EX-10.7






Exhibit 10.7




ALIMERA SCIENCES, INC.




2004 INCENTIVE STOCK PLAN





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	§ 1. BACKGROUND AND PURPOSE	 	 	1	 
	 	 	 	 	 	 	 	 	 
	§ 2 DEFINITIONS	 	 	1	 
	 
	 	2.1	 	 	Affiliate
	 	 	1	 
	 	2.2	 	 	Board
	 	 	1	 
	 	2.3	 	 	Change Effective Date
	 	 	1	 
	 	2.4	 	 	Change in Control
	 	 	2	 
	 	2.5	 	 	Code
	 	 	4	 
	 	2.6	 	 	Committee
	 	 	4	 
	 	2.7	 	 	Company
	 	 	4	 
	 	2.8	 	 	Director
	 	 	4	 
	 	2.9	 	 	Eligible Employee
	 	 	4	 
	 	2.10	 	 	Fair Market Value
	 	 	4	 
	 	2.11	 	 	ISO
	 	 	5	 
	 	2.12	 	 	1933 Act
	 	 	5	 
	 	2.13	 	 	1934 Act
	 	 	5	 
	 	2.14	 	 	Non-ISO
	 	 	5	 
	 	2.15	 	 	Option
	 	 	5	 
	 	2.16	 	 	Option Certificate
	 	 	5	 
	 	2.17	 	 	Option Price
	 	 	5	 
	 	2.18	 	 	Parent
	 	 	5	 
	 	2.19	 	 	Plan
	 	 	5	 
	 	2.20	 	 	Rule 16b-3
	 	 	5	 
	 	2.21	 	 	SAR Value
	 	 	5	 
	 	2.22	 	 	Stock
	 	 	5	 
	 	2.23	 	 	Stock Appreciation Right
	 	 	6	 
	 	2.24	 	 	Stock Appreciation Right Certificate
	 	 	6	 
	 	2.25	 	 	Stock Grant
	 	 	6	 
	 	2.26	 	 	Stock Grant Certificate
	 	 	6	 
	 	2.27	 	 	Stock Unit Grant
	 	 	6	 
	 	2.28	 	 	Subsidiary
	 	 	6	 
	 	2.29	 	 	Ten Percent Shareholder
	 	 	6	 
	 	 	 	 	 	 	 	 	 
	§ 3 SHARES AND GRANT LIMITS	 	 	7	 
	 
	 	3.1	 	 	Shares Reserved
	 	 	7	 
	 	3.2	 	 	Source of Shares
	 	 	7	 
	 	3.3	 	 	Use of Proceeds
	 	 	7	 
	 	 	 	 	 	 	 	 	 
	§ 4 EFFECTIVE DATE	 	 	8	 
	 	 	 	 	 	 	 	 	 
	§ 5 COMMITTEE	 	 	8	 
	 	 	 	 	 	 	 	 	 
	§ 6 ELIGIBILITY AND ANNUAL GRANT CAPS	 	 	8	 






 









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	§ 7 OPTIONS	 	 	9	 
	 
	 	7.1	 	 	Committee Action
	 	 	9	 
	 	7.2	 	 	$100,000 Limit
	 	 	9	 
	 	7.3	 	 	Option Price
	 	 	10	 
	 	7.4	 	 	Payment
	 	 	10	 
	 	7.5	 	 	Exercise
	 	 	10	 
	 	 	 	 	 	 	 	 	 
	§ 8 STOCK APPRECIATION RIGHTS	 	 	11	 
	 
	 	8.1	 	 	Committee Action
	 	 	11	 
	 	8.2	 	 	Terms and Conditions
	 	 	11	 
	 	8.3	 	 	Exercise
	 	 	13	 
	 	 	 	 	 	 	 	 	 
	§ 9. STOCK GRANTS 	 	 	13	 
	 
	 	9.1	 	 	Committee Action
	 	 	13	 
	 	9.2	 	 	Conditions
	 	 	14	 
	 	9.3	 	 	Dividends, Voting Rights and Creditor Status
	 	 	15	 
	 	9.4	 	 	Satisfaction of Forfeiture Conditions
	 	 	16	 
	 	 	 	 	 	 	 	 	 
	§ 10 NON-TRANSFERABILITY	 	 	17	 
	 	 	 	 	 	 	 	 	 
	§ 11 SECURITIES REGISTRATION	 	 	17	 
	 	 	 	 	 	 	 	 	 
	§ 12 LIFE OF PLAN	 	 	18	 
	 	 	 	 	 	 	 	 	 
	§ 13 ADJUSTMENT	 	 	19	 
	 
	 	13.1	 	 	Capital Structure
	 	 	19	 
	 	13.2	 	 	Transactions Described in § 424
	 	 	19	 
	 	13.3	 	 	Fractional Shares
	 	 	20	 
	 	 	 	 	 	 	 	 	 
	§ 14 CHANGE IN CONTROL	 	 	20	 
	 	 	 	 	 	 	 	 	 
	§ 15 AMENDMENT OR TERMINATION	 	 	21	 
	 
	 	16.1	 	 	Shareholder Rights
	 	 	22	 
	 	16.2	 	 	No Contract of Employment
	 	 	22	 
	 	16.3	 	 	Withholding
	 	 	22	 
	 	16.4	 	 	Construction
	 	 	23	 
	 	16.5	 	 	Other Conditions
	 	 	23	 
	 	16.6	 	 	Rule 16b-3
	 	 	23	 
	 	16.7	 	 	Annual Financial Statements
	 	 	23	 






 -ii-




 









 





§ 1.


BACKGROUND AND PURPOSE




     The purpose of this Plan is to promote the interest of the Company by authorizing the
Committee to grant Options and Stock Appreciation Rights and to make Stock Grants and Stock Unit
Grants to Eligible Employees and Directors in order (1) to attract and retain Eligible Employees
and Directors, (2) to provide an additional incentive to each Eligible Employee or Director to work
to increase the value of Stock and (3) to provide each Eligible Employee or Director with a stake
in the future of the Company which corresponds to the stake of each of the Company’s shareholders.



§ 2


DEFINITIONS




     2.1 Affiliate — means any organization (other than a Subsidiary) that would be
treated as under common control with the Company under § 414(c) of the Code if “50 percent” were
substituted for “80 percent” in the income tax regulations under § 414(c) of the Code.



     2.2 Board — means the Board of Directors of the Company.



     2.3 Change Effective Date — means either




	 	(a)	 	the date which includes the “closing” of the transaction which
makes a Change in Control effective if the Change in Control is made effective
through a transaction which has a “closing” or
	 
	 	(b)	 	the date on which there is a Change in Control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A for a
proxy statement filed under the 1934 Act if the 1934 Act were applicable




 









 






	 	 	 	and if
the Change in Control is made effective other than through a transaction which
has a “closing”.





     2.4 Change in Control — means a change in control of the Company (other than an
initial public offering of Stock) of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the 1934 Act as in effect at the time
of such “change in control” if the 1934 Act were applicable, provided that such a change in control
shall be deemed to have occurred at such time as




	 	(a)	 	any “person” (as that term is used in Sections 13(d) and
14(d)(2) of the 1934 Act), is or becomes the beneficial owner (as defined in
Rule 13d-3 under the 1934 Act) directly or indirectly, of securities
representing 20% or more of the combined voting power for election of directors
of the then outstanding securities of the Company or any successor to the
Company;
	 
	 	(b)	 	during any period of two consecutive years or less, individuals
who at the beginning of such period constitute the Board cease, for any reason,
to constitute at least a majority of the Board, unless the election or
nomination for election of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at
the beginning of the period;
	 
	 	(c)	 	the shareholders of the Company approve any reorganization,
merger, consolidation or share exchange as a result of which the common stock
of the Company shall be changed, converted or exchanged into or for securities
of another corporation (other than a merger with a wholly-owned subsidiary of
the Company) or any dissolution or liquidation of the




-2-









 






	 	 	 	Company or any sale or
the disposition of 50% or more of the assets or business of the Company; or
	 
	 	(d)	 	shareholders of the Company approve any reorganization, merger,
consolidation or share exchange unless (A) the persons who were the beneficial
owners of the outstanding shares of the common stock of the Company immediately
before the consummation of such transaction beneficially own more than 50% of
the outstanding shares of the common stock of the successor or survivor
corporation in such transaction immediately following the consummation of such
transaction and (B) the number of shares of the common stock of such successor
or survivor corporation beneficially owned by the persons described in
§ 2.4(d)(A) immediately following the consummation of such transaction is
beneficially owned by each such person in substantially the same proportion
that each such person had beneficially owned shares of the Company common stock
immediately before the consummation of such transaction, provided (C) the
percentage described in § 2.4(d)(A) of the
beneficially owned shares of the successor or survivor corporation and the
number described in § 2.4 (d)(B) of the beneficially owned shares of the
successor or survivor corporation shall be determined exclusively by
reference to the shares of the successor or survivor corporation which
result from the beneficial ownership of shares of common stock of the
Company by the persons described in § 2.4(d)(A) immediately before the
consummation of such transaction.





-3-









 










     2.5 Code — means the Internal Revenue Code of 1986, as amended.



     2.6 Committee — means a committee of the Board which shall have at least 2 members,
each of whom shall be appointed by and shall serve at the pleasure of the Board and shall come
within the definition of a “non-employee director” under Rule 16b-3 and an “outside director” under
§ 162(m) of the Code.



     2.7 Company — means Alimera Sciences, Inc. and any successor to Alimera Sciences,
Inc..



     2.8 Director — means any member of the Board who is not an employee of the Company or
a Parent or Subsidiary or affiliate (as such term is defined in Rule 405 of the 1933 Act) of the
Company.



     2.9 Eligible Employee — means an employee of the Company or any Subsidiary or Parent
or Affiliate to whom the Committee decides for reasons sufficient to the Committee to make a grant
under this Plan.



     2.10 Fair Market Value — means either (a) the closing price on any date for a share
of Stock as reported by The Wall Street Journal or as reported by a newspaper or trade journal selected by the Committee or,
if no such closing price is available on such date, (b) such closing price as so reported in
accordance with § 2.10(a) for the immediately preceding business day, or, if no newspaper or trade
journal reports such closing price or if no such price quotation is available, (c) the price which
the Committee acting in good faith determines through any reasonable valuation method that a share
of Stock might change hands between a willing buyer and a willing seller, neither being under any
compulsion to buy or to sell and both having reasonable knowledge of the relevant facts.



-4-









 





     2.11 ISO — means an option granted under this Plan to purchase Stock which is
intended to satisfy the requirements of § 422 of the Code.



     2.12 1933 Act — means the Securities Act of 1933, as amended.



     2.13 1934 Act — means the Securities Exchange Act of 1934, as amended.



     2.14 Non-ISO — means an option granted under this Plan to purchase Stock which is
intended to fail to satisfy the requirements of § 422 of the Code.



     2.15 Option — means an ISO or a Non-ISO which is granted under § 7.



     2.16 Option Certificate — means the certificate (whether in electronic or written
form) which sets forth the terms and conditions of an Option granted under this Plan.



     2.17 Option Price — means the price which shall be paid to purchase one share of
Stock upon the exercise of an Option granted under this Plan.



     2.18 Parent — means any corporation which is a parent corporation (within the meaning
of § 424(e) of the Code) of the Company.



     2.19 Plan — means this Alimera Sciences, Inc. 2004 Incentive Stock Plan as effective
as of the date approved by the shareholders of the Company and as amended from time to time
thereafter.



     2.20 Rule 16b-3 — means the exemption under Rule 16b-3 to Section 16(b) of the 1934
Act or any successor to such rule.



     2.21 SAR Value — means the value assigned by the Committee to a share of Stock in
connection with the grant of a Stock Appreciation Right under § 8.



     2.22 Stock — means the common stock of the Company, par value $0.01 per share.



-5-









 





     2.23 Stock Appreciation Right — means a right which is granted under § 8 to receive
the appreciation in a share of Stock.



     2.24 Stock Appreciation Right Certificate — means the certificate (whether in
electronic or written form) which sets forth the terms and conditions of a Stock Appreciation Right
which is not granted as part of an Option.



     2.25 Stock Grant — means a grant under § 9 which is designed to result in the
issuance of the number of shares of Stock described in such grant rather than a payment in cash
based on the Fair Market Value of such shares of Stock.



     2.26 Stock Grant Certificate — means the certificate (whether in electronic or
written form) which sets forth the terms and conditions of a Stock Grant or a Stock Unit Grant.



     2.27 Stock Unit Grant — means a grant under § 9 which is designed to result in the
payment of cash based on the Fair Market Value of the number of shares of Stock described in such
grant rather than the issuance of the number of shares of Stock described in such grant.



     2.28 Subsidiary — means a corporation which is a subsidiary corporation (within the
meaning of § 424(f) of the Code) of the Company.



     2.29 Ten Percent Shareholder — means a person who owns (after taking into account the
attribution rules of § 424(d) of the Code) more than ten percent of the total combined voting power
of all classes of stock of either the Company, a Subsidiary or Parent.



-6-









 





§ 3


SHARES AND GRANT LIMITS




     3.1 Shares Reserved. There shall (subject to § 13) be reserved for issuance under
this Plan (a) [x,xxx,xxx] shares of Stock.



     3.2 Source of Shares. The shares of Stock described in § 3.1 shall be reserved to the
extent that the Company deems appropriate from authorized but unissued shares of Stock and from
shares of Stock which have been reacquired by the Company. All shares of Stock described in § 3.1
shall remain available for issuance under this Plan until issued pursuant to the exercise of an
Option or a Stock Appreciation Right or issued pursuant to a Stock Grant, and any such shares of
stock which are issued pursuant to an Option, a Stock Appreciation Right or a Stock Grant which are
forfeited thereafter shall again become available for issuance under this Plan. Finally, if the
Option Price under an Option is paid in whole or in part in shares of Stock or if shares of Stock
are tendered to the Company in satisfaction of any condition to a Stock Grant, such shares
thereafter shall become available for issuance under this Plan and shall be treated the same as any
other shares available for issuance under this Plan.



     3.3 Use of Proceeds. The proceeds which the Company receives from the sale of any
shares of Stock under this Plan shall be used for general corporate purposes and shall be added to
the general funds of the Company.



-7-









 





§ 4


EFFECTIVE DATE




     The effective date of this Plan shall be the date the shareholders of the Company (acting at a
duly called meeting of such shareholders or by written consent) approve the adoption of this Plan.



§ 5


COMMITTEE




     This Plan shall be administered by the Committee. The Committee acting in its absolute
discretion shall exercise such powers and take such action as expressly called for under this Plan
and, further, the Committee shall have the power to interpret this Plan and (subject to § 14 and
§ 15 and Rule 16b-3) to take such other action in the administration and operation of this Plan as
the Committee deems equitable under the circumstances, which action shall be binding on the
Company, on each affected Eligible Employee or Director and on each other person directly or
indirectly affected by such action. Furthermore, the Committee as a condition to making any grant
under this Plan to any Eligible Employee or Director shall have the right to require him or her to
execute an agreement which makes the Eligible Employee or Director subject to non-competition
provisions and other restrictive covenants which run in favor of the Company.



§ 6



ELIGIBILITY AND ANNUAL GRANT CAPS




     Only Eligible Employees who are employed by the Company or a Subsidiary or Parent shall be
eligible for the grant of ISOs under this Plan. All Eligible Employees and



-8-









 







Directors shall be
eligible for the grant of Non-ISOs and Stock Appreciation Rights and for Stock Grants and Stock
Unit Grants under this Plan.



§ 7


OPTIONS




     7.1 Committee Action. The Committee acting in its absolute discretion shall have the
right to grant Options to Eligible Employees and to Directors under this Plan from time to time to
purchase shares of Stock, but the Committee shall not, absent the approval of the Company’s
shareholders, take any action, whether through amendment, cancellation, replacement grants, or any
other means, to reduce the Option Price of any outstanding Options. Each grant of an Option to an
Eligible Employee or Director shall be evidenced by an Option Certificate, and each Option
Certificate shall set forth whether the Option is an ISO or a Non-ISO and shall set forth such
other terms and conditions of such grant as the Committee acting in its absolute discretion deems
consistent with the terms of this Plan; however, if the Committee grants an ISO and a Non-ISO to a
Eligible Employee on the same date, the right of the Eligible Employee to exercise the ISO shall
not be conditioned on his or her failure to exercise the Non-ISO.



     7.2 $100,000 Limit. No Option shall be treated as an ISO to the extent that the
aggregate Fair Market Value of the Stock subject to the Option which would first become exercisable
in any calendar year exceeds $100,000. Any such excess shall instead automatically be treated as a
Non-ISO. The Committee
shall interpret and administer the ISO limitation set forth in this § 7.2 in accordance with
§ 422(d) of the Code, and the Committee shall treat this § 7.2 as in effect only for those periods
for which § 422(d) of the Code is in effect.



-9-









 





     7.3 Option Price. The Option Price for each share of Stock subject to an Option shall
be no less than the Fair Market Value of a share of Stock on the date the Option is granted;
provided, however, if the Option granted to an Eligible Employee who is a Ten Percent Shareholder,
the Option Price for each share of Stock subject to such ISO shall be no less than 110% of the Fair
Market Value of a share of Stock on the date such ISO is granted.



     7.4 Payment. The Option Price shall be payable in full upon the exercise of any
Option and, at the discretion of the Committee, an Option Certificate can provide for the payment
of the Option Price either in cash, by check or in Stock which has been held for at least 6 months
and which is acceptable to the Committee, or through any cashless exercise procedure which is
acceptable to the Committee, or in any combination of such forms of payment. Any payment made in
Stock shall be treated as equal to the Fair Market Value of such Stock on the date the certificate
for such Stock (or proper evidence of such certificate) is presented to the Committee or its
delegate in such form as acceptable to the Committee.



     7.5 Exercise.




	 	(a)	 	Exercise Period. Each Option granted
under this Plan shall be exercisable in whole or in part at such time
or times as set forth in the related Option Certificate, but no Option
Certificate shall make an Option exercisable on or after the earlier of






	 	(1)	 	the date which is
the fifth anniversary of the date the Option is granted,
if the Option is an ISO and the Eligible Employee is a
Ten Percent Shareholder on the date the Option is
granted, or




-10-









 






	 	(2)	 	the date which is
the tenth anniversary of the date the Option is granted,
if the Option is (a) a Non-ISO or (b) an ISO which is
granted to an Eligible Employee who is not a Ten Percent
Shareholder on the date the Option is granted.






	 	(b)	 	Termination of Status as Eligible Employee
or Director. Subject to § 7.5(a), an Option Certificate may
provide for the exercise of an Option after an Eligible Employee’s or a
Director’s status as such has terminated for any reason whatsoever,
including death or disability.





§ 8


STOCK APPRECIATION RIGHTS




     8.1 Committee Action. The Committee acting in its absolute discretion shall have the
right to grant Stock Appreciation Rights to Eligible Employees and to Directors under this Plan
from time to time, and each Stock Appreciation Right grant shall be evidenced by a Stock
Appreciation Right Certificate or, if such Stock Appreciation Right is granted as part of an
Option, shall be evidenced by the Option Certificate for the related Option.



     8.2 Terms and Conditions.




	 	(a)	 	Stock Appreciation Right Certificate. If a Stock
Appreciation Right is granted independent of an Option, such Stock Appreciation
Right shall be evidenced by a Stock Appreciation Right Certificate, and such
certificate shall set forth the number of shares of Stock on which the Eligible
Employee’s or Director’s right to appreciation shall be based and the SAR




-11-









 






	 	 	 	Value
of each share of Stock. Such SAR Value shall be no less than the Fair Market
Value of a share of Stock on the date that the Stock Appreciation Right is
granted. The Stock Appreciation Right Certificate shall set forth such other
terms and conditions for the exercise of the Stock Appreciation Right as the
Committee deems appropriate under the circumstances, but no Stock Appreciation
Right Certificate shall make a Stock Appreciation Right exercisable on or after
the date which is the tenth anniversary of the date such Stock Appreciation
Right is granted.
	 
	 	(b)	 	Option Certificate. If a Stock Appreciation Right is
granted together with an Option, such Stock Appreciation Right shall be
evidenced by an Option Certificate, the number of shares of Stock on which the
Eligible Employee’s or Director’s right to appreciation shall be based shall be
the same as the number of shares of Stock subject to the related Option, and
the SAR Value for each such share of Stock shall be no less than the Option
Price under the related Option. Each such Option Certificate shall provide
that the exercise of the Stock Appreciation Right with respect to
any share of Stock shall cancel the Eligible Employee’s or Director’s right
to exercise his or her Option with respect to such share and, conversely,
that the exercise of the Option with respect to any share of Stock shall
cancel the Eligible Employee’s or Director’s right to exercise his or her
Stock Appreciation Right with respect to such share. A Stock Appreciation
Right which is granted as part of an Option shall be exercisable only while
the related Option is exercisable. The Option




-12-









 






	 	 	 	Certificate shall set forth
such other terms and conditions for the exercise of the Stock Appreciation
Right as the Committee deems appropriate under the circumstances.





     8.3 Exercise. A Stock Appreciation Right shall be exercisable only when the Fair
Market Value of a share of Stock on which the right to appreciation is based exceeds the SAR Value
for such share, and the payment due on exercise shall be based on such excess with respect to the
number of shares of Stock to which the exercise relates. An Eligible Employee or Director upon the
exercise of his or her Stock Appreciation Right shall receive a payment from the Company in cash or
in Stock issued under this Plan, or in a combination of cash and Stock, and the number of shares of
Stock issued shall be based on the Fair Market Value of a share of Stock on the date the Stock
Appreciation Right is exercised. The Committee acting in its absolute discretion shall have the
right to determine the form and time of any payment under this § 8.3.



§ 9.2


STOCK GRANTS




     9.1 Committee Action. The Committee acting in its absolute discretion shall have the
right to make Stock Grants and Stock Unit Grants to Eligible Employees and to Directors. Each
Stock Grant and each Stock Unit Grant shall be evidenced by a Stock Grant Certificate, and each
Stock Grant Certificate shall set forth the conditions, if any, under which Stock will be issued
under the Stock Grant or cash will be paid under the Stock Unit Grant and the conditions under
which the Eligible Employee’s or Director’s interest in any Stock which has been issued will become
non-forfeitable.



-13-









 





     9.2 Conditions.




	 	(a)	 	Conditions to Issuance of Stock. The Committee acting
in its absolute discretion may make the issuance of Stock under a Stock Grant
subject to the satisfaction of one, or more than one, condition which the
Committee deems appropriate under the circumstances for Eligible Employees or
Directors generally or for an Eligible Employee or a Director in particular,
and the related Stock Grant Certificate shall set forth each such condition and
the deadline for satisfying each such condition. Stock subject to a Stock
Grant shall be issued in the name of an Eligible Employee or Director only
after each such condition, if any, has been timely satisfied, and any Stock
which is so issued shall be held by the Company pending the satisfaction of the
forfeiture conditions, if any, under § 9.2(b) for the related Stock Grant.
	 
	 	(b)	 	Conditions on Forfeiture of Stock or Cash Payment. The
Committee acting in its absolute discretion may make any cash payment due under
a
Stock Unit Grant or Stock issued in the name of an Eligible Employee or
Director under a Stock Grant non-forfeitable subject to the satisfaction of
one, or more than one, objective employment, performance or other condition
that the Committee acting in its absolute discretion deems appropriate
under the circumstances for Eligible Employees or Directors generally or
for an Eligible Employee or a Director in particular, and the related Stock
Grant Certificate shall set forth each such condition, if any, and the
deadline, if any, for satisfying each such condition. An Eligible




-14-









 






	 	 	 	Employee’s or a Director’s non-forfeitable interest in the shares of Stock
underlying a Stock Grant or the cash payable under a Stock Unit Grant shall
depend on the extent to which he or she timely satisfies each such
condition. Each share of Stock underlying a Stock Grant shall not be
available under § 3 after such grant is effective until such time, if any,
as such share thereafter is forfeited as a result of a failure to timely
satisfy a forfeiture condition, in which event such share of Stock shall
again become available under § 3 as of the date of such forfeiture.
Finally, the Company shall have the right to require an Eligible Employee
or Director to sign an irrevocable stock power in favor of the Company with
respect to forfeitable shares of Stock issued under this § 9.2(b) in order
for the Company to effect a forfeiture in accordance with this § 9.2(b).





     9.3 Dividends, Voting Rights and Creditor Status.




	 	(a)	 	Cash Dividends. Except as otherwise set forth in a
Stock Grant, if a dividend is paid in cash on a share of Stock after such Stock
has been issued under a Stock Grant but before the first date that an Eligible
Employee’s or a Director’s interest in such Stock (1) is forfeited completely
or (2) becomes completely non-forfeitable, the Company shall pay such cash
dividend directly to such Eligible Employee or Director.
	 
	 	(b)	 	Stock Dividends. If a dividend is paid on a share of
Stock in Stock after such Stock has been issued under a Stock Grant but before
the first date that an Eligible Employee’s or a Director’s interest in such
Stock (1) is forfeited completely or (2) becomes completely non-forfeitable,
the




-15-









 






	 	 	 	Company shall hold such dividend Stock subject to the same conditions under
§ 9.2(b) as the related Stock Grant.
	 
	 	(c)	 	Other. If a dividend (other than a dividend described
in § 9.3(a) or § 9.3(b)) is paid with respect to a share of Stock after such
Stock has been issued under a Stock Grant but before the first date that an
Eligible Employee’s or a Director’s interest in such Stock (1) is forfeited
completely or (2) becomes completely non-forfeitable, the Company shall
distribute or hold such dividend in accordance with such rules as the Committee
shall adopt with respect to each such dividend.
	 
	 	(d)	 	Voting. Except as otherwise set forth in a Stock
Grant, an Eligible Employee or a Director shall have the right to vote the
Stock issued under his or her Stock Grant during the period which comes after
such Stock has been issued under a Stock Grant but before the first date that
an Eligible
Employee’s or Director’s interest in such Stock (1) is forfeited completely
or (2) becomes completely non-forfeitable.
	 
	 	(e)	 	General Creditor Status. An Eligible Employee and a
Director to whom a Stock Unit grant is made shall be no more than a general and
unsecured creditor of the Company with respect to any cash payable under such
Stock Unit Grant.





     9.4 Satisfaction of Forfeiture Conditions. A share of Stock shall cease to be subject
to a Stock Grant at such time as an Eligible Employee’s or a Director’s interest in such Stock
becomes non-forfeitable under this Plan, and the certificate or other evidence of ownership



-16-









 







representing such share shall be transferred to the Eligible Employee or Director as soon as
practicable thereafter.



§ 10


NON-TRANSFERABILITY




     No Option, Stock Grant, Stock Unit Grant or Stock Appreciation Right shall (absent the
Committee’s consent) be transferable by an Eligible Employee or a Director other than by will or by
the laws of descent and distribution, and any Option or Stock Appreciation Right shall (absent the
Committee’s consent) be exercisable during a Eligible Employee’s or Director’s lifetime only by the
Eligible Employee or Director. The person or persons to whom an Option or Stock Grant or Stock
Unit Grant or Stock Appreciation Right is transferred by will or by the laws of descent and
distribution (or with the Committee’s consent) thereafter shall be treated as the Eligible Employee
or Director.



§ 11


SECURITIES REGISTRATION




     As a condition to the receipt of shares of Stock under this Plan, the Eligible Employee or
Director shall, if so requested by the Company, agree to hold such shares of Stock for investment
and not with a view of resale or distribution to the public and, if so requested by the Company,
shall deliver to the Company a written statement satisfactory to the Company to that effect.
Furthermore, if so requested by the Company, the Eligible Employee or Director shall make a written
representation to the Company that he or she will not sell or offer for sale any of such Stock
unless a registration statement shall be in effect with respect to such Stock under the 1933 Act
and any applicable state securities law or he or she shall have furnished to the Company an opinion
in form and substance satisfactory to the Company of legal counsel



-17-









 







satisfactory to the Company that
such registration is not required. Certificates or other evidence of ownership representing the
Stock transferred upon the exercise of an Option or Stock Appreciation Right or upon the lapse of
the forfeiture conditions, if any, on any Stock Grant may at the discretion of the Company bear a
legend to the effect that such Stock has not been registered under the 1933 Act or any applicable
state securities law and that such Stock cannot be sold or offered for sale in the absence of an
effective registration statement as to such Stock under the 1933 Act and any applicable state
securities law or an opinion in form and substance satisfactory to the Company of legal counsel
satisfactory to the Company that such registration is not required.



§ 12


LIFE OF PLAN




     No Option or Stock Appreciation Right shall be granted or Stock Grant or Stock Unit Grant made
under this Plan on or after the earlier of:




	 	(1)	 	the tenth anniversary of the effective date of
this Plan (as determined under § 4), in which event this Plan otherwise
thereafter shall continue in effect until all outstanding Options and
Stock Appreciation Rights have been exercised in full or no longer are
exercisable and all Stock issued under any Stock Grants under this Plan
have been forfeited or have become non-forfeitable, or
	 
	 	(2)	 	the date on which all of the Stock reserved
under § 3 has (as a result of the exercise of Options or Stock
Appreciation Rights granted under this Plan or the satisfaction of the
forfeiture conditions, if any, on Stock Grants) been issued or no
longer is




-18-









 






	 	 	 	available for use under this Plan, in which event this Plan
also shall terminate on such date.





§ 13


ADJUSTMENT




     13.1 Capital Structure. The number, kind or class (or any combination thereof) of
shares of Stock reserved under § 3, the grant caps described in § 3, the number, kind or class (or
any combination thereof) of shares
of Stock subject to Options or Stock Appreciation Rights granted under this Plan and the Option
Price of such Options and the SAR Value of such Stock Appreciation Rights as well as the number,
kind or class (or any combination thereof) of shares of Stock subject to Stock Grants or Stock Unit
Grants made under this Plan shall be adjusted by the Committee in an equitable manner to reflect
any equity restructuring or change in the capitalization of the Company, including, but not limited
to, spin offs, stock dividends, large non-reoccurring dividends, rights offerings or stock splits.



     13.2 Transactions Described in § 424. The Committee as part of any corporate
transaction described in § 424(a) of the Code shall have the right to adjust (in any manner which
the Committee in its discretion deems consistent with § 424(a) of the Code) the number, kind or
class (or any combination thereof) of shares of Stock reserved under § 3 and the annual grant caps
described in § 3. Furthermore, the Committee as part of any corporate transaction described in
§ 424(a) of the Code shall have the right to adjust (in any manner which the Committee in its
discretion deems consistent with § 424(a) of the Code) the number, kind or class (or any
combination thereof) of shares of Stock subject to any outstanding Stock Grants or Stock Unit
Grants under this Plan and any related grant conditions and forfeiture conditions, and the number,
kind or class (or any combination thereof) of shares subject to Option and Stock



-19-









 







Appreciation Right
grants previously made under this Plan and the related Option Price and SAR Value for each such
Option and Stock Appreciation Right, and, further, shall have the right (in any manner which the
Committee in its discretion deems consistent with § 424(a) of the Code and without regard to the
annual grant caps described in § 3 of this Plan) to make any Stock Grants and Option and Stock
Appreciation Right grants to effect the assumption of, or the substitution for, stock grants, stock
unit grants and option and stock appreciation right grants previously made by any other corporation
to the extent that such corporate transaction calls for such substitution or assumption of such
stock grants, stock unit grants and stock option and stock appreciation right grants.



     13.3 Fractional Shares. If any adjustment under this § 13 would create a fractional
share of Stock or a right to acquire a fractional share of Stock under any Option, Stock
Appreciation Right or Stock Grant, such fractional share shall be disregarded and the number of
shares of Stock reserved under this Plan and the number subject to any Options or Stock
Appreciation Right grants and Stock Grants shall be the next lower number of shares of Stock,
rounding all fractions downward. An adjustment made under this § 13 by the Committee shall be
conclusive and binding on all affected persons.



§ 14



CHANGE IN CONTROL




     If there is a Change in Control of the Company, then as of the Change Effective Date for such
Change in Control any and all conditions to the exercise of all outstanding Options and Stock
Appreciation Rights on such date and any and all outstanding issuance and forfeiture conditions on
any Stock Grants and Stock Unit Grants on such date automatically shall be deemed 100% satisfied as
of such Change Effective Date, and the Board shall have the right (to



-20-









 







the extent expressly required
as part of such transaction) to cancel such Options, Stock Appreciation Rights, Stock Grants and
Stock Unit Grants after providing each Eligible Employee and Director a reasonable period to
exercise his or her Options and Stock Appreciation Rights and to take such other action as
necessary or appropriate to receive the Stock subject to any Stock Grants and the cash payable
under any Stock Unit Grants; provided, if any issuance or
forfeiture condition described in this § 14 relates to satisfying any performance goal and there is
a target for such goal, such issuance or forfeiture condition shall be deemed satisfied under this
§ 14 only to the extent of such target unless such target has been exceeded before the Change
Effective Date, in which event such issuance or forfeiture condition shall be deemed satisfied to
the extent such target had been so exceeded.



§ 15


AMENDMENT OR TERMINATION




     This Plan may be amended by the Board from time to time to the extent that the Board deems
necessary or appropriate; provided, however, (a) no amendment shall be made absent the approval of
the shareholders of the Company to the extent such approval is required under applicable law or the
rules of the stock exchange, if any, on which shares of Stock are listed and (b) no amendment shall
be made to § 14 on or after the date of any Change in Control which might adversely affect any
rights which otherwise would vest on the related Change Effective Date. The Board also may suspend
granting Options or Stock Appreciation Rights or making Stock Grants or Stock Unit Grants under
this Plan at any time and may terminate this Plan at any time; provided, however, the Board shall
not have the right unilaterally to modify, amend or cancel any Option or Stock Appreciation Right
granted or Stock Grant made before such suspension or termination unless (1) the Eligible Employee
or Director consents in writing



-21-









 







to such modification, amendment or cancellation or (2) there is a
dissolution or liquidation of the Company or a transaction described in § 13.2 or § 14.



§ 16


MISCELLANEOUS




     16.1 Shareholder Rights. No Eligible Employee or Director shall have any rights as a
shareholder of the Company as a result of the grant of an Option or a Stock Appreciation Right
pending the actual delivery of the Stock subject to such Option or Stock Appreciation Right to such
Eligible Employee or Director. Subject to § 9.3, an Eligible Employee’s or a Director’s rights as
a shareholder in the
shares of Stock underlying a Stock Grant which is effective shall be set forth in the related Stock
Grant Certificate.



     16.2 No Contract of Employment. The grant of an Option or a Stock Appreciation Right
or a Stock Grant or Stock Unit Grant to an Eligible Employee or Director under this Plan shall not
constitute a contract of employment or a right to continue to serve on the Board and shall not
confer on an Eligible Employee or Director any rights upon his or her termination of employment or
service in addition to those rights, if any, expressly set forth in this Plan or the related Option
Certificate, Stock Appreciation Right Certificate, or Stock Grant Certificate.



     16.3 Withholding. Each Option, Stock Appreciation Right, Stock Grant and Stock Unit
Grant shall be made subject to the condition that the Eligible Employee or Director consents to
whatever action the Committee directs to satisfy the minimum statutory federal and state tax
withholding requirements, if any, which the Company determines are applicable to the exercise of
such Option or Stock Appreciation Right or to the satisfaction of any forfeiture conditions with
respect to Stock subject to a Stock Grant or Stock Unit Grant issued in the name



-22-









 







of the Eligible
Employee or Director. No withholding shall be effected under this Plan which exceeds the minimum
statutory federal and state withholding requirements.



     16.4 Construction. All references to sections (§) are to sections (§) of this Plan
unless otherwise indicated. This Plan shall be construed under the laws of the State of Delaware.
Each term set forth in § 2 shall, unless otherwise stated, have the meaning set forth opposite such
term for purposes of this Plan and, for purposes of such definitions, the singular shall include
the plural and the plural shall
include the singular. Finally, if there is any conflict between the terms of this Plan and the
terms of any Option Certificate, Stock Appreciation Right Certificate or Stock Grant Certificate,
the terms of this Plan shall control.



     16.5 Other Conditions. Each Option Certificate, Stock Appreciation Right Certificate
or Stock Grant Certificate may require that an Eligible Employee or a Director (as a condition to
the exercise of an Option or a Stock Appreciation Right or the issuance of Stock subject to a Stock
Grant) enter into any agreement or make such representations prepared by the Company, including
(without limitation) any agreement which restricts the transfer of Stock acquired pursuant to the
exercise of an Option or a Stock Appreciation Right or a Stock Grant or provides for the repurchase
of such Stock by the Company.



     16.6 Rule 16b-3. The Committee shall have the right to amend any Option, Stock Grant
or Stock Appreciation Right to withhold or otherwise restrict the transfer of any Stock or cash
under this Plan to an Eligible Employee or Director as the Committee deems appropriate in order to
satisfy any condition or requirement under Rule 16b-3 to the extent Rule 16 of the 1934 Act might
be applicable to such grant or transfer.



     16.7 Annual Financial Statements. To the extent that Eligible Employees or Directors
who are granted an Option or Stock Grant under this Plan do not otherwise have access



-23-









 







to equivalent
information, the Company will provide financial statements to such Eligible Employees at least
annually.



     IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Plan to
evidence its adoption of this Plan.



	 	 	 	 	 	 	 
	 	 	ALIMERA SCIENCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Daniel White, VP
Finance and Corporate Development	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 







-24-