option
grant. Each Option Agreement will be subject to the terms and conditions of the
Plan.

 

(cc)             “Optionholder” means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

 

(dd)             “Other Stock Award” means an award based in whole or in part by
reference to the Common Stock which is granted pursuant to the terms and
conditions of Section 6(d).

 

(ee)             “Other Stock Award Agreement” means a written agreement between
the Company and a holder of an Other Stock Award evidencing the terms and
conditions of an Other Stock Award grant. Each Other Stock Award Agreement will
be subject to the terms and conditions of the Plan.

 

(ff)               “Own,” “Owned,” “Owner,” “Ownership” A person or Entity will
be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.

 

22.

 

 

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

 

(hh)             “Performance Cash Award” means an award of cash granted
pursuant to the terms and conditions of Section 6(c)(ii).

 

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

 

23.

 

 

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

 

(kk)            “Performance Period” means the period of time selected by the
Board or Committee (as applicable) over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a
Participant’s right to and the payment of a Stock Award or a Performance Cash
Award. Performance Periods may be of varying and overlapping duration, at the
sole discretion of the Board or Committee (as applicable).

 

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

 

(mm)          “Plan” means this Protagonist Therapeutics, Inc. 2018 Inducement
Plan, as it may be amended.

 

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

 

(oo)             “Restricted Stock Award Agreement” means a written agreement
between the Company and a holder of a Restricted Stock Award evidencing the
terms and conditions of a Restricted Stock Award grant. Each Restricted Stock
Award Agreement will be subject to the terms and conditions of the Plan.

 

24.

 

 

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

 

(qq)             “Restricted Stock Unit Award Agreement” means a written
agreement between the Company and a holder of a Restricted Stock Unit Award
evidencing the terms and conditions of a Restricted Stock Unit Award grant. Each
Restricted Stock Unit Award Agreement will be subject to the terms and
conditions of the Plan.

 

(rr)             “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange
Act or any successor to Rule 16b-3, as in effect from time to time.

 

(ss)             “Rule 405” means Rule 405 promulgated under the Securities Act.

 

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

 

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

 

(vv)              “Stock Appreciation Right Agreement” means a written agreement
between the Company and a holder of a Stock Appreciation Right evidencing the
terms and conditions of a Stock Appreciation Right grant. Each Stock
Appreciation Right Agreement will be subject to the terms and conditions of the
Plan.

 

(ww)            “Stock Award” means any right to receive Common Stock granted
under the Plan, including a Nonstatutory Stock Option, a Restricted Stock Award,
a Restricted Stock Unit Award, a Stock Appreciation Right, a Performance Stock
Award or any Other Stock Award.

 

(xx)             “Stock Award Agreement” means a written agreement between the
Company and a Participant evidencing the terms and conditions of a Stock Award
grant. Each Stock Award Agreement will be subject to the terms and conditions of
the Plan.

 

(yy)             “Subsidiary” means, with respect to the Company, (i) any
corporation of which more than 50% of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation will have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, Owned
by the Company, and (ii) any partnership, limited liability company or other
entity in which the Company has a direct or indirect interest (whether in the
form of voting or participation in profits or capital contribution) of more than
50%.

 

(zz)             “Transaction” means a Corporate Transaction or a Change in
Control.

 

25.