Document:

Form of Warrant to Purchase Common Stock

 EXHIBIT 4.3 
  

EXHIBIT B 
  
 THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE
EXTENT THAT AN OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED. 
  
 ACADIA PHARMACEUTICALS INC. 
  
 WARRANT TO PURCHASE COMMON STOCK 
  

			
	No. CW    	 	April 20, 2005

  
 Void After April 19,
2010 
  
 THIS CERTIFIES
THAT, for value received,                             , with
its principal office at
                                        ,
or assigns (the “Holder”), is entitled to subscribe for and purchase at the Exercise Price (defined below) from ACADIA Pharmaceuticals Inc., a Delaware corporation, with its principal office at 3911 Sorrento Valley Blvd., San
Diego, CA 92121 (the “Company”) up to                      shares of the Common Stock of the Company (the
“Common Stock”), subject to adjustment as provided herein. This Warrant is one of a series of Warrants being issued pursuant to the terms of the Securities Purchase Agreement, dated April 15, 2005, by and among the Company
and the original Holder of this Warrant and the other parties named therein (the “Purchase Agreement”). Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to such terms in the Purchase
Agreement. 
  
 1. DEFINITIONS. As
used herein, the following terms shall have the following respective meanings: 
  
 (a) “Exercise Period” shall mean the period commencing 180 days after the date hereof and ending April 19, 2010, unless sooner terminated as provided below. 
  
 (b) “Exercise Price” shall mean $8.148 per share,
subject to adjustment pursuant to Section 5 below. 
  
 (c)
“Exercise Shares” shall mean the shares of the Company’s Common Stock issued upon exercise of this Warrant, subject to adjustment pursuant to the terms herein, including but not limited to adjustment pursuant to Section 5
below. 
  

 1. 

 2. EXERCISE OF WARRANT. 
  
 2.1 Method of Exercise. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder): 
  
 (a) An executed Notice of Exercise in the form attached hereto;

  
 (b) Payment of the Exercise Price either (i) in cash
or by check or wire transfer of immediately available funds, or (ii) pursuant to a Cashless Exercise, as described below; and 
  
 (c) This Warrant. 
  
 Upon the exercise of the rights represented by this Warrant, shares of Common Stock shall be issued for the Exercise Shares so purchased, and shall be
registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates, within a reasonable time after the rights represented by this Warrant shall have been so exercised and shall be issued in certificate form and
delivered to the Holder, if so requested. 
  
 The person in whose
name any Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of
the date of issuance of the shares of Common Stock, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the
close of business on the next succeeding date on which the stock transfer books are open. 
  
 2.2 Cashless Exercise. Notwithstanding any provisions herein to the contrary, if, at any time during the Exercise Period, the Current Market Price (as defined below) of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless exercise by surrender of this Warrant at the principal office of the
Company together with the properly endorsed Notice of Exercise and the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: 
  

					
	 	  	X =	  	Y (B-A)
	 	  	 	  	      B
			
	Where:    	  	X =    	  	the number of shares of Common Stock to be issued to the Holder.
			
	 	  	Y =	  	the number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being
exercised.
			
	 	  	A =	  	the Exercise Price.
			
	 	  	B =	  	the Current Market Price of one share of Common Stock.

  
  

 2. 

 “Current Market Price” means on any particular date: 
  
 (a) if the Common Stock is traded on the Nasdaq SmallCap Market or
the Nasdaq National Market, the average of the closing prices of the Common Stock of the Company on such market over the five (5) trading days ending immediately prior to the applicable date of valuation; 
  
 (b) if the Common Stock is traded on any registered national stock
exchange but is not traded on the Nasdaq SmallCap Market or the Nasdaq National Market, the average of the closing prices of the Common Stock of the Company on such exchange over the five (5) trading days ending immediately prior to the applicable
date of valuation 
  
 (c) if the Common Stock is traded
over-the-counter, but not on the Nasdaq SmallCap Market, the Nasdaq National Market or a registered national stock exchange, the average of the closing bid prices over the 30-day period ending immediately prior to the applicable date of valuation;
and 
  
 (d) if there is no active public market for the
Common Stock, the value thereof, as determined in good faith by the Board of Directors of the Company upon due consideration of the proposed determination thereof by the Holder. 
  
 2.3 Partial Exercise. If this Warrant is exercised in part only, the Company shall, upon surrender of this Warrant,
execute and deliver, within 10 days of the date of exercise, a new Warrant evidencing the rights of the Holder, or such other person as shall be designated in the Notice of Exercise, to purchase the balance of the Exercise Shares purchasable
hereunder. In no event shall this Warrant be exercised for a fractional Exercise Share, and the Company shall not distribute a Warrant exercisable for a fractional Exercise Share. Fractional Warrant shares shall be treated as provided in Section 6
hereof. 
  
 3. COVENANTS OF
THE COMPANY. 
  
 3.1
Covenants as to Exercise Shares. The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof. The Company further covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved, free from
preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall
not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock (or other securities as provided
herein) to such number of shares as shall be sufficient for such purposes. 
  
 3.2 No Impairment. Except and to the extent as waived or consented to by the Holder or otherwise in accordance with Section 11 hereof, the Company will not, by 

  

 3. 

 
amendment of its Certificate of Incorporation (as such may be amended from time to time), or through any means, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder against impairment. 
  
 3.3 Notices of Record Date. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least ten days prior to the date specified herein, a notice specifying the date on
which any such record is to be taken for the purpose of such dividend or distribution. 
  
 4. REPRESENTATIONS OF HOLDER. 
  
 4.1 Acquisition of Warrant for Personal Account. The Holder represents and warrants that it is acquiring the Warrant and the Exercise Shares solely
for its account for investment and not with a present view toward the public or distribution of said Warrant or Exercise Shares or any part thereof and has no intention of selling or distributing said Warrant or Exercise Shares or any arrangement or
understanding with any other persons regarding the sale or distribution of said Warrant or, except in accordance with the provisions of Article 6 of the Purchase Agreement, the Exercise Shares, and except as would not result in a violation of the
Securities Act. The Holder will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) the Warrant except in accordance with the Securities
Act and will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) the Exercise Shares except in accordance with the provisions of Article
6 of the Purchase Agreement or pursuant to and in accordance with the Securities Act.  
  
 4.2 Securities Are Not Registered. 
  
 (a) The Holder understands that the offer and sale of the Warrant or the Exercise Shares have not been registered under the Securities Act on the basis that no distribution or public offering of the stock of
the Company is to be effected. The Holder realizes that the basis for the exemption may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the securities for a fixed or determinable period in the
future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention. 
  
 (b) The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such registration is available. The Holder recognizes that the Company has no obligation to register the Warrant or, except as provided in the Purchase Agreement, the Exercise
Shares of the Company, or to comply with any exemption from such registration. 
  

 4. 

 (c) The Holder is aware that neither the Warrant nor the Exercise Shares may be sold pursuant to
Rule 144 adopted under the Securities Act unless certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale
following the required holding period under Rule 144 and the number of shares being sold during any three month period not exceeding specified limitations. Holder is aware that any such sale made in reliance on Rule 144, if Rule 144 is available,
may be made only in accordance with the terms of Rule 144. 
  
 4.3 Disposition of Warrant and Exercise Shares. 
  
 (a) The Holder further agrees not to make any disposition of all or any part of the Warrant or Exercise Shares in any event unless and until: 
  

(i) The Company shall have received a letter secured by the Holder from the SEC stating that no action will be recommended to the Commission
with respect to the proposed disposition; 
  
 (ii) There
is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or 
  
 (iii) The Holder shall have notified the Company of the proposed disposition and shall have furnished the Company
with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, for the
Holder to the effect that such disposition will not require registration of such Warrant or Exercise Shares under the Securities Act or any applicable state securities laws; provided, that no opinion shall be required for any disposition made
or to be made in accordance with the provisions of Rule 144. 
  
 (b) The Holder understands and agrees that all certificates evidencing the Exercise Shares to be issued to the Holder may bear a legend in substantially the following form: 
  
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO
REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY 
  

 5. 

 THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN OPINION IS REQUIRED PURSUANT TO THE
AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED. 
  
 5.
ADJUSTMENT OF EXERCISE PRICE. In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, split-ups, recapitalizations, reclassifications,
combinations or exchanges of shares, separations, reorganizations, liquidations, or the like, the number and class of shares available under the Warrant in the aggregate and the Exercise Price shall be correspondingly adjusted to give the Holder of
the Warrant, on exercise for the same aggregate Exercise Price, the total number, class, and kind of shares as the Holder would have owned had the Warrant been exercised prior to the event and had the Holder continued to hold such shares until after
the event requiring adjustment. The form of this Warrant need not be changed because of any adjustment in the number, class, and kind of shares subject to this Warrant. The Company shall promptly provide a certificate from its Chief Financial
Officer notifying the Holder in writing of any adjustment in the Exercise Price and/or the total number, class, and kind of shares issuable upon exercise of this Warrant, which certificate shall specify the Exercise Price and number, class and kind
of shares under this Warrant after giving effect to such adjustment. 
  
 6. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon
exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company
shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then current fair market value of an Exercise Share by such fraction.

  
 7. CERTAIN EVENTS.
In the event of, at any time during the Exercise Period, any capital reorganization, or any reclassification of the capital stock of the Company (other than a change in par value or from par value to no par value or no par value to par value or
as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Company with or into another corporation (other than a merger solely to effect a reincorporation of the Company into another
state), in each case, in which the stockholders of the Company immediately prior to such capital reorganization, reclassification, consolidation or merger, will hold less than a majority of the outstanding shares of the Company or resulting
corporation immediately after such capital reorganization, reclassification, consolidation or merger, or the sale or other disposition of all or substantially all of the properties and assets of the Company and its subsidiaries, taken as a whole, in
its entirety to any other person, other than sales or other dispositions that do not require stockholder approval (each, an “Event”), the Company shall provide to the Holder ten days’ advance written notice of such
Event, and the Holder shall have the option, in its sole discretion, to allow any unexercised portion of the Warrant to be deemed automatically exercised pursuant to Section 2.2. This Warrant will be binding opon the successors and assigns of the
Company upon an Event. 
  
 8. NO
STOCKHOLDER RIGHTS. This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company. 
  

 6. 

 9. TRANSFER OF WARRANT. Subject to applicable laws
and compliance with Section 4.3 hereof, this Warrant and all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee
designated by Holder. The transferee shall sign an investment letter in form and substance satisfactory to the Company. 
  
 10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by anyone. 
  
 11.
MODIFICATIONS AND WAIVER. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the Company and (i) Purchasers holding
Warrants representing at least 75% of the number of Exercise Shares then issuable upon exercise of the Warrants sold in the Offering, provided, however, that such modification, amendment or waiver is made with respect to all Warrants issued
in the Offering and does not adversely affect the Holder without adversely affecting all holders of Warrants in a similar manner; or (ii) the Holder. 
  
 12. NOTICES, ETC. All notices required or permitted hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed email, telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications
shall be sent to the Company at the address listed on the signature page and to the Holders at the addresses on the Company records, or at such other address as the Company or Holder may designate by ten days’ advance written notice to the
other party hereto. 
  
 13. ACCEPTANCE.
Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein. 
  
 14. GOVERNING LAW. This Warrant and all rights, obligations and liabilities hereunder shall be governed by the laws
of the State of New York without regard to the principles of conflict of laws. 
  
 15. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The
language in this Warrant shall be construed as to its fair meaning without regard to which party drafted this Warrant. 
  
 16. SEVERABILITY. The invalidity or unenforceability of any provision of this Warrant in any jurisdiction shall not affect the
validity or enforceability of such provision in any other jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and effect. 
  

 7. 

 17. ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and undertakings of the parties, whether oral or written, with respect to such subject matter. 

 
 [Signature Page Follows] 
  

 8. 

 IN WITNESS WHEREOF, the Company has
caused this Warrant to be executed by its duly authorized officer as of April 20, 2005. 
  

			
	ACADIA PHARMACEUTICALS INC.
		
	By:	 	  

		
	Name:	 	  

		
	Title:	 	  

		
	Address:	 	            3911 Sorrento Valley Blvd.
	 	 	            San Diego, CA 92121
	 	 	            Attention: Chief Financial Officer
	 	 	            Facsimile: (858) 320-8637

  
  

 9. 

 NOTICE OF EXERCISE 
  
 TO: ACADIA PHARMACEUTICALS INC. 
  
 (1) The undersigned hereby elects to (check one box only): 
  
 q purchase
                     shares of the Common Stock of ACADIA Pharmaceuticals Inc. (the “Company”) pursuant to the terms
of the attached Warrant, and tenders herewith payment of the exercise price in full for such shares, together with all applicable transfer taxes, if any. 
  
 q purchase the number of shares of Common Stock of the Company by cashless exercise pursuant to the
terms of the Warrant as shall be issuable upon cashless exercise of the portion of the Warrant relating to                      shares, and
shall tender payment of all applicable transfer taxes, if any. 
  
 (2) Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: 
  

 (Name) 
  

  
  

 (Address) 
  
 (3) The undersigned represents that (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment
and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and
financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has
such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned understands that the
shares of Common Stock issuable upon exercise of this Warrant have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), by reason of a specific exemption from the registration provisions of
the Securities Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Securities Act, they must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from such registration is available; (v) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Securities Act
unless certain conditions are met and until the undersigned has held the shares for the number of years prescribed by Rule 144, that among the conditions for use of the Rule is the availability of current information to the public about the Company
and the Company has not made such information available and has no present plans to do so; and (vi) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock 
  

 1. 

 unless and until there is then in effect a registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company, stating that such registration is not required. 

 

			
	  

	 	  

	(Date)	 	(Signature)
		
	 	 	  

 (Print
name)

  

 2. 

 ASSIGNMENT FORM 
  
 (To assign the foregoing Warrant, subject to compliance with section 4.3 hereof, execute this form and supply required
information. Do not use this form to purchase shares.) 
  
 FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to 
  

	
	Name:  _______________________________________________________________________________________________________________________
	(Please Print)
	  
 Address:  _______________________________________________________________________________________________________________________

	(Please Print)

  

	
	 
	 Dated:                     ,
20    

	
	 Holder’s

	 Signature:  ___________________________________________

	
	 Holder’s

	 Address:  ___________________________________________

  
 NOTE: The signature to this
Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file
proper evidence of authority to assign the foregoing Warrant. 
  

 1.Form of Executive Officer Bonus Plan

 Exhibit 10.6 
  
 NOVATEL WIRELESS, INC. 
  
 SENIOR MANAGEMENT BONUS PLAN 
  
 Fiscal Year 2005 
  

	I.	INTRODUCTION 

  

	 	A.	The Objective of this Bonus Plan is to provide eligible senior management of Novatel Wireless, Inc. and its subsidiaries (the “Company”) with the target metrics in
connection with their respective bonus opportunity related to their contributions to the success and strategic growth of the Company. Participation in the Plan and the payment of any sums hereunder shall be at the sole and absolute discretion of the
Company. 

  

	 	B.	Participants: This Plan, as determined by the Company on a fully discretionary basis, applies solely to regular employees of the Company who are senior executive officers
(“Plan Participants”), whom the Company determines meet the eligibility requirements set forth in Section III. For purposes of this Plan and unless otherwise prohibited by applicable law, the term “regular employee” means an
individual who is deemed by the Company to be both an employee of the Company and employed for an unspecified or indefinite period of time. 

  

	 	C.	Effective Date: Fiscal Year 2005 (January 1, 2005 – December 31, 2005). 

  

	 	D.	Changes in Targets: The Company reserves the right to modify the targets in whole or in part, at any time. Any such modification or termination must be approved in writing by
either (i) the CEO, except with respect to his own targets or bonus payments, or (ii) resolution of the Compensation Committee. 

  

	 	E.	Authority: The Company reserves the right to interpret this document on a fully discretionary basis. Nothing in this Plan is intended to create an entitlement to any employee
for any incentive payment hereunder except as the Company may determine in its discretion. 

  

	II.	BONUS TARGET FACTOR 

  

	 	A.	Bonus Target Factor will be determined by reference to Corporate Targets and Individual Targets. Corporate Targets will be determined by assigning a weight of between 0 and
0.50 based on achievement of Corporate Targets. Individual Targets will be determined by assigning a weight of between 0 and 0.50 based on achievement of Individual Targets. The Bonus Target Factor will be the sum of the Corporate Target Factor and
the Individual Target Factor. 

  

	 	B.	Corporate Targets are based on an evaluation of a Plan Participant’s performance and contribution for the Fiscal Year of the following criteria.

  

	
	The Company’s financial performance, including achievement of the Company’s 2005 Operating Plan, achievement of sequential growth, operating leverage, positive operating income and
EPS
	
	Achievement of and contribution to the Company’s success, strategic objectives and direction
	
	Achievement of the Company’s 2005 execution plan and 2005 strategic plan
	
	Ability to work as a team player and collaborate with others across the company, suppliers, partners and/or customers.
	
	Interaction with other teams (e.g., to achieve other team goals)

  

	 	C.	INDIVIDUAL TARGETS are based on an evaluation of a Plan Participant’s performance and contribution for the Fiscal Year of the respective criteria for his or her
respective group. 

  

	III.	ELIGIBILITY 

  

	 	A.	Eligibility: A Plan Participant must satisfy each of the following eligibility requirements to be considered for the Incentive Payment hereunder. 

  

	 	1.	The Plan Participant must be deemed by the Company to be employed by the Company as a regular employee in an incentive-eligible position on or before the first working day of the
last fiscal quarter of the Fiscal Year, and must be employed as a regular employee in an incentive-eligible position on the last working day of the Fiscal Year; 

  

	 	2.	The Plan Participant must not be providing services to the Company as a temporary employee, intern or as an independent contractor, consultant, or agent under a written or oral
contract, and must not be classified by the Company as a temporary employee, independent contractor, consultant, or agent (whether or not such classification is upheld upon review by a governmental, judicial or other agency);

  

	 	3.	Unless otherwise required by law, in no event will an employee be eligible to receive an incentive hereunder unless he/she is employed on the last working day of the Fiscal Year in
the capacity, or comparable capacity, such Plan Participant is employed on the date hereof. 

  

	 	4.	Plan Participants meeting all eligibility requirements hereunder who have less than one year of service will be eligible to receive a discretionary incentive that is pro-rated from
the effective date of participation in the plan up to and including the Expiration Date. Unless otherwise required by law, in no event will an employee be eligible to receive an incentive hereunder unless he/she is employed on the last working day
of the Fiscal Year in the capacity, or comparable capacity, such Plan Participant is employed on the date hereof. 

  

	IV.	PARTICIPANTS AND INCENTIVE TARGET PERCENTAGE 

  

	 	A.	Participants and Incentive Target Percentage. The sole Plan Participants in the Plan are those set forth below. The Incentive Target Percentage for each such Participant is a
percentage of each Participant’s base salary as follows and may be changed at the discretion of the Company at any time during the Fiscal Year. 

  

			
	 Participant

	  	 Incentive Target Percentage

	 CEO
	  	75%
	 CFO
	  	50%
	 VP Sales and Marketing
	  	25%
	 VP Business Affairs
	  	50%
	 VP Research and Development
	  	50%
	 VP Business Development
	  	50%
	 VP Operations
	  	50%

  

	 	B.	Elements of Calculation: 

  
 Incentives under this Plan are calculated on a fully discretionary basis, in accordance with the following formula: 
  

																	
	Base Salary	  	X	  	Incentive Target Percentage	  	X	  	Bonus Target Factor	  	X	  	Pro-ration Factor	  	=	  	Total Annual Incentive

  

	 	1.	Base Salary shall mean the annual base salary for each Plan Participant set forth above in effect at the end of Q4. 

  

	 	2.	Pro-ration Factor accounts for the number of calendar days during the Fiscal Year that such Plan Participant was in an incentive-eligible position. For example, the
Pro-ration Factor for a Plan Participant who has been in the Plan the entire year will be 1.00. For a Plan Participant who has been in the Plan for 6 months, this factor will be 0.50. 

  

	 	C.	Incentive Formula and Calculation Example: Assuming a base salary of $200,000, Incentive Target Percentage of 50%, Corporate Target Factor of 0.50 and Individual Target
Factor of 0.40, and a Pro-ration Factor of 1.00, the Total Annual Incentive for such a Plan Participant meeting all eligibility requirements, would be calculated as follows: 

  
 Sample Calculation 
  

																	
	Base Salary	  	 	  	Incentive Target Percentage	  	 	  	Bonus Target Factor	  	 	  	Pro-ration Factor	  	 	  	Total Annual Incentive
	$200,000	  	X	  	0.50	  	X	  	0.90	  	=	  	1.0	  	=	  	$90,000*

  

	*	less any appropriate withholdings. 

  
 In this example, the total incentive equals 45% of base salary. 
  

	 	D.	At Will Employment. The Company is an at-will employer, which means that an employee’s employment can be terminated by an employee or the Company at any time with or without
cause. The Company reserves the right to modify an employee’s duties, title or other terms and conditions of employment with or without cause. This Plan cannot and should not be interpreted to alter the at-will nature of the employment
relationship between the Company and any Plan Participant. The at-will nature of the employment relationship cannot be modified except in a written document signed by the Company’s CEO.

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