Threshold Pharmaceuticals, Inc.

2014 Equity Incentive Plan

 

Adopted by the Board of Directors: March 20, 2014

Approved by the Stockholders: May 16, 2014

 

1.General.

 

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

 

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

 

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

 

2.Administration.

 

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

 

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

 

(i)          To determine: (A) who will be granted Awards; (B) when and how each
Award will be granted; (C) what type of Award will be granted; (D) the
provisions of each Award (which need not be identical), including when a person
will be permitted to exercise or otherwise receive cash or Common Stock under
the Award; (E) the number of shares of Common Stock subject to, or the cash
value of, an Award; and (F) the Fair Market Value applicable to 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, 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 (including Section 2(b)(viii) below) 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.

 

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(vi)        To amend the Plan in any respect the Board deems necessary or
advisable, including, without limitation, by adopting amendments relating to
Incentive Stock Options and certain nonqualified deferred compensation under
Section 409A of the Code and/or to make the Plan or Awards granted under the
Plan compliant with the requirements for Incentive Stock Options or exempt from
or compliant with the requirements for nonqualified deferred compensation under
Section 409A of the Code, subject to the limitations, if any, of applicable law.
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 otherwise provided in the Plan (including Section
2(b)(viii) below) or an Award Agreement, no amendment of the Plan will impair a
Participant’s rights under an outstanding Award without the Participant’s
written consent.

 

(vii)       To submit any amendment to the Plan for stockholder approval,
including, but not limited to, amendments to the Plan intended to satisfy the
requirements of (A) Section 162(m) of the Code regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to Covered Employees, (B) Section 422 of the Code regarding
incentive stock options or (C) Rule 16b-3.

 

(viii)      To approve forms of Award Agreements for use under the Plan and to
amend the terms of any one or more Awards, including, but not limited to,
amendments to provide terms more favorable to the Participant than previously
provided in the Award Agreement, subject to any specified limits in the Plan
that are not subject to Board discretion; provided, however, that a
Participant’s rights under any Award will not be impaired by any such amendment
unless (A) the Company requests the consent of the affected Participant, and
(B) such Participant consents in writing.

 

Notwithstanding the foregoing or anything in the Plan to the contrary, (1) a
Participant’s rights will not be deemed to have been impaired by any amendment
of an Award or the Plan, or by any suspension or termination of the Plan, if the
Board, in its sole discretion, determines that the amendment, suspension or
termination, taken as a whole, (A) does not materially impair the Participant’s
rights, or (B) in connection with any transaction or event described in Section
9, is in the best interests of the Company or its stockholders, and (2) subject
to the limitations of applicable law, if any, the Board may amend the terms of
any Award or the Plan, or may suspend or terminate the Plan, without the
affected Participant’s consent (A) to maintain the qualified status of the Award
as an Incentive Stock Option under Section 422 of the Code; (B) to change the
terms of an Incentive Stock Option, if such change results in impairment of the
Award solely because it impairs the qualified status of the Award as an
Incentive Stock Option under Section 422 of the Code; (C) to clarify the manner
of exemption from, or to bring the Award into compliance with, Section 409A of
the Code; (D) to comply with other applicable laws or listing requirements; or
(E) to meet the requirements of any accounting standard or to avoid any adverse
accounting treatment. The Board may, but need not, take the tax or accounting
consequences to affected Participants into consideration in acting under the
preceding sentence.

 

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

 

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

 

(c)          Delegation to Committee.

 

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

 

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(ii)         Section 162(m) and Rule 16b-3 Compliance. The Committee may consist
solely of two (2) or more Outside Directors, in accordance with Section 162(m)
of the Code, or solely of two (2) or more Non-Employee Directors, in accordance
with Rule 16b-3.

 

(d)          Delegation to an Officer. The Board may delegate to one (1) or more
Officers the authority to do one or both of the following: (i) designate
Employees who are not Officers to be recipients of Options and SARs (and, to the
extent permitted by applicable law, other Stock Awards) and, to the extent
permitted by applicable law, the terms of such Awards; and (ii) determine the
number of shares of Common Stock to be subject to such Stock Awards granted to
such Employees; provided, however, that the Board resolutions regarding such
delegation will specify the total number of shares of Common Stock that may be
subject to the Stock Awards granted by such Officer and that such Officer may
not grant a Stock Award to himself or herself. Any such Stock Awards will be
granted on the form of Award Agreement most recently approved for use by the
Committee or the Board, unless otherwise provided in the resolutions approving
the delegation authority. The Board may not delegate authority to an Officer who
is acting solely in the capacity of an Officer (and not also as a Director) to
determine the Fair Market Value pursuant to Section 13(v)(iv) below.

 

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

 

(f)          Cancellation and Re-Grant of Stock Awards. Neither the Board nor
any Committee will have the authority to (i) reduce the exercise, purchase or
strike price of any outstanding Option or SAR under the Plan, or (ii) cancel any
outstanding Option or SAR that has an exercise price or strike price greater
than the then-current Fair Market Value of the Common Stock in exchange for cash
or other Stock Awards under the Plan, unless the stockholders of the Company
have approved such an action within twelve (12) months prior to such an event.

 

3.Shares Subject to the Plan.

 

(a)          Share Reserve.

 

(i)          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 from and after the Effective Date will not exceed (A) 6,000,000 shares
plus (B) the Prior Plan Returning Shares (as defined below), if any, which
become available for grant under this Plan from time to time (such aggregate
number of shares described in (A) and (B) above, the “Share Reserve”).

 

For purposes of this Plan, “Prior Plan Returning Shares” means any shares
subject to outstanding stock awards granted under the 2004 Amended and Restated
Equity Incentive Plan of Threshold Pharmaceuticals, Inc. or the Threshold
Pharmaceuticals, Inc. 2001 Equity Incentive Plan (each, a “Prior Plan”) that,
from and after 12:01 a.m. Pacific time on the Effective Date, (i) expire or
terminate for any reason prior to exercise or settlement, (ii) are forfeited,
cancelled or otherwise returned to the Company because of the failure to meet a
contingency or condition required for the vesting of such shares, or (iii) other
than with respect to outstanding options and stock appreciation rights granted
under a Prior Plan with respect to which the exercise or strike price is at
least one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the option or stock appreciation right on the date of grant (the
“Prior Plan Appreciation Awards”), are reacquired or withheld (or not issued) by
the Company to satisfy a tax withholding obligation in connection with a stock
award. Any such shares will immediately be added to the Share Reserve as and
when such shares become Prior Plan Returning Shares and become available for
issuance pursuant to Awards granted hereunder.

 

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(ii)         For clarity, the Share Reserve in this Section 3(a) is a limitation
on the number of shares of Common Stock that may be issued pursuant to the Plan.
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, 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.

 

(iii)        Subject to Section 3(b), the number of shares of Common Stock
available for issuance under the Plan will be reduced by: (A) one (1) share for
each share of Common Stock issued pursuant to an Option or SAR with respect to
which the exercise or strike price is at least one hundred percent (100%) of the
Fair Market Value of the Common Stock subject to the Option or SAR on the date
of grant; and (B) 1.2 shares for each share of Common Stock issued pursuant to a
Full Value Award.

 

(b)          Reversion of Shares to the Share Reserve.

 

(i)          Shares Available For Subsequent Issuance. If (A) any shares of
Common Stock subject to a Stock Award are not issued because such Stock Award or
any portion thereof expires or otherwise terminates without all of the shares
covered by such Stock Award having been issued or is settled in cash (i.e., the
Participant receives cash rather than stock), (B) 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 for
the vesting of such shares, or (C) with respect to a Full Value Award, any
shares of Common Stock are reacquired or withheld (or not issued) by the Company
to satisfy a tax withholding obligation in connection with such Full Value
Award, such shares will again become available for issuance under the Plan
(collectively, the “2014 Plan Returning Shares”). For each (1) 2014 Plan
Returning Share subject to a Full Value Award or (2) Prior Plan Returning Share
subject to a stock award other than a Prior Plan Appreciation Award, the number
of shares of Common Stock available for issuance under the Plan will increase by
1.2 shares.

 

(ii)         Shares Not Available For Subsequent Issuance. Any shares of Common
Stock reacquired or withheld (or not issued) by the Company to satisfy the
exercise or purchase price of a Stock Award will no longer be available for
issuance under the Plan, including any shares subject to a Stock Award that are
not delivered to a Participant because such Stock Award is exercised through a
reduction of shares subject to such Stock Award (i.e., “net exercised”). In
addition, any shares reacquired or withheld (or not issued) by the Company to
satisfy a tax withholding obligation in connection with an Option or Stock
Appreciation Right or a Prior Plan Appreciation Award, or any shares repurchased
by the Company on the open market with the proceeds of the exercise or strike
price of an Option or Stock Appreciation Right or a Prior Plan Appreciation
Award will no longer be available for issuance under the Plan.

 

(c)          Incentive Stock Option Limit. Subject to the Share Reserve and
Section 9(a) relating to Capitalization Adjustments, the aggregate maximum
number of shares of Common Stock that may be issued pursuant to the exercise of
Incentive Stock Options will be 37,500,000 shares of Common Stock.

 

(d)          Section 162(m) Limitations. Subject to the Share Reserve and
Section 9(a) relating to Capitalization Adjustments, at such time as the Company
may be subject to the applicable provisions of Section 162(m) of the Code, the
following limitations will apply.

 

(i)          A maximum of 3,000,000 shares of Common Stock subject to Options,
SARs and Other Stock Awards whose value is determined by reference to an
increase over an exercise or strike price of at least one hundred percent (100%)
of the Fair Market Value on the date any such Stock Award is granted may be
granted to any one Participant during any one calendar year. Notwithstanding the
foregoing, if any additional Options, SARs or Other Stock Awards whose value is
determined by reference to an increase over an exercise or strike price of at
least one hundred percent (100%) of the Fair Market Value on the date the Stock
Award is granted are granted to any Participant during any calendar year,
compensation attributable to the exercise of such additional Stock Awards will
not satisfy the requirements to be considered “qualified performance-based
compensation” under Section 162(m) of the Code unless such additional Stock
Award is approved by the Company’s stockholders.

 

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(ii)         A maximum of 3,000,000 shares of Common Stock subject to
Performance Stock Awards may be granted to any one Participant during any one
calendar year (whether the grant, vesting or exercise is contingent upon the
attainment during the Performance Period of the Performance Goals).

 

(iii)        A maximum of $5,000,000 may be granted as a Performance Cash Award
to any one Participant during any one calendar year.

 

(e)          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. Incentive Stock Options may
be granted only to employees of the Company or a “parent corporation” or
“subsidiary corporation” thereof (as such terms are defined in Sections 424(e)
and 424(f) of the Code). Stock Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants; provided, however, that Stock
Awards may not be granted to Employees, Directors and Consultants who are
providing Continuous Service only to any “parent” of the Company, as such term
is defined in Rule 405, unless (i) the stock underlying such Stock Awards is
treated as “service recipient stock” under Section 409A of the Code (for
example, because the Stock 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 Stock Awards are otherwise
exempt from or alternatively comply with the distribution requirements of
Section 409A of the Code.

 

(b)          Ten Percent Stockholders. A Ten Percent Stockholder will not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value on the date of
grant and the Option is not exercisable after the expiration of five (5) years
from the date of grant.

 

5.Provisions Relating to Options and Stock Appreciation Rights.

 

Each Option or SAR will be in such form and will contain such terms and
conditions as the Board deems appropriate. All Options will be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. If an Option is not specifically designated as an Incentive Stock
Option, or if an Option is designated as an Incentive Stock Option but some
portion or all of the Option fails to qualify as an Incentive Stock Option under
the applicable rules, then the Option (or portion thereof) will be a
Nonstatutory Stock Option. The provisions of separate Options or SARs need not
be identical; provided, however, that each Award Agreement will conform to
(through incorporation of provisions hereof by reference in the applicable Award
Agreement or otherwise) the substance of each of the following provisions:

 

(a)          Term. Subject to the provisions of Section 4(b) regarding Ten
Percent Stockholders, no Option or SAR will be exercisable after the expiration
of ten (10) years from the date of its grant or such shorter period specified in
the Award Agreement.

 

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

 

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(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 that otherwise restrict the ability to use
certain methods) and to grant Options that require the consent of the Company to
use a particular method of payment. The permitted methods of payment are as
follows:

 

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

 

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

 

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

 

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

 

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

 

(d)          Exercise and Payment of a SAR. To exercise any outstanding SAR, the
Participant must provide written notice of exercise to the Company in compliance
with the provisions of the 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
Sections 5(e)(ii) and 5(e)(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 in the Plan, neither an
Option nor a SAR may be transferred for consideration.

 

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(ii)         Domestic Relations Orders. Subject to the approval of the Board or
a duly authorized Officer, an Option or SAR may be transferred pursuant to the
terms of a domestic relations order, official marital settlement agreement or
other divorce or separation instrument as permitted by Treasury Regulations
Section 1.421-1(b)(2). If an Option is an Incentive Stock Option, such Option
may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

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

 

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

 

(g)          Termination of Continuous Service. Except as otherwise provided in
the applicable Award Agreement or other agreement between the Participant and
the Company or an Affiliate, if a Participant’s Continuous Service terminates
(other than due to the Participant’s death or Disability and other than for
Cause), 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 three (3) 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 (as
applicable) within the applicable time frame, the Option or SAR (as applicable)
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 or an Affiliate, if the exercise of an Option or SAR following the
termination of the Participant’s Continuous Service (other than due to the
Participant’s death or Disability and other than for Cause) 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, or (ii) the expiration of the term of the Option or
SAR as set forth in the applicable Award Agreement. In addition, unless
otherwise provided in a Participant’s Award Agreement, if the sale of any Common
Stock received upon exercise of an Option or SAR following the termination of
the Participant’s Continuous Service (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 time (that need not be consecutive)
equal to the applicable post-termination exercise period after the termination
of the Participant’s Continuous Service during which the sale of the Common
Stock received upon exercise of the Option or SAR would not be in violation of
the Company’s insider trading policy, or (ii) the expiration of the term of the
Option or SAR as set forth in the applicable Award Agreement.

 

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(i)          Disability of Participant. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company or an Affiliate, 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 twelve (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 (as applicable) within the applicable time frame, the Option or
SAR (as applicable) will terminate.

 

(j)          Death of Participant. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company or an Affiliate, 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 Participant’s Option or SAR may be exercised (to the extent
that 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 such
period of time ending on the earlier of (i) the date eighteen (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 the Option or SAR as
set forth in the Award Agreement. If, after the Participant’s death, the Option
or SAR (as applicable) 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
Participant and the Company or an Affiliate, if a Participant’s Continuous
Service is terminated for Cause, the Participant’s Option or SAR will terminate
immediately upon such 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.

 

(l)          Leaves of Absence. Except as otherwise provided in the applicable
Award Agreement or other agreement between the Participant and the Company or an
Affiliate, in the event of a Participant’s leave of absence (other than a
personal or medical leave of absence approved by an authorized representative of
the Company with employment guaranteed upon return), 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 beginning of such leave of
absence), but only within such period of time ending on the earlier of (i) the
date three (3) months following the beginning of such leave of absence (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, upon such a leave of absence, the Participant does not exercise his or her
Option or SAR (as applicable) within the applicable time frame, the Option or
SAR (as applicable) will terminate.

 

(m)          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 (6) 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 an Affiliate, 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 (6)
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(m) 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 underlying a Restricted Stock Award 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 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:

 

(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.

 

9

 

 

(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 (covering a number of shares not in excess of that set forth in Section
3(d)(ii)) that is payable (including that may be granted, vest or be exercised)
contingent upon the attainment during a Performance Period of certain
Performance Goals. A Performance Stock Award may, but need not, require the
Participant’s completion of a specified period of Continuous Service. The length
of any Performance Period, the Performance Goals to be achieved during the
Performance Period, and the measure of whether and to what degree such
Performance Goals have been attained will be conclusively determined by the
Committee (or, if not required for compliance with Section 162(m) of the Code,
the Board or the Committee), 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.

 

(ii)         Performance Cash Awards. A Performance Cash Award is a cash award
(for a dollar value not in excess of that set forth in Section 3(d)(iii)) that
is payable contingent upon the attainment during a Performance Period of certain
Performance Goals. A Performance Cash Award may, but need not, require the
Participant’s completion of a specified period of Continuous Service. The length
of any Performance Period, the Performance Goals to be achieved during the
Performance Period, and the measure of whether and to what degree such
Performance Goals have been attained will be conclusively determined by the
Committee (or, if not required for compliance with Section 162(m) of the Code,
the Board or the Committee), 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)        Committee and Board Discretion. The Committee (or, if not required
for compliance with Section 162(m) of the Code, the Board or the Committee)
retains the discretion to reduce or eliminate the compensation or economic
benefit due upon the attainment of any Performance Goals and to define the
manner of calculating the Performance Criteria it selects to use for a
Performance Period.

 

10

 

 

(iv)        Section 162(m) Compliance. Unless otherwise permitted in compliance
with Section 162(m) of the Code with respect to an Award intended to qualify as
“performance-based compensation” thereunder, the Committee will establish the
Performance Goals applicable to, and the formula for calculating the amount
payable under, the Award no later than the earlier of (A) the date ninety (90)
days after the commencement of the applicable Performance Period, and (B) the
date on which twenty-five percent (25%) of the Performance Period has elapsed,
and in any event at a time when the achievement of the applicable Performance
Goals remains substantially uncertain. Prior to the payment of any compensation
under an Award intended to qualify as “performance-based compensation” under
Section 162(m) of the Code, the Committee will certify the extent to which any
Performance Goals and any other material terms under such Award have been
satisfied (other than in cases where the Performance Goals relate solely to the
increase in the value of the Common Stock). Notwithstanding satisfaction or any
completion of any Performance Goals, shares subject to Options, cash or other
benefits granted, issued, retainable and/or vested under an Award on account of
satisfaction of such Performance Goals may be reduced by the Committee on the
basis of any further considerations as the Committee, in its sole discretion,
will determine.

 

(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 appreciation rights with
an exercise price or strike price less than one hundred percent (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 granted under Section 5 and 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 the
authority 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.

 

(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 a 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 issued 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 constituting
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.

 

11

 

  

(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 to serve 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.

 

(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 or any Affiliate is reduced (for example, and without limitation, if the
Participant is an Employee of the Company and the Employee has a change in
status from a full-time Employee to a part-time Employee) after the date of
grant of any Award to the Participant, the 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)          Incentive Stock Option Limitations. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
any Affiliates) exceeds one hundred thousand dollars ($100,000) (or such other
limit established in the Code) or otherwise does not comply with the rules
governing Incentive Stock Options, the Options or portions thereof that exceed
such limit (according to the order in which they were granted) or otherwise do
not comply with such rules will be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of the applicable Option Agreement(s).

 

(g)          Investment Assurances. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any 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.

 

12

 

 

(h)          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.

 

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

 

(j)          Deferrals. To the extent permitted by applicable law, the Board, in
its sole discretion, may determine that the delivery of Common Stock or the
payment of cash, upon the exercise, vesting or settlement of all or a portion of
any 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.

 

(k)          Compliance with Section 409A of the Code. To the extent that the
Board determines that any Award granted hereunder is 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. To the extent applicable, the Plan and Award Agreements
will be interpreted in accordance with Section 409A of the Code. 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 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
will be made upon a “separation from service” before a date that is six (6)
months following the date of such Participant’s “separation from service” (as
defined in Section 409A of the Code without regard to alternative definitions
thereunder) or, if earlier, the date of the Participant’s death.

 

(l)          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 resign
for “good reason” or “constructive termination” (or similar term) under any
agreement with the Company.

 

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

 

(a)          Capitalization Adjustments. In the event of a Capitalization
Adjustment, the Board will appropriately and proportionately adjust: (i) the
class(es) and maximum number of securities subject to the Plan pursuant to
Section 3(a); (ii) the class(es) and maximum number of securities that may be
issued pursuant to the exercise of Incentive Stock Options pursuant to Section
3(c); (iii) the class(es) and maximum number of securities that may be awarded
to any person pursuant to Section 3(d); and (iv) 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.

 

13

 

 

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

 

(c)          Fundamental Transactions. The provisions of this Section 9(c) will
apply to Awards in the event of a Fundamental Transaction unless otherwise
provided in the Award Agreement or any other written agreement between the
Company or any Affiliate and the Participant or in any director compensation
policy of the Company.

 

In the event of a Fundamental Transaction, any or all outstanding Awards may be
assumed, converted or replaced by the successor corporation (if any), which
assumption, conversion or replacement shall be binding on all Participants under
this Plan. In the alternative, the successor corporation may substitute
equivalent Awards or provide substantially similar consideration to Participants
as was provided to stockholders (after taking into account the existing
provisions of the Awards). The successor corporation may also issue, in place of
outstanding shares of Common Stock held by the Participants, substantially
similar shares or other property subject to repurchase restrictions no less
favorable to the Participant. In the event such successor corporation (if any)
does not assume or substitute Awards, as provided above, pursuant to a
Fundamental Transaction, the vesting with respect to such Awards shall fully and
immediately accelerate or the repurchase rights of the Company shall fully and
immediately terminate, as the case may be, so that the Awards may be exercised
or the repurchase rights shall terminate before, or otherwise in connection with
the closing or completion of the Fundamental Transaction, but then terminate.
Notwithstanding anything in this Plan to the contrary, the Board may, in its
sole discretion, provide that the vesting of any or all shares of Common Stock
subject to an Award that are subject to vesting or right of repurchase shall
accelerate or lapse, as the case may be, upon a Fundamental Transaction. If the
Board exercises such discretion with respect to Options, such Options shall
become exercisable in full prior to the consummation of such Fundamental
Transaction at such time and on such conditions as the Board determines, and if
such Options are not exercised prior to the consummation of the Fundamental
Transaction, they shall terminate at such time as determined by the Board.
Subject to any greater rights granted to Participants under the foregoing
provisions of this Section 9(c), in the event of the occurrence of any
Fundamental Transaction, any outstanding Awards shall be treated as provided in
the applicable agreement or plan of merger, consolidation, dissolution,
liquidation, or sale of assets.

 

(d)          Change in Control. A Stock Award may be subject to 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 in any other written
agreement between the Company or any Affiliate and the Participant or as may be
provided in any director compensation policy of the Company, but in the absence
of such provision, no such acceleration will occur.

 

(e)          Parachute Payments.

 

(i)          If any payment or benefit a Participant will or may receive from
the Company or otherwise (a “280G Payment”) would (i) constitute a “parachute
payment” within the meaning of Section 280G of the Code, and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), then any such 280G Payment pursuant to the Plan (a “Payment”)
shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x)
the largest portion of the Payment that would result in no portion of the
Payment (after reduction) being subject to the Excise Tax or (y) the largest
portion, up to and including the total, of the Payment, whichever amount (i.e.,
the amount determined by clause (x) or by clause (y)), after taking into account
all applicable federal, state and local employment taxes, income taxes, and the
Excise Tax (all computed at the highest applicable marginal rate), results in
the Participant’s receipt, on an after-tax basis, of the greater economic
benefit notwithstanding that all or some portion of the Payment may be subject
to the Excise Tax. If a reduction in a Payment is required pursuant to the
preceding sentence and the Reduced Amount is determined pursuant to clause (x)
of the preceding sentence, the reduction shall occur in the manner (the
“Reduction Method”) that results in the greatest economic benefit for the
Participant. If more than one method of reduction will result in the same
economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata
Reduction Method”).

 

14

 

  

(ii)         Notwithstanding any provision of Section 9(e)(i) to the contrary,
if the Reduction Method or the Pro Rata Reduction Method would result in any
portion of the Payment being subject to taxes pursuant to Section 409A of the
Code that would not otherwise be subject to taxes pursuant to Section 409A of
the Code, then the Reduction Method and/or the Pro Rata Reduction Method, as the
case may be, shall be modified so as to avoid the imposition of taxes pursuant
to Section 409A of the Code as follows: (A) as a first priority, the
modification shall preserve to the greatest extent possible, the greatest
economic benefit for the Participant as determined on an after-tax basis; (B) as
a second priority, Payments that are contingent on future events (e.g., being
terminated without cause), shall be reduced (or eliminated) before Payments that
are not contingent on future events; and (C) as a third priority, Payments that
are “deferred compensation” within the meaning of Section 409A of the Code shall
be reduced (or eliminated) before Payments that are not “deferred compensation”
within the meaning of Section 409A of the Code.

 

(iii)        Unless the Participant and the Company agree on an alternative
accounting firm or law firm, the accounting firm engaged by the Company for
general tax compliance purposes as of the day prior to the effective date of the
Change in Control shall perform the foregoing calculations. If the accounting
firm so engaged by the Company is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, the Company shall
appoint a nationally recognized accounting firm or law firm to make the
determinations required by this Section 9(e). The Company shall bear all
expenses with respect to the determinations by such accounting firm or law firm
required to be made hereunder. The Company shall use commercially reasonable
efforts to cause the accounting firm or law firm engaged to make the
determinations hereunder to provide its calculations, together with detailed
supporting documentation, to the Participant and the Company within fifteen (15)
calendar days after the date on which the Participant’s right to a 280G Payment
becomes reasonably likely to occur (if requested at that time by the Participant
or the Company) or such other time as requested by the Participant or the
Company.

 

(iv)        If the Participant receives a Payment for which the Reduced Amount
was determined pursuant to clause (x) of Section 9(e)(i) and the Internal
Revenue Service determines thereafter that some portion of the Payment is
subject to the Excise Tax, the Participant agrees to promptly return to the
Company a sufficient amount of the Payment (after reduction pursuant to clause
(x) of Section 9(e)(i)) so that no portion of the remaining Payment is subject
to the Excise Tax. For the avoidance of doubt, if the Reduced Amount was
determined pursuant to clause (y) of Section 9(e)(i), the Participant shall have
no obligation to return any portion of the Payment pursuant to the preceding
sentence.

 

10.Plan Term; Earlier Termination or Suspension of the Plan.

 

(a)          The Board may suspend or terminate the Plan at any time. No
Incentive Stock Option will be granted after the tenth (10th) anniversary of the
earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the
Plan is approved by the stockholders of the Company. No Awards may be granted
under the Plan while the Plan is suspended or after it is terminated.

 

(b)          No Impairment of Rights. Suspension or termination of the Plan will
not impair rights and obligations under any Award granted while the Plan is in
effect except with the written consent of the affected Participant or as
otherwise permitted in the Plan (including Section 2(b)(viii) above) or an Award
Agreement.

 

11.Effective Date of Plan.

 

This Plan will become effective on the Effective Date.

 

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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:

 

(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” means employment related dishonesty, fraud, misconduct or
disclosure or misuse of confidential information, or other employment related
conduct that is likely to cause significant injury to the Company, an Affiliate,
or any of their respective employees, officers or directors (including, without
limitation, commission of a felony or similar offense), in each case as
determined by the Board. “Cause” shall not require that a civil judgment or
criminal conviction have been entered against or guilty plea shall have been
made by the Participant regarding any of the matters referred to in the previous
sentence. Accordingly, the Board shall be entitled to determine “Cause” based on
the Board’s good faith belief. If the Participant is criminally charged with a
felony or similar offense that shall be a sufficient, but not a necessary, basis
for such belief.

 

(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 fifty percent (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 by an investor, any affiliate thereof
or any other Exchange Act Person that acquires the Company’s securities in a
transaction or series of related transactions the primary purpose of which is to
obtain financing for the Company through the issuance of equity securities or
(B) 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;

 

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(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
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to such
transaction;

 

(iii)        the stockholders of the Company approve or the Board approves a
plan of complete dissolution or liquidation of the Company, or a complete
dissolution or liquidation of the Company will otherwise occur, except for a
liquidation into a parent corporation;

 

(iv)        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 fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same proportions as their
Ownership of the outstanding voting securities of the Company immediately prior
to such sale, lease, license or other disposition; or

 

(v)         individuals who, on the date this 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 definition or any other provision of this Plan,
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.

 

(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 (1) or more 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 Threshold Pharmaceuticals, 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.

 

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(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, Awards will not continue to vest during a leave
of absence, unless otherwise determined by the Board or chief executive officer
of the Company, in that party’s sole discretion, with respect to an approved
personal or medical leave of absence with employment guaranteed upon return.

 

(n)          “Covered Employee” will have the meaning provided in Section
162(m)(3) of the Code.

 

(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 twelve (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)          “Effective Date” means the effective date of this Plan document,
which is the date of the annual meeting of stockholders of the Company held in
2014, provided this Plan is approved by the Company’s stockholders at such
meeting.

 

(r)          “Employee” means a regular employee of the Company or an Affiliate
who is treated as an employee in the personnel records of the Company or an
Affiliate, but not individuals who are classified by the Company or an Affiliate
as: (i) leased from or otherwise employed by a third party, (ii) independent
contractors, or (iii) intermittent or temporary workers. The Company’s or an
Affiliate’s classification of an individual as an “Employee” (or as not an
“Employee”) for purposes of this Plan shall not be altered retroactively even if
that classification is changed retroactively for another purpose as a result of
an audit, litigation or otherwise. 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.

 

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

 

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

 

(u)          “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 an offering of such
securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their Ownership of stock of
the Company; or (v) any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is
the Owner, directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities.

 

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

 

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(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 (the “Value Date”), as reported in a source the Board deems
reliable.

 

(ii)         Unless otherwise provided by the Board, if no sales are reported as
having occurred on the Value Date, the Fair Market Value will be the closing
sales price on the last preceding trading day on which sales of Common Stock are
reported as having occurred. If no sales are reported as having occurred during
the five trading days before the Value Date, the Fair Market Value will be the
closing bid for the Common Stock on the Value Date.

 

(iii)        If the Common Stock is listed on multiple exchanges or systems, the
Fair Market Value will be based on sales or bid prices, as applicable, on the
primary exchange or system on which the Common Stock is traded or quoted.

 

(iv)        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.

 

(w)          “Full Value Award” means a Stock Award that is not an Option or SAR
with respect to which the exercise or strike price is at least one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Option or SAR on the date of grant.

 

(x)          “Fundamental 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 merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards granted under this
Plan are assumed, converted or replaced by the successor corporation, which
assumption shall be binding on all Participants);

 

(ii)         a merger in which the Company is the surviving corporation but
after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company;

 

(iii)        the sale of all or substantially all of the assets of the Company;
or

 

(iv)        the acquisition, sale, or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction.

 

(y)          “Incentive Stock Option” means an option granted pursuant to
Section 5 that is intended to be, and that qualifies as, an “incentive stock
option” within the meaning of Section 422 of the Code.

 

(z)          “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.

 

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(aa)         “Nonstatutory Stock Option” means any option granted pursuant to
Section 5 that does not qualify as an Incentive Stock Option.

 

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

 

(cc)         “Option” means an Incentive Stock Option or a Nonstatutory Stock
Option to purchase shares of Common Stock granted pursuant to the Plan.

 

(dd)         “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.

 

(ee)         “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.

 

(ff)         “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).

 

(gg)         “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.

 

(hh)         “Outside Director” means a Director who either (i) is not a current
employee of the Company or an “affiliated corporation” (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an “affiliated corporation” who receives
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year, has not been an officer of the Company
or an “affiliated corporation,” and does not receive remuneration from the
Company or an “affiliated corporation,” either directly or indirectly, in any
capacity other than as a Director, or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

 

(ii)         “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.

 

(jj)         “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.

 

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

 

(ll)           “Performance Criteria” means the one or more criteria that the
Committee (or, if not required for compliance with Section 162(m) of the Code,
the Board or the Committee) 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 Committee (or Board, if
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) implementation or completion of projects or processes; (25)
customer satisfaction; (26) stockholders’ equity; (27) capital expenditures;
(28) debt levels; (29) operating profit or net operating profit; (30) workforce
diversity; (31) growth of net income or operating income; (32) billings; (33)
net order dollars; (34) net profit dollars; (35) net profit growth; (36) net
revenue dollars; and (37) to the extent that an Award is not intended to comply
with Section 162(m) of the Code, other measures of performance selected by the
Committee or Board.

 

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(mm)         “Performance Goals” means, for a Performance Period, the one or
more goals established by the Committee (or, if not required for compliance with
Section 162(m) of the Code, the Board or the Committee) 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 Committee (or, if not
required for compliance with Section 162(m) of the Code, the Board or the
Committee) (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 Committee (or Board, if 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, as applicable, for non-U.S. dollar denominated Performance Goals; (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;
and (5) to exclude the effects of any “extraordinary items” as determined under
generally accepted accounting principles.

 

(nn)         “Performance Period” means the period of time selected by the
Committee (or, if not required for compliance with Section 162(m) of the Code,
the Board or the Committee) 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 Performance Stock Award or a Performance Cash Award.
Performance Periods may be of varying and overlapping duration, at the sole
discretion of the Committee (or Board, if applicable).

 

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

 

(pp)         “Plan” means this Threshold Pharmaceuticals, Inc. 2014 Equity
Incentive Plan.

 

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

 

(rr)         “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.

 

(ss)         “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).

 

(tt)         “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.

 

(uu)         “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.

 

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

 

(ww)         “Rule 701” means Rule 701 promulgated under the Securities Act.

 

21

 

 

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

 

(yy)         “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.

 

(zz)         “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.

 

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

 

(bbb)        “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.

 

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

 

(ddd)        “Ten Percent Stockholder” means a person who Owns (or is deemed to
Own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Affiliate.

 

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