Exhibit 10.7

 

OPTIMER PHARMACEUTICALS, INC.
RESTRICTED STOCK UNIT GRANT NOTICE
(2012 EQUITY INCENTIVE PLAN)

 

Optimer Pharmaceuticals, Inc. (the “Company”) hereby awards to Participant the
number of restricted stock units specified and on the terms set forth below (the
“Award”).  The Award is subject to all of the terms and conditions as set forth
herein and in the Company’s 2012 Equity Incentive Plan (the “Plan”) and the
Restricted Stock Unit Agreement (the “Agreement”), both of which are attached
hereto and incorporated herein in their entirety.  Capitalized terms not
explicitly defined herein but defined in the Plan or the Agreement shall have
the meanings set forth in the Plan or the Agreement.  Except as explicitly
provided herein or in the Agreement, in the event of any conflict between the
terms in the Award and the Plan, the terms of the Plan shall control.

 

Participant:

 

 

Date of Grant:

 

 

Vesting Commencement Date:

 

 

Number of Restricted Stock Units:

 

 

Consideration:

Participant’s Services

 

 

Vesting Schedule:                   
[                                                              ]. 
Notwithstanding the foregoing, vesting shall terminate upon the Participant’s
termination of Continuous Service.

 

Issuance Schedule:               One share of Common Stock will be issued for
each restricted stock unit which vests at the time set forth in Section 6 of the
Agreement.

 

Additional Terms/Acknowledgements:  The undersigned Participant acknowledges
receipt of, and understands and agrees to, this Restricted Stock Unit Grant
Notice, the Agreement, the Plan prospectus and the Plan.  Participant further
acknowledges that as of the Date of Grant, this Restricted Stock Unit Grant
Notice, the Agreement and the Plan set forth the entire understanding between
Participant and the Company regarding the Award and supersedes all prior oral
and written agreements on that subject, with the exception of: (i) any written
employment or severance arrangement that would provide for vesting acceleration
of the Award upon the terms and conditions set forth therein, or (ii) any
compensation recovery policy that is adopted by the Company or is otherwise
required by applicable law.  By accepting this Award, the undersigned
Participant consents to receive Plan documents by electronic delivery and to
participate in the Plan through an on-line or electronic system established and
maintained by the Company or another third party designated by the Company.

 

OPTIMER PHARMACEUTICALS, INC.

 

PARTICIPANT:

 

 

 

By:

 

 

 

Signature

 

Signature

 

 

 

Title:

 

 

Date:

 

 

 

 

Date:

 

 

 

 

ATTACHMENTS:         Restricted Stock Unit Agreement, 2012 Equity Incentive Plan

 

--------------------------------------------------------------------------------

 

OPTIMER PHARMACEUTICALS, INC.

2012 EQUITY INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AGREEMENT

 

Pursuant to the Restricted Stock Unit Grant Notice (the “Grant Notice”) and this
Restricted Stock Unit Agreement (the “Agreement”) and in consideration of your
services, Optimer Pharmaceuticals, Inc. (the “Company”) has awarded you a
Restricted Stock Unit Award (the “Award”) under its 2012 Equity Incentive Plan
(the “Plan”) for the number of restricted stock units set forth on the Grant
Notice.  Capitalized terms not explicitly defined in this Agreement shall have
the same meanings given to them in the Plan or the Grant Notice, as applicable. 
Except as otherwise explicitly provided herein, in the event of any conflict
between the terms in this Agreement and the Plan, the terms of the Plan shall
control.

 

The details of your Award, in addition to those set forth in the Grant Notice
and the Plan, are as follows.

 

1.                                      GRANT OF THE AWARD.  This Award
represents your right to be issued on a future date the number of shares of
Common Stock that is equal to the number of restricted stock units indicated in
the Grant Notice (the “Stock Units”).  As of the Date of Grant, the Company will
credit to a bookkeeping account maintained by the Company for your benefit (the
“Account”) the number of Stock Units subject to the Award.  This Award was
granted in consideration of your services to the Company.  Except as otherwise
provided herein, you will not be required to make any payment to the Company
(other than past and future services to the Company) with respect to your
receipt of the Award, the vesting of the Stock Units or the delivery of the
Common Stock to be issued in respect of the Award.

 

2.                                      VESTING.  Subject to the limitations
contained herein, your Award will vest, if at all, in accordance with the
vesting schedule provided in the Grant Notice, provided that vesting will cease
upon the termination of your Continuous Service.  Upon such termination of your
Continuous Service, the Stock Units credited to the Account that were not vested
on the date of such termination will be forfeited at no cost to the Company and
you will have no further right, title or interest in such Stock Units or the
shares of Common Stock to be issued in respect of such portion of the Award.

 

3.                                      NUMBER OF STOCK UNITS AND SHARES OF
COMMON STOCK.

 

(a)                                 The number of Stock Units subject to your
Award may be adjusted from time to time for Capitalization Adjustments, as
provided in the Plan.

 

--------------------------------------------------------------------------------

 

(b)                                 Any additional Stock Units that become
subject to the Award pursuant to this Section 3, if any, shall be subject, in a
manner determined by the Board, to the same forfeiture restrictions,
restrictions on transferability, and time and manner of delivery as applicable
to the other Stock Units covered by your Award.

 

(c)                                  Notwithstanding the provisions of this
Section 3, no fractional shares or rights for fractional shares of Common Stock
shall be created pursuant to this Section 3.  The Board shall, in its
discretion, determine an equivalent benefit for any fractional shares or
fractional shares that might be created by the adjustments referred to in this
Section 3.

 

4.                                      SECURITIES LAW COMPLIANCE.  You may not
be issued any shares in respect of your Award unless either (i) the shares are
registered under the Securities Act; or (ii) the Company has determined that
such issuance would be exempt from the registration requirements of the
Securities Act. Your Award also must comply with other applicable laws and
regulations governing the Award, and you will not receive such shares if the
Company determines that such receipt would not be in material compliance with
such laws and regulations.

 

5.                                      TRANSFER RESTRICTIONS.  Your Award is
not transferable, except by will or by the laws of descent and distribution.  In
addition to any other limitation on transfer created by applicable securities
laws, you agree not to assign, hypothecate, donate, encumber or otherwise
dispose of any interest in any of the shares of Common Stock subject to the
Award until the shares are issued to you in accordance with Section 6 of this
Agreement.  After the shares have been issued to you, you are free to assign,
hypothecate, donate, encumber or otherwise dispose of any interest in such
shares provided that any such actions are in compliance with the provisions
herein, any applicable Company policies (including, but not limited to, insider
trading and window period policies) and applicable securities laws. 
Notwithstanding the foregoing, by delivering written notice to the Company, in a
form satisfactory to the Company, you may designate a third party who, in the
event of your death, shall thereafter be entitled to receive any distribution of
Common Stock to which you were entitled at the time of your death pursuant to
this Agreement.

 

6.                                      DATE OF ISSUANCE.

 

(a)                                 To the extent the Award is (1) exempt from
application of Section 409A of the Code and any state law of similar effect
(collectively “Section 409A”) and (2) not subject to Section 6(b) below, the
Company will deliver to you a number of shares of Common Stock equal to the
number of vested Stock Units subject to your Award, including any additional
Stock Units received pursuant to Section 3 above that relate to those vested
Stock Units, on the applicable vesting date(s).  However, if a scheduled
delivery date falls on a date that is not a business day, such delivery date
shall instead fall on the next following business day.  Notwithstanding the
foregoing, in the event that (i) any shares covered by your Award are

 

--------------------------------------------------------------------------------

 

scheduled to be delivered on a day (the “Original Distribution Date”) that does
not occur: (A) during an open “window period” applicable to you under the
Company’s policy permitting officers, directors and other designated individuals
to sell shares only during certain “window” periods, in effect from time to time
(the “Policy”), (B) on a day on which you are permitted to sell shares of Common
Stock pursuant to a written plan that meets the requirements of Rule 10b5-1
under the Exchange Act, as determined by the Company in accordance with the
Policy, or (C) on a date when you are otherwise permitted to sell shares of
Common Stock on the open market, and (ii) the Company elects not to satisfy its
tax withholding obligations by withholding shares from your distribution or
withholding from other compensation otherwise payable to you by the Company,
then such shares shall not be delivered on such Original Distribution Date and
shall instead be delivered on the first business day of the next occurring open
“window period” applicable to you pursuant to such Policy (regardless of whether
you are still providing Continuous Service at such time) or the next business
day when you are not prohibited from selling shares of Common Stock in the open
market, but in no event later than the fifteenth (15th) day of the third
calendar month of the calendar year following the calendar year in which the
applicable shares covered by the Award vest.  Delivery of the shares pursuant to
the provisions of this Section 6(a) is intended to comply with the requirements
for the short-term deferral exemption available under Treasury Regulations
Section 1.409A-1(b)(4) and shall be construed and administered in such manner. 
The form of such delivery of the shares (e.g., a stock certificate or electronic
entry evidencing such shares) shall be determined by the Company.

 

(b)                                 Notwithstanding the foregoing provisions,
the following provisions will apply if you elect to defer delivery of the shares
to be issued in respect of your Award beyond the vesting date in accordance with
this Section:

 

(i)                                    If you elect to defer delivery of shares
of Common Stock in respect of the Award beyond the vesting date and such
election is made no later than the last day of the calendar year prior to the
calendar year in which the Date of Grant occurs and shares commence vesting, or
if you elect to defer delivery of the shares subject to your Award in a manner
that otherwise complies with Section 409A, then the Company will not deliver
such shares on the vesting date or dates provided in your Grant Notice, but will
instead deliver such shares to you on the date or dates or permitted payment
events that you so elect (the “Settlement Date”); provided, however, that in the
event of your upon your termination of employment or separation from service (as
such term is defined in Section 409A(a)(2)(A)(i) of the Code (and without regard
to any alternative definition thereunder) (“Separation from Service”) prior to
the Settlement Date, such vested shares of Common Stock will instead be
delivered to you on the earlier date of your Separation from Service or pursuant
to the objective payment formula commencing on your Separation from Service, if
any, that you specified in your election to defer delivery.  If such deferral
election is made, the Board or a duly authorized committee thereof will, in its
sole discretion, establish the rules and procedures for such election which will
be evidenced by a Restricted Stock Unit Election Agreement.

 

--------------------------------------------------------------------------------

 

(ii)                                If at the time the shares would otherwise be
issued to you in respect of your Award as a result of your Separation from
Service, you are subject to the distribution limitations contained in
Section 409A applicable to “specified employees” as defined in
Section 409A(a)(2)(B)(i) of the Code and applicable guidance thereunder, share
issuances to you as a result of your Separation from Service will not be made
before the date which is six (6) months following the date of your Separation
from Service, or, if earlier, the date of your death that occurs within such six
(6) month period.

 

(iii)                            If the Company determines that you are subject
to the Policy or you are otherwise prohibited from selling shares of the
Company’s stock in the public market and any shares of Common Stock subject to
your Award are scheduled to be delivered on a Settlement Date that does not
occur (A) during an open “window period” applicable to you, (B) on a day on
which you are permitted to sell shares of Common Stock pursuant to a written
plan that meets the requirements of Rule 10b5-1 under the Exchange Act, as
determined by the Company in accordance with the Policy, or (C) on a day when
you are otherwise permitted to sell shares of Common Stock in the public market
and the Company elects not to satisfy its tax withholding obligations by
withholding shares from your distribution or by withholding from other
compensation otherwise payable to you by the Company, then such shares will not
be delivered on such Settlement Date and will instead be delivered as soon as
practicable on the first business day within the next open “window period”
applicable to you pursuant to such policy or the next day when you are not
prohibited from selling shares of Common Stock in the public market (regardless
of whether you are still providing Continuous Service at such time); provided,
however, that unless the delay until the next open window period or the next day
when you are not prohibited from selling shares of the Company’s stock in the
public market would not result in the imposition of any additional taxes under
the Code (including Section 409A of the Code), the delivery of the shares will
not be delayed pursuant to this provision beyond 60 days following the selected
Settlement Date.  The form of such delivery (e.g., a stock certificate or
electronic entry evidencing such shares) will be determined by the Company.

 

(iv)                             In the event that you have a Separation from
Service that is not a termination of your Continuous Service, then any unvested
shares subject to your Award that vest in ordinary course pursuant to the
vesting schedule set forth in the Grant Notice following your Separation from
Service will be issued to you in accordance with the provisions of Section 6(a);
provided, however, that the foregoing provision will not apply to the extent
that your severance arrangement, if any, provides for acceleration of vesting of
the Award upon your Separation from Service, in which case the shares will be
issued to you in accordance with the provisions of Section 6(a) or 6(b), as
applicable.

 

(c)                                  If your Award is subject to, and not exempt
from, Section 409A (a “Non-Exempt Award”), the applicable provisions of Appendix
A will apply and will supersede anything to the contrary that may be set forth
in the Plan, Grant Notice or in any other section of

 

--------------------------------------------------------------------------------

 

the Agreement with respect to the permitted treatment of your Non-Exempt Award
in connection with certain terminations of your employment or service with the
Company and certain change in control events.

 

7.                                      DIVIDENDS.  You shall receive no benefit
or adjustment to your Award with respect to any cash dividend, stock dividend or
other distribution that does not result from a Capitalization Adjustment as
provided in the Plan; provided, however, that this sentence shall not apply with
respect to any shares of Common Stock that are delivered to you in connection
with your Award after such shares have been delivered to you.

 

8.                                      RESTRICTIVE LEGENDS.  The shares issued
in respect of your Award shall be endorsed with appropriate legends determined
by the Company.

 

9.                                      AWARD NOT A SERVICE CONTRACT.

 

(a)                                 Your Continuous Service with the Company or
an Affiliate is not for any specified term and may be terminated by you or by
the Company or an Affiliate at any time, for any reason, with or without cause
and with or without notice.  Nothing in this Agreement (including, but not
limited to, the vesting of your Award pursuant to the schedule set forth in the
Grant Notice or the issuance of the shares in respect of your Award), the Plan
or any covenant of good faith and fair dealing that may be found implicit in
this Agreement or the Plan shall:  (i) confer upon you any right to continue in
the employ of, or affiliation with, the Company or any Affiliate;
(ii) constitute any promise or commitment by the Company or any Affiliate
regarding the fact or nature of future positions, future work assignments,
future compensation or any other term or condition of employment or affiliation;
(iii) confer any right or benefit under this Agreement or the Plan unless such
right or benefit has specifically accrued under the terms of this Agreement or
Plan; or (iv) deprive the Company of the right to terminate you at will and
without regard to any future vesting opportunity that you may have.

 

(b)                                 By accepting this Award, you acknowledge and
agree that the right to continue vesting in the Award pursuant to the vesting
schedule provided in the Grant Notice is earned only by continuing as an
employee, director or consultant at the will of the Company (not through the act
of being hired, being granted this Award or any other award or benefit) and that
the Company has the right to reorganize, sell, spin-out or otherwise restructure
one or more of its businesses or Affiliates at any time or from time to time, as
it deems appropriate (a “reorganization”).  You further acknowledge and agree
that such a reorganization could result in the termination of your Continuous
Service, or the termination of Affiliate status of your employer and the loss of
benefits available to you under this Agreement, including but not limited to,
the termination of the right to continue vesting in the Award.  You further
acknowledge and agree that this Agreement, the Plan, the transactions
contemplated hereunder and the vesting schedule set forth herein or any covenant
of good faith and fair dealing that may

 

--------------------------------------------------------------------------------

 

be found implicit in any of them do not constitute an express or implied promise
of continued engagement as an employee or consultant for the term of this
Agreement, for any period, or at all, and shall not interfere in any way with
your right or the Company’s right to terminate your Continuous Service at any
time, with or without cause and with or without notice.

 

10.                               WITHHOLDING OBLIGATIONS.

 

(a)                                 On or before the time you receive a
distribution of the shares subject to your Award, or at any time thereafter as
requested by the Company, you hereby authorize any required withholding from the
Common Stock issuable to you and/or otherwise agree to make adequate provision
in cash for any sums required to satisfy the federal, state, local and foreign
tax withholding obligations of the Company or any Affiliate which arise in
connection with your Award (the “Withholding Taxes”).  Additionally, the Company
may, in its sole discretion, satisfy all or any portion of the Withholding Taxes
obligation relating to your Award by any of the following means or by a
combination of such means: (i) withholding from any compensation otherwise
payable to you by the Company; (ii) causing you to tender a cash payment;
(iii) permitting or requiring you to enter into a “same day sale” commitment
with a broker-dealer that is a member of the Financial Industry Regulatory
Authority (a “FINRA Dealer”) whereby you irrevocably elect to sell a portion of
the shares to be delivered in connection with your Restricted Stock Units to
satisfy the Withholding Taxes and whereby the FINRA Dealer irrevocably commits
to forward the proceeds necessary to satisfy the Withholding Taxes directly to
the Company and/or its Affiliates; or (iv) withholding shares of Common Stock
from the shares of Common Stock issued or otherwise issuable to you in
connection with the Award with a Fair Market Value (measured as of the date
shares of Common Stock are issued to pursuant to Section 6) equal to the amount
of such Withholding Taxes; provided, however, that the number of such shares of
Common Stock so withheld shall not exceed the amount necessary to satisfy the
Company’s required tax withholding obligations using the minimum statutory
withholding rates for federal, state, local and foreign tax purposes, including
payroll taxes, that are applicable to supplemental taxable income; and provided
further, that to the extent necessary to qualify for an exemption from
application of Section 16(b) of the Exchange Act, such share withholding
procedure shall be subject to the express prior approval of the Board or a duly
authorized committee thereof.

 

(b)                                 Unless the tax withholding obligations of
the Company and/or any Affiliate are satisfied, the Company shall have no
obligation to deliver to you any Common Stock pursuant to this Award.

 

(c)                                  In the event the Company’s obligation to
withhold arises prior to the delivery to you of Common Stock or it is determined
after the delivery of Common Stock to you that the amount of the Company’s
withholding obligation was greater than the amount withheld by the Company, you
agree to indemnify and hold the Company harmless from any failure by the Company
to withhold the proper amount.

 

--------------------------------------------------------------------------------

 

11.                               UNSECURED OBLIGATION.  Your Award is unfunded,
and as a holder of a vested Award, you shall be considered an unsecured creditor
of the Company with respect to the Company’s obligation, if any, to issue shares
pursuant to this Agreement.  You shall not have voting or any other rights as a
stockholder of the Company with respect to the shares to be issued pursuant to
this Agreement until such shares are issued to you pursuant to Section 6 of this
Agreement.  Upon such issuance, you will obtain full voting and other rights as
a stockholder of the Company.  Nothing contained in this Agreement, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind or a fiduciary relationship between you and the Company or
any other person.

 

12.                               OTHER DOCUMENTS.  You hereby acknowledge
receipt or the right to receive a document providing the information required by
Rule 428(b)(1) promulgated under the Securities Act, which includes the Plan
prospectus.  In addition, you acknowledge receipt of the Company’s policy
permitting officers, directors and other specified individuals to sell shares
only during certain “window” periods and the Company’s insider trading policy,
in effect from time to time.

 

13.                               NOTICES.  Any notices provided for in your
Award or the Plan shall be given in writing (including electronically) and shall
be deemed effectively given upon receipt or, in the case of notices delivered by
the Company to you, five (5) days after deposit in the United States mail,
postage prepaid, addressed to you at the last address you provided to the
Company.  Notwithstanding the foregoing, the Company may, in its sole
discretion, decide to deliver any documents related to participation in the Plan
and this Award by electronic means or to request your consent to participate in
the Plan by electronic means.  By accepting this Award you consent to receive
such documents by electronic delivery and, if requested, to agree to participate
in the Plan through an on-line or electronic system established and maintained
by the Company or another third party designated by the Company.

 

14.                               GOVERNING PLAN DOCUMENT.  Your Award is
subject to all the provisions of the Plan, the provisions of which are hereby
made a part of your Award, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan.  Except as expressly provided in this Agreement,
in the event of any conflict between the provisions of your Award and those of
the Plan, the provisions of the Plan shall control.  In addition, your Award
(and any compensation paid or shares issued under your Award) is subject to
recoupment in accordance with The Dodd—Frank Wall Street Reform and Consumer
Protection Act and any implementing regulations thereunder, any clawback policy
adopted by the Company and any compensation recovery policy otherwise required
by applicable law.

 

--------------------------------------------------------------------------------

 

15.                               OTHER DOCUMENTS.  You hereby acknowledge
receipt of and the right to receive a document providing the information
required by Rule 428(b)(1) promulgated under the Securities Act, which includes
the Plan prospectus.  In addition, you acknowledge receipt of the Company’s
policy permitting certain individuals to sell shares only during certain
“window” periods and the Company’s insider trading policy, in effect from time
to time.

 

16.                               SEVERABILITY.  If all or any part of this
Agreement or the Plan is declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not invalidate any
portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Section or part of a Section to the fullest extent
possible while remaining lawful and valid.

 

17.                               EFFECT ON OTHER EMPLOYEE BENEFIT PLANS.  The
value of the Award subject to this Agreement shall not be included as
compensation, earnings, salaries, or other similar terms used when calculating
the Employee’s benefits under any employee benefit plan sponsored by the Company
or any Affiliate, except as such plan otherwise expressly provides. The Company
expressly reserves its rights to amend, modify, or terminate any of the
Company’s or any Affiliate’s employee benefit plans.

 

18.                               AMENDMENT.  This Agreement may not be
modified, amended or terminated except by an instrument in writing, signed by
you and by a duly authorized representative of the Company. Notwithstanding the
foregoing, this Agreement may be amended solely by the Board by a writing which
specifically states that it is amending this Agreement, so long as a copy of
such amendment is delivered to you, and provided that no such amendment
adversely affecting your rights hereunder may be made without your written
consent. Without limiting the foregoing, the Board reserves the right to change,
by written notice to you, the provisions of this Agreement in any way it may
deem necessary or advisable to carry out the purpose of the grant as a result of
any change in applicable laws or regulations or any future law, regulation,
ruling, or judicial decision, provided that any such change shall be applicable
only to rights relating to that portion of the Award which is then subject to
restrictions as provided herein.

 

19.                               NO OBLIGATION TO MINIMIZE TAXES.  The Company
has no duty or obligation to minimize the tax consequences to you of this Award
and will not be liable to you for any adverse tax consequences to you arising in
connection with this Award.  You are hereby advised to consult with your own
personal tax, financial and/or legal advisors regarding the tax consequences of
this Award and by signing the Grant Notice, you have agreed that you have done
so or knowingly and voluntarily declined to do so.

 

--------------------------------------------------------------------------------

 

20.                               MISCELLANEOUS.

 

(a)                                 The rights and obligations of the Company
under this Award will be transferable to any one or more persons or entities,
and all covenants and agreements hereunder will inure to the benefit of, and be
enforceable by the Company’s successors and assigns.

 

(b)                                 You agree upon request to execute any
further documents or instruments necessary or desirable in the sole
determination of the Company to carry out the purposes or intent of your Award.

 

(c)                                  You acknowledge and agree that you have
reviewed your Award in its entirety, have had an opportunity to obtain the
advice of counsel prior to executing and accepting your Award, and fully
understand all provisions of your Award.

 

(d)                                 This Agreement will be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

(e)                                  All obligations of the Company under the
Plan and this Agreement will be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

 

*                                        
*                                         *

 

This Agreement will be deemed to be signed by you upon the signing by you of the
Grant Notice to which it is attached.

 

--------------------------------------------------------------------------------

 

Appendix A

 

The provisions set forth on this Appendix A shall apply to the extent the Award
is a Non-Exempt Award and shall supersede any provisions to the contrary set
forth in the Plan or in any other section of the Agreement to which this
Appendix A is attached.

 

1.                                      TREATMENT OF NON-EXEMPT AWARDS UPON
TERMINATION OF SERVICE.  The provisions of this Section 1 are intended to apply
to the extent your Award is a Non-Exempt Award because of the terms of a
severance arrangement or other agreement between you and the Company, if any,
that provide for acceleration of vesting of your Award and issuance of the
shares in respect of the Award upon your termination of employment or Separation
from Service and such severance benefit does not satisfy the requirements for an
exemption from application of Section 409A provided under Treasury Regulations
Section 1.409A-1(b)(4) or 1.409A-1(b)(9) (“Non-Exempt Severance Arrangement”). 
To the extent your Award is a Non-Exempt Award due to application of a
Non-Exempt Severance Arrangement, the following provisions in this Section 1 of
Appendix A shall supersede anything to the contrary in Section 6(a) or (b) of
the Agreement.

 

(a)                                 If your Award vests in the ordinary course
during your Continuous Service in accordance with the vesting schedule set forth
in the Grant Notice, without accelerating vesting under the terms of a
Non-Exempt Severance Arrangement, in no event shall the shares be issued in
respect of your Award any later than the later of: (i) December 31st of the
calendar year that includes the applicable vesting date and (ii) the 60th day
that follows the applicable vesting date.

 

(b)                                 If vesting of your Award accelerates under
the terms of a Non-Exempt Severance Arrangement in connection with your
Separation from Service, and such vesting acceleration provisions  were in
effect as of the date of grant of your Award and, therefore, are part of the
terms of your Award as of the date of grant, then the shares shall be earlier
issued in respect of your Award upon your Separation from Service in accordance
with the terms of the Non-Exempt Severance Arrangement, but in no event later
than the 60th day that follows the date of your Separation from Service. 
However, if at the time the shares would otherwise be issued you are subject to
the distribution limitations contained in Section 409A applicable to “specified
employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares
shall not be issued before the date that is six (6) months following the date of
your Separation from Service, or, if earlier, the date of your death that occurs
within such six month period.

 

(c)                                  If vesting of your Award accelerates under
the terms of a Non-Exempt Severance Arrangement in connection with your
Separation from Service, and such vesting acceleration provisions were not in
effect as of the date of grant of the Award and, therefore, are not a part of
the terms of your Award on the date of grant, then such acceleration of vesting
of

 

--------------------------------------------------------------------------------

 

your Award shall not accelerate the issuance date of the shares, but the shares
shall instead be issued on the same schedule as set forth in the Grant Notice as
if they had vested in the ordinary course during your Continuous Service,
notwithstanding the vesting acceleration of the Award.  Such issuance schedule
is intended to satisfy the requirements of payment on a specified date or
pursuant to a fixed schedule, as provided under Treasury Regulations
Section 1.409A-3(a)(4).

 

2.                                      TREATMENT OF NON-EXEMPT AWARDS UPON A
CORPORATE TRANSACTION FOR EMPLOYEES AND CONSULTANTS WHO ARE NOT DIRECTORS.  The
provisions in this Section 2 shall apply and shall supersede anything to the
contrary that may be set forth in the Plan, Grant Notice or in any section of
the Agreement with respect to the permitted treatment of your Non-Exempt Award
in connection with a Corporate Transaction if you were either an Employee or
Consultant upon the applicable date of grant of your Non-Exempt Award.

 

(a)                                 Vested Non-Exempt Awards:  To the extent
your Non-Exempt Award has vested in accordance with its terms upon or prior to
the date of a Corporate Transaction (such portion of your Non-Exempt Award is a
“Vested Non-Exempt Award”), then the following provisions shall apply.

 

(i)                                    If the Corporate Transaction is also a
change in the ownership or effective control of the Company, or in the ownership
of a substantial portion of the Company’s assets, as described in
Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations
Section 1.409A-3(i)(5) (a “409A Change of Control”), then the surviving or
acquiring corporation (or its parent company) (the “Acquiring Entity”) may not
assume, continue or substitute your Vested Non-Exempt Award.  Upon the 409A
Change of Control the settlement of your Vested Non-Exempt Award shall
automatically be accelerated and the shares shall be immediately issued in
respect of your Vested Non-Exempt Award. Alternatively, the Company may instead
provide that you shall receive a cash settlement equal to the Fair Market Value
of the shares that would otherwise be issued to you upon the 409A Change of
Control.

 

(ii)                                If the Corporate Transaction is not also a
409A Change of Control, then the Acquiring Entity must either assume, continue
or substitute your Vested Non-Exempt Award.  The shares to be issued in respect
of your Vested Non-Exempt Award shall be issued to you by the Acquiring Entity
on the same schedule that the shares would have been issued to you if the
Corporate Transaction had not occurred.  In the Acquiring Entity’s discretion,
in lieu of an issuance of shares, the Acquiring Entity may instead substitute a
cash payment on each applicable issuance date, equal to the Fair Market Value of
the shares that would otherwise be issued to you on such issuance dates, with
the determination of the Fair Market Value of the shares made on the date of the
Corporate Transaction.

 

(b)                                 Unvested Non-Exempt Awards.  To the extent
your Non-Exempt Award has not vested in accordance with its terms upon or prior
to the date of any Corporate Transaction, (such portion of your Non-Exempt Award
is an “Unvested Non-Exempt Award”), then the following provisions shall apply.

 

--------------------------------------------------------------------------------

 

(i)                                    If the Acquiring Entity shall not assume,
substitute or continue your Unvested Non-Exempt Award, then such Award shall
automatically terminate and be forfeited upon the Corporate Transaction with no
consideration payable to you in respect of your forfeited Unvested Non-Exempt
Award.  Notwithstanding the foregoing, to the extent permitted and in compliance
with the requirements of Section 409A, the Company may in its discretion
determine to elect to accelerate the vesting and settlement of the Unvested
Non-Exempt Award upon the Corporate Transaction, or instead substitute a cash
payment equal to the Fair Market Value of such shares that would otherwise be
issued to you, as further provided in Section 4(b) below.  In the absence of
such discretionary election by the Company, your Unvested Non-Exempt Award shall
be forfeited without payment of any consideration to you if the Acquiring Entity
shall not assume, substitute or continue your Unvested Non-Exempt Award in
connection with the Corporate Transaction.

 

(ii)                                The foregoing treatment shall apply with
respect to all Unvested Non-Exempt Awards upon any Corporate Transaction, and
regardless of whether or not such Corporate Transaction is also a 409A Change of
Control.

 

3.                                      TREATMENT OF NON-EXEMPT AWARDS UPON A
CORPORATE TRANSACTION FOR NON-EMPLOYEE DIRECTORS.  The provisions in this
Section 3 shall apply and shall supersede anything to the contrary that may be
set forth in the Plan, Grant Notice or in any section of the Agreement with
respect to the permitted treatment of your Non-Exempt Award in connection with a
Corporate Transaction if you were a Director but not an Employee upon the
applicable date of grant of your Non-Exempt Award.

 

(a)                                 If the Corporate Transaction is also a 409A
Change of Control, then the Acquiring Entity may not assume, continue or
substitute your Non-Exempt Award.  Upon the 409A Change of Control the vesting
and settlement of your Non-Exempt Award shall automatically be accelerated and
the shares shall be immediately issued to you in respect of the Non-Exempt
Award.

 

(b)                                 If the Corporate Transaction is not also a
409A Change of Control, then the Acquiring Entity must either assume, continue
or substitute your Non-Exempt Award.  Unless otherwise determined by the Board,
your Non-Exempt Award shall not vest upon the Corporate Transaction. The shares
to be issued in respect of your Non-Exempt Award shall be issued to you by the
Acquiring Entity on the same schedule that the shares would have been issued to
you if the Corporate Transaction had not occurred.

 

4.                                      GENERAL SUPERSEDING PROVISIONS.  The
provisions in this Section 4 shall apply and supersede anything to the contrary
that may be set forth in the Plan, the Grant Notice or in any other section of
the Agreement with respect to the permitted treatment of your Non-Exempt Award:

 

--------------------------------------------------------------------------------

 

(a)                                 Any exercise by the Board of discretion to
accelerate the vesting of your Non-Exempt Award shall not result in any
acceleration of the scheduled issuance dates for the shares in respect of the
Non-Exempt Award unless earlier issuance of the shares upon the applicable
vesting dates would be in compliance with the requirements of Section 409A.

 

(b)                                 The Company explicitly reserves the right to
earlier settle your Non-Exempt Award to the extent permitted and in compliance
with the requirements of Section 409A, including pursuant to any of the
exemptions available in Treasury Regulations Section 1.409A-3(j)(4)(ix).

 

(c)                                  To the extent the terms of your Non-Exempt
Award provide that it shall be settled upon a Change in Control or Corporate
Transaction, to the extent it is required for compliance with the requirements
of Section 409A, the Change in Control or Corporate Transaction event triggering
settlement must also constitute a 409A Change of Control. To the extent the
terms of your Non-Exempt Award provides that it shall be settled upon a
termination of your employment or termination of Continuous Service, to the
extent it is required for compliance with the requirements of Section 409A, the
termination event triggering settlement must also constitute a Separation from
Service.  However, if at the time the shares would otherwise be issued to you in
connection with your “separation from service” you are subject to the
distribution limitations contained in Section 409A applicable to “specified
employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares
shall not be issued before the date that is six (6) months following the date of
your Separation from Service, or, if earlier, the date of your death that occurs
within such six month period.

 

5.                                      SECTION 409A COMPLIANCE.  The provisions
in this Agreement for delivery of the shares in respect of the Non-Exempt Award
are intended to comply with the requirements of Section 409A so that the
delivery of the shares to you in respect of your Non-Exempt Award shall not
trigger the additional tax imposed under Section 409A, and any ambiguities
herein shall be so interpreted.

 

--------------------------------------------------------------------------------