Document:

hgbl-ex101_165.htm

Exhibit 10.1

Amendment to Employment Agreement

 

This Amendment to Employment Agreement (“Amendment”) is effective as of September 13, 2019 between Equity Partners HG LLC f/k/a Equity Partners CRB, LLC (“Company”) and Kenneth Mann (“Executive”).

 

Company and Executive are party to an Employment Agreement dated March 10, 2011 (the “Agreement”). Company and Executive desire for Executive’s employment to end on December 31, 2019, and desire to memorialize the terms of Executive’s resignation.

 

Intending to be legally bound, the parties agree as follows:

 

	
1.
	
Employment. 

 

	
 
	
1.1.
	
Duration.  The Agreement and Executive’s employment by Company shall continue until Company’s normal close of business on December 31, 2019 (the “Resignation Time”).  

 

	
 
	
1.2.
	
Compensation.  

 

	
 
	
1.2.1.
	
Amounts.  Subject to Executive’s compliance with the terms of the Agreement and this Amendment, Executive’s current salary, potential bonus, and benefits shall continue until the Resignation Time.  For clarity: (i) Executive’s current annual base salary is $375,000, and (ii) Executive is entitled to a bonus in an amount equal to $50,000 paid in regular payroll, consistently with past Company practice (the “Executive Bonus”).  This bonus will continue to be paid in regular payroll, and is deemed earned upon payment.  In addition, the personnel of Company (including Executive) collectively are entitled to share an aggregate bonus equal to the sum of: (i) 50% of Company’s 2019 net operating income (if any) calculated by Heritage Global Inc. (“Parent”) consistently with past Company practice (“NOI”), plus (ii) $25,000 (the “Aggregate Personnel Bonus”).  To confirm, Company may withhold from payments to Executive under this Amendment any amounts required to be withheld by applicable law, in accordance with Section 6 of the Agreement.

 

	
 
	
1.2.2.
	
Payment.  No later than March 15, 2020, Company shall pay to Executive the balance of any Executive Bonus that becomes due.  No later than March 15, 2020, Company shall pay any Aggregate Personnel Bonus that becomes due to such Company personnel and in such proportions as Executive shall specify to Company prior to the Resignation Time.  

 

	
 
	
1.3.
	
Resignation.  At the Resignation Time, the Agreement shall automatically terminate and Executive shall be deemed to have resigned from employment with Company as of the Resignation Time.  

1

 

	
 
	
1.4.
	
Accrued Vacation.  In exchange for the consideration provided by Company herein, Executive hereby waives any right to receive payment for any accrued but unused vacation upon termination of employment. 

 

	
 
	
1.5.
	
Termination and Survival.

 

	
 
	
1.5.1.
	
Termination.  

 

	
 
	
1.5.1.1.
	
Executive retains his right to terminate employment for Good Reason prior to the Termination Date.    

 

	
 
	
1.5.1.2.
	
Company retains its right to terminate employment for Cause prior to the Termination Date.    

 

	
 
	
1.5.1.3.
	
For the avoidance of doubt, it shall be a breach of the Agreement and this Amendment for Executive to terminate his employment without Good Reason or for Company to terminate Executive’s employment without Cause.  For clarity, Executive agrees that he may not request and is not entitled to receive any severance payment specified in the last sentence of Section 4(b) of the Agreement.  A material breach of this Amendment by any party shall also be deemed a breach of the Agreement.  

 

	
 
	
1.5.2.
	
Survival. The terms of this Amendment shall survive and remain enforceable notwithstanding any termination of Executive’s employment prior to the Resignation Time.  At the Resignation Time, the Agreement and this Amendment shall terminate and be of no further force or effect, except to the extent breached prior to the Resignation Time, and provided that the following provisions shall survive such termination and remain enforceable following the Resignation Time (collectively, the “Surviving Provisions”): 

 

	
 
	
1.5.2.1.
	
Section 4(a) of the Agreement, with respect to the Proprietary Information of Parent (defined below) and its Affiliates (other than Company), and 

	
 
	
1.5.2.2.
	
Section 4(b) and 4(c) of the Agreement,; however, subject to the superior terms of Section 3.3 below, and

	
 
	
1.5.2.3.
	
Sections 4(e), 4(f), 4(h), and 5, with respect to Parent and its Affiliates (other than Company), and

	
 
	
1.5.2.4.
	
Sections 1.2.2, 1.4, 1.5.2, and 2 through 5 of this Amendment,

 

For clarity, the Affiliates of Parent include Heritage Global Capital LLC.  Parent, Heritage Global LLC (the “Sole Member”) and Company shall be entitled to enforce such Sections against Executive. 

 

	
2.
	
Stock and Options.  

 

	
 
	
2.1.
	
Stock.  Equity Partners, Inc. of Maryland (“Executive’s Entity”), an entity owned by Executive, holds or held 81,967 shares of common stock of Parent (the “Shares”).  For 

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clarity, this Amendment does not affect Executive’s or Executive’s Entity’s ownership of the Shares.

 

	
 
	
2.2.
	
Options.  Subject to Company’s compliance with the terms of the Agreement and this Amendment, at the Resignation Time Executive shall: (i) surrender to Parent each option (whether or not vested) to acquire common stock of Parent received by Executive pursuant to the Agreement and the option to acquire 300,000 shares of Parent granted to Executive on December 9, 2016, and (ii) cause Executive’s Entity to surrender to Parent each option (whether or not vested) to acquire common stock of Parent received by Executive’s Entity in connection with that certain Asset Purchase Agreement among Company, Executive, Executive’s Entity and others dated June 23, 2011.  Each such option shall automatically terminate and be null and void ab initio as of the Resignation Time.  Executive represents and warrants than neither he nor Executive’s Entity have exercised any such option.  Executive shall not, and shall cause Executive’s Entity not to, exercise any such option. 

  

	
3.
	
Transfer of Assets.  

 

	
 
	
3.1.
	
Transfer.  Subject to Executive’s compliance with the terms of the Agreement and this Amendment, effective as of 12:01 a.m. Pacific time on January 1, 2020 (the “Effective Time”): (i) Company shall transfer to Executive or an entity designated by Executive (in either case, “Buyer”), and Executive shall cause Buyer to accept, all of the assets of Company listed on Exhibit A hereto and no others (the “Assets”), free and clear of all liens; and (ii) Executive may choose, in his sole discretion, to accept assignment from the Company of any of the liabilities and obligations of the Company listed on Exhibit B hereto and no others (the “Potentially Assumed Liabilities”) by providing written notice to the Company on or by 5:00 p.m. on November 29, 2019 of those liabilities and obligations of the Company to be assumed by Executive.  For clarity, the Surviving Provisions shall continue in full force and effect after the Effective Time.

 

	
 
	
3.2.
	
Representations and Warranties and Indemnification.  

 

	
 
	
3.2.1.
	
Company.  The Company represents and warranties that it is conveying the Assets to Buyer free and clear of any liens or encumbrances. The Assumed Liabilities are being conveyed to Buyer without any representations or warranties, and no representation or warranty is made with respect to the business of Company the Assumed Liabilities, or otherwise.  PARENT, SOLE MEMBER, AND COMPANY HEREBY DISCLAIM ANY AND ALL REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.

 

	
 
	
3.2.2.
	
Indemnification.  

 

	
 
	
3.2.2.1.
	
By Company.  Company shall indemnify, defend and hold Executive and Buyer (if Executive is not the Buyer)  harmless from and against all losses, 

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damages, liabilities, deficiencies, claims, suits, actions, demands, investigations, proceedings, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys' fees (collectively, “Losses”), incurred or sustained by, or imposed upon, Executive and Buyer (if Executive is not the Buyer) to the extent based upon, arising out of, with respect to or by reason of: (i) any breach of Company’s obligations under this Amendment; (ii) except for any matter that is the subject of an indemnification obligation by Executive pursuant to Section 3.2.2.2 of this Amendment, any liability or obligation of Company other than the Assumed Liabilities.  

 

	
 
	
3.2.2.2.
	
By Executive.  Executive shall indemnify, defend and hold harmless Parent and its Affiliates (including Sole Member and Company) and their respective managers, directors, officers, employees, professional advisors, and other agents from and against all Losses incurred or sustained by, or imposed upon, any of the foregoing to the extent based upon, arising out of, with respect to or by reason of: (i) any breach of Executive’s or Buyer’s (if Executive is not the Buyer) obligations under this Amendment, (ii) the Assumed Liabilities  or (iii) third party claims resulting from grossly negligent or willful or reckless acts or omissions of Executive in connection with his employment with Company.  

 

	
 
	
3.3.
	
Termination of Restrictions.  Subject to Executive’s compliance with the terms of the Agreement and this Amendment, effective at the Effective Time all employee non-solicit provisions contained in the Agreement, any employment agreements entered into between Company and any current employee of Company (if any), and any Company employee policy manual that restrict the ability of Executive or any employee of Company to solicit or employ personnel of Company shall terminate with respect to Executive and the employees of Company.  Subject to their compliance with any applicable confidentiality obligation, effective immediately upon execution of this Amendment, Executive and all employees of Company may engage in discussions with potential employers individually or collectively regarding employment beginning no sooner than the Effective Time.  For clarity, Company acknowledges that the Executive is not bound by any non-compete agreement with the Company, nor are any current employees of the Company.

 

	
4.
	
Division of Revenue. 

 

	
 
	
4.1.
	
Cash and Cash Equivalents.  Except for the Assets (Exhibit A), Company shall retain all of its assets and rights, including: (i) all cash and cash equivalents held by Company, including funds in any trust account, and (ii) all equity interests in Boxlight Corporation held by Company.  

 

	
 
	
4.2.
	
Completed Engagements.    Following the Effective Time, Executive shall and shall cause Buyer to, promptly pay to Company all revenue received directly or indirectly at any time by Executive, Buyer or any third party acting on behalf of, in concert with, at 

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the direction of, or with the express or implicit consent of Executive or Buyer (collectively, “Received”), with respect to each Engagement (defined below) for which a fee, retainer, or other compensation or expense reimbursement or consideration of any nature becomes due prior to the Effective Time or that is related to any Engagement that is closed or completed prior to the Effective Time.  For purposes of this Amendment, “Engagement” shall mean each arrangement by which Company is retained to identify or attract equity or other investors or lenders; sell, liquidate, or otherwise dispose of equity interests, assets or business operations; recapitalize or restructure a business or operations or financial obligations; or otherwise provide similar or related services or services commonly known as business brokerage, investment banking, or broker-dealer services.

 

	
 
	
4.3.
	
Pending Engagements.  Following the Effective Time, Executive shall and shall cause Buyer to, promptly pay to Company a percentage of all revenue Received with respect to each Engagement for which Company has been engaged or retained as of the Effective time but that is closed or completed following the Effective Time, determined by multiplying such revenue by the percentage of the Engagement completed prior to the Effective Time, as determined in good faith by Executive and a representative of Sole Member on or before December 31, 2019.     

 

	
 
	
4.4.
	
Exclusion.  Notwithstanding any other term or provision of this Amendment, Executive may provide his personal services to [G2] and retain all amounts paid to Executive by [G2] for his personal services; provided that Executive does not use any property or personnel of Company in connection with his services to [G2], with the exceptions of  Company owned laptop used by Executive, and any buyer databases used by Company so long as such use does not create a cost or liability for Company or Parent.  In providing services to [G2], Executive may use any independent contractors currently used by Company.

 

	
 
	
4.5.
	
Efforts.  Prior to the Effective Time, Executive shall use commercially reasonable, good faith efforts, consistent with past practice, to obtain additional Engagements for Company and accelerate the closing or completion of pending Engagements.  Following the Effective Time, Executive shall and shall cause Buyer to use commercially reasonable, good faith efforts, consistent with past practice, to collect all amounts due with respect to each Engagement. 

 

	
 
	
4.6.
	
Audit Rights.  Executive shall and shall cause Buyer to maintain accurate and complete records to document the accurate calculation and payment of all amounts due to Company under this Section 4. On three business days’ notice within one year after payment of the final amount due under this Section 4, Company or its representatives may at Company’s expense audit and copy from Executive and Buyer such books, records, and other documents as necessary to verify Executive and Buyer’s compliance with this Section 4.  Executive shall and shall cause Buyer to reasonably cooperate with any such audit.  If any audit under this Section 4.6 reveals an under-payment of any amount(s) due under this Section 4, then Executive shall and shall cause Buyer to promptly pay to Company the shortfall amount(s) plus interest on the deficient 

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amount(s) commencing as of the date such amount(s) should have been paid under this Section 4, at an annual rate equal to the then-prevailing Prime Rate as reported in the Wall Street Journal (or, if less, the maximum interest permitted by applicable law).  If any audit under this Section 4 reveals a shortfall greater than ten percent (10%) of the payment(s) audited, then Executive shall and shall cause Buyer to reimburse Company the reasonably incurred out-of-pocket costs incurred by Company and its Affiliates in connection with such audit, including the fees and expenses of any third-party retained to assist or conduct such audit.  Executive may dispute any audit results by prompt written notice to Company.  If the parties fail to resolve any such dispute within thirty (30) days of the date of Executive’s dispute notice, then any party may initiate dispute resolution proceedings in accordance with Section 5.14 of this Amendment.

 

	
5.
	
Miscellaneous.

 

	
 
	
5.1.
	
Defined Terms.  Capitalized terms used but not defined in this Amendment shall have the meanings given in the Agreement.  Headings in this Amendment are for convenient reference and shall not be used to interpret or construe any provision of this Amendment.

 

	
 
	
5.2.
	
Further Assurances. Each of the parties to this Amendment shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions of this Amendment and give effect to the transactions contemplated by this Amendment.

 

	
 
	
5.3.
	
Releases.  At the Resignation Time, Executive, Company, Parent and Sole Member shall execute and deliver the mutual release agreement attached as Exhibit C.

 

	
 
	
5.4.
	
Confidentiality.  Each party agrees not to disclose any of the negotiations of, terms of, or amounts paid under this Amendment to any third party; provided that no party will be prohibited from making disclosures to professional advisors as necessary to obtain their advice or as may be required by applicable law, including as required by applicable securities law.  Executive may disclose the terms of this Amendment to the extent necessary to confirm to Executive’s potential employers and employees Executive’s rights and obligations regarding employment matters.  Except as required by applicable law, no party may issue or release any announcement, statement, press release, or other publicity relating to this Amendment except those public announcements that are mutually agreed to by Executive and Parent.

 

	
 
	
5.5.
	
Non-disparagement.  Parent shall not and shall cause its Affiliates not to make, publish, or communicate to any third party or in any public forum any disparaging remarks, comments, or statements concerning Executive, and Executive shall not and shall cause Buyer not to, make, publish, or communicate to any third party or in any public forum any disparaging remarks, comments, or statements concerning Parent or its present or future Affiliates or any of their respective present or future employees, officers, or directors.  This Section 5.5 does not in any way restrict or impede Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or from cooperating with any government 

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investigation or court order or from making a good-faith, truthful report to any government agency with oversight responsibility for Parent, Sole Member or Company.

 

	
 
	
5.6.
	
Equitable Relief.    Notwithstanding any limitation on remedies contained in the Agreement, each party acknowledges and agrees that (i) a breach or threatened breach by such party of any of its obligations under this Amendment would give rise to irreparable harm to the other party or its Affiliates for which monetary damages would not be an adequate remedy and (ii) if a breach or a threatened breach by such party of any such obligations occurs, the other party hereto will, in addition to any and all other rights and remedies that may be available to such party at law, at equity, or otherwise in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance, and any other relief that may be available from a federal or state court of competent jurisdiction in Maryland.

 

	
 
	
5.7.
	
Provision of Data.  Executive shall use commercially reasonable, good faith efforts to deliver to Parent prior to the Effective Time the following information for all periods on and after January 1, 2011: (i) the name and contact information of each client, trustee, and attorney who Engaged or referred a potential Engagement to Company, (ii) the project name assigned to each Engagement (whether or not the Engagement was completed and whether or not the related transaction was completed or closed), the corresponding transaction type, transaction price or value, date of completion or closing, the name of the buyer or other transaction parties, and the corresponding fee paid to Company, and (iii) all mailing lists (including email, contact and other relevant data) used and/or maintained by Company.      To the extent that any of the foregoing is an Asset (Exhibit A), Parent and its present and future Affiliates shall be entitled to use and authorize others to use such information in connection with the operation and disposition of their respective businesses as though they were the owners of such information.

 

	
 
	
5.8.
	
Access to Records.  In order to facilitate Parent’s tax, accounting, SEC, and other legal obligations, for a period of ten (10) years after the Effective Time, Executive shall and shall cause Buyer to: (i) retain the books and records included in the Assets (Exhibit A) and related to periods prior to the Effective Time in a manner reasonably consistent with the prior practices of Company; and (ii) upon reasonable notice, afford the representatives of Parent reasonable access (including the right to make, at Parent’s expense, photocopies), during normal business hours, to such books and records. 

 

	
 
	
5.9.
	
Expenses. Except as otherwise expressly provided in this Amendment, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Amendment and the transactions contemplated by this Amendment shall be paid by the party incurring such costs and expenses.

 

	
 
	
5.10.
	
No Third-Party Beneficiaries. Parent and Sole Member and Executive are beneficiaries of the Agreement and this Amendment and are entitled to enforce the Agreement and this Amendment.  Otherwise, this Amendment is for the sole benefit of Company and Executive and their respective successors and permitted assigns.  Except 

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as provided in the preceding sentence, nothing in this Amendment, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Amendment.

 

	
 
	
5.11.
	
Integration.  The Agreement continues in full force and effect, as amended by this Amendment.  The Agreement and this Amendment constitute the sole and entire agreement of the parties with respect to the subject matter of the Agreement and this Amendment, and supersede all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to the subject matter. In the event of any inconsistency between the Agreement and this Amendment, this Amendment shall control.  No party have relied on any statement, representation, warranty, or agreement of any other party or of any other person, including any representations, warranties, or agreements arising from statute or otherwise in law, except for the representations, warranties, or agreements expressly contained in the Agreement and this Amendment.

 

	
 
	
5.12.
	
Counterparts.  This Amendment may be executed in counterparts.  A signed copy of this Amendment delivered by e-mail or other electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Amendment.

 

	
 
	
5.13.
	
Governing Law.  Notwithstanding Section 10(e) of the Agreement, the Agreement and this Amendment and all matters arising out of or relating to the Agreement or this Amendment shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction).

 

	
 
	
5.14.
	
Venue.  Notwithstanding Section 10(e) of the Agreement, any legal suit, action, or proceeding arising out of or based upon/relating to the Agreement or this Amendment or the transactions contemplated thereby or hereby shall be instituted solely and exclusively in the federal courts of the United States of America situated in Maryland or the state courts of Maryland, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding. The parties irrevocably and unconditionally waive any objection to venue of any suit, action, or proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum.

 

[signature page follows.]

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Company and Executive hereby execute this Amendment as of the Effective Date.

 

			
	
COMPANY:
	
 
	
EXECUTIVE:

	
 
	
 
	
 

	
Equity Partners HG LLC
	
 
	
 

	
 
	
 
	
 

	
By: /s/ James Sklar
	
 
	
/s/ Kenneth W. Mann

	
Title: EVP, General Counsel
	
 
	
Kenneth Mann

 

 

 

Heritage Global LLC and Heritage Global Inc.  hereby agree to be bound by this Amendment. 

 

			
	
SOLE MEMBER:
	
 
	
 

	
 
	
 
	
 

	
Heritage Global LLC
	
 
	
 

	
 
	
 
	
 

	
By: /s/ James Sklar
	
 
	
 

	
Title: EVP, General Counsel
	
 
	
 

 

 

 

Heritage Global Inc. hereby agrees to be bound by Section 5.3 of this Amendment. 

			
	
PARENT:
	
 
	
 

	
 
	
 
	
 

	
Heritage Global Inc.
	
 
	
 

	
 
	
 
	
 

	
By: /s/ James Sklar
	
 
	
 

	
Title: EVP, General Counsel
	
 
	
 

 

 

9Exhibit 4.4

 

GENOMIC HEALTH, INC.

 

AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN

 

(Adopted by the Board of Directors on September 8, 2005,

 

as amended and restated by the Board of Directors on April 16, 2019)

 

 

Table of Contents

 

	
SECTION 1.  ESTABLISHMENT   AND PURPOSE.
    	
1
    
	
 
    	
 
    
	
SECTION 2.  DEFINITIONS.
    	
1
    
	
 
    	
 
    
	
(a)        “Affiliate”
    	
1
    
	
 
    	
 
    
	
(b)        “Award”
    	
1
    
	
 
    	
 
    
	
(c)        “Board   of Directors”
    	
1
    
	
 
    	
 
    
	
(d)        “Change   in Control”
    	
1
    
	
 
    	
 
    
	
(e)        “Code”
    	
2
    
	
 
    	
 
    
	
(f)        “Committee”
    	
2
    
	
 
    	
 
    
	
(g)        “Company”
    	
2
    
	
 
    	
 
    
	
(h)        “Consultant”
    	
2
    
	
 
    	
 
    
	
(i)        “Employee”
    	
2
    
	
 
    	
 
    
	
(j)        “Exchange   Act”
    	
2
    
	
 
    	
 
    
	
(k)        “Exercise   Price”
    	
2
    
	
 
    	
 
    
	
(l)        “Fair   Market Value”
    	
2
    
	
 
    	
 
    
	
(m)        “ISO”
    	
3
    
	
 
    	
 
    
	
(n)        “Nonstatutory   Option” or “NSO”
    	
3
    
	
 
    	
 
    
	
(o)        “Offeree”
    	
3
    
	
 
    	
 
    
	
(p)        “Option”
    	
3
    
	
 
    	
 
    
	
(q)        “Optionee”
    	
3
    
	
 
    	
 
    
	
(r)        “Outside   Director”
    	
3
    
	
 
    	
 
    
	
(s)        “Parent”
    	
3
    
	
 
    	
 
    
	
(t)        “Participant”
    	
3
    
	
 
    	
 
    
	
(u)        “Plan”
    	
3
    
	
 
    	
 
    
	
(v)        “Purchase   Price”
    	
3
    
	
 
    	
 
    
	
(w)        “Restricted   Share”
    	
3
    
	
 
    	
 
    
	
(x)        “Restricted   Share Agreement”
    	
3
    
	
 
    	
 
    
	
(y)        “SAR”
    	
3
    
	
 
    	
 
    
	
(z)        “SAR   Agreement”
    	
3
    
	
 
    	
 
    
	
(aa)      “Service”
    	
3
    
	
 
    	
 
    
	
(bb)      “Share”
    	
4
    
	
 
    	
 
    
	
(cc)      “Stock”
    	
4
    
	
 
    	
 
    
	
(dd)      “Stock   Option Agreement”
    	
4
    
	
 
    	
 
    
	
(ee)      “Stock   Unit”
    	
4
    
	
 
    	
 
    
	
(ff)      “Stock   Unit Agreement”
    	
4
    

 

i

 

	
(gg)      “Subsidiary”
    	
4
    
	
 
    	
 
    
	
(hh)      “Total   and Permanent Disability”
    	
4
    
	
 
    	
 
    
	
SECTION 3.  ADMINISTRATION.
    	
4
    
	
 
    	
 
    
	
(a)        Committee   Composition
    	
4
    
	
 
    	
 
    
	
(b)        Committee   for Non-Officer Grants
    	
4
    
	
 
    	
 
    
	
(c)        Committee   Procedures
    	
4
    
	
 
    	
 
    
	
(d)        Committee   Responsibilities
    	
5
    
	
 
    	
 
    
	
SECTION 4.  ELIGIBILITY.
    	
6
    
	
 
    	
 
    
	
(a)        General   Rule
    	
6
    
	
 
    	
 
    
	
(b)        Automatic   Grants to Outside Directors.
    	
6
    
	
 
    	
 
    
	
(c)        Ten-Percent   Stockholders
    	
7
    
	
 
    	
 
    
	
(d)        Attribution   Rules
    	
7
    
	
 
    	
 
    
	
(e)        Outstanding   Stock
    	
7
    
	
 
    	
 
    
	
SECTION 5.  STOCK   SUBJECT TO PLAN.
    	
7
    
	
 
    	
 
    
	
(a)        Basic   Limitation
    	
7
    
	
 
    	
 
    
	
(b)        Award   Limitation
    	
7
    
	
 
    	
 
    
	
(c)        Additional   Shares
    	
7
    
	
 
    	
 
    
	
SECTION 6.  RESTRICTED   SHARES.
    	
7
    
	
 
    	
 
    
	
(a)        Restricted   Stock Agreement
    	
7
    
	
 
    	
 
    
	
(b)        Payment   for Awards
    	
8
    
	
 
    	
 
    
	
(c)        Vesting
    	
8
    
	
 
    	
 
    
	
(d)        Voting   and Dividend Rights
    	
8
    
	
 
    	
 
    
	
(e)        Restrictions   on Transfer of Shares
    	
8
    
	
 
    	
 
    
	
SECTION 7.  TERMS   AND CONDITIONS OF OPTIONS.
    	
8
    
	
 
    	
 
    
	
(a)        Stock   Option Agreement
    	
8
    
	
 
    	
 
    
	
(b)        Number   of Shares
    	
8
    
	
 
    	
 
    
	
(c)        Exercise   Price
    	
8
    
	
 
    	
 
    
	
(d)        Withholding   Taxes
    	
8
    
	
 
    	
 
    
	
(e)        Exercisability   and Term
    	
8
    
	
 
    	
 
    
	
(f)        Exercise   of Options
    	
9
    
	
 
    	
 
    
	
(g)        No   Rights as a Stockholder
    	
9
    
	
 
    	
 
    
	
(h)        Modification,   Extension and Renewal of Options
    	
9
    
	
 
    	
 
    
	
(i)        Restrictions   on Transfer of Shares
    	
9
    
	
 
    	
 
    
	
(j)        Buyout   Provisions
    	
9
    

 

ii

 

	
SECTION 8.  PAYMENT   FOR SHARES.
    	
9
    
	
 
    	
 
    
	
(a)        General   Rule
    	
9
    
	
 
    	
 
    
	
(b)        Surrender   of Stock
    	
9
    
	
 
    	
 
    
	
(c)        Services   Rendered
    	
10
    
	
 
    	
 
    
	
(d)        Cashless   Exercise
    	
10
    
	
 
    	
 
    
	
(e)        Exercise/Pledge
    	
10
    
	
 
    	
 
    
	
(f)        Promissory   Note
    	
10
    
	
 
    	
 
    
	
(g)        Other   Forms of Payment
    	
10
    
	
 
    	
 
    
	
(h)        Limitations   under Applicable Law
    	
10
    
	
 
    	
 
    
	
SECTION 9.  STOCK   APPRECIATION RIGHTS.
    	
10
    
	
 
    	
 
    
	
(a)        SAR   Agreement
    	
10
    
	
 
    	
 
    
	
(b)        Number   of Shares
    	
10
    
	
 
    	
 
    
	
(c)        Exercise   Price
    	
10
    
	
 
    	
 
    
	
(d)        Exercisability   and Term
    	
10
    
	
 
    	
 
    
	
(e)        Effect   of Change in Control
    	
10
    
	
 
    	
 
    
	
(f)        No   Rights as a Stockholder
    	
11
    
	
 
    	
 
    
	
(g)        Exercise   of SARs
    	
11
    
	
 
    	
 
    
	
(h)        Modification   or Assumption of SARs
    	
11
    
	
 
    	
 
    
	
(i)        Buyout   Provisions
    	
11
    
	
 
    	
 
    
	
SECTION 10. STOCK   UNITS.
    	
11
    
	
 
    	
 
    
	
(a)        Stock   Unit Agreement
    	
11
    
	
 
    	
 
    
	
(b)        Payment   for Awards
    	
11
    
	
 
    	
 
    
	
(c)        Vesting   Conditions
    	
11
    
	
 
    	
 
    
	
(d)        Voting   and Dividend Rights
    	
11
    
	
 
    	
 
    
	
(e)        Form and   Time of Settlement of Stock Units
    	
12
    
	
 
    	
 
    
	
(f)        Death   of Recipient
    	
12
    
	
 
    	
 
    
	
(g)        Creditors’   Rights
    	
12
    
	
 
    	
 
    
	
SECTION 11. ADJUSTMENT   OF SHARES.
    	
12
    
	
 
    	
 
    
	
(a)        Adjustments
    	
12
    
	
 
    	
 
    
	
(b)        Dissolution   or Liquidation
    	
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(c)        Reorganizations
    	
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(d)        Reservation   of Rights
    	
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SECTION 12. DEFERRAL   OF AWARDS.
    	
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(a)        Committee   Powers
    	
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(b)        General   Rules
    	
13
    

 

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SECTION 13. AWARDS   UNDER OTHER PLANS.
    	
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SECTION 14. PAYMENT   OF DIRECTOR’S FEES IN SECURITIES.
    	
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(a)        Effective   Date
    	
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(b)        Elections   to Receive NSOs, Restricted Shares or Stock Units
    	
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(c)        Number   and Terms of NSOs, Restricted Shares or Stock Units
    	
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SECTION 15. LEGAL   AND REGULATORY REQUIREMENTS.
    	
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SECTION 16. TAXES.
    	
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(a)        Withholding   Taxes
    	
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(b)        Share   Withholding
    	
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(c)        Section 409A
    	
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SECTION 17. OTHER   PROVISIONS APPLICABLE TO AWARDS.
    	
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(a)        Transferability
    	
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(b)        Qualifying   Performance Criteria
    	
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(c)        Vesting   Restrictions on Awards
    	
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(d)        Recoupment
    	
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SECTION 18. NO   EMPLOYMENT RIGHTS.
    	
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SECTION 19. DURATION   AND AMENDMENTS.
    	
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(a)        Term   of the Plan
    	
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(b)        Right   to Amend or Terminate the Plan
    	
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(c)        Effect   of Termination
    	
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iv

 

GENOMIC HEALTH, INC.

 

AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN

 

(As amended and restated on April 16, 2019)

 

SECTION 1.        ESTABLISHMENT AND PURPOSE.

 

The Plan was adopted by the Board of Directors on September 8, 2005, amended and restated on January 28, 2009, amended on July 25, 2013, amended and restated on March 19, 2014, amended on April 26, 2015, amended on January 26, 2016 and amended and restated on January 31, 2018. The Plan was most recently amended and restated on April 16, 2019 (“Restatement Date”) subject to Company stockholder approval. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or nonstatutory stock options) or stock appreciation rights.

 

SECTION 2.        DEFINITIONS.

 

(a)          “Affiliate” shall mean any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.

 

(b)          “Award” shall mean any award of an Option, a SAR, a Restricted Share or a Stock Unit under the Plan.

 

(c)          “Board of Directors” shall mean the Board of Directors of the Company, as constituted from time to time.

 

(d)          “Change in Control” shall mean the occurrence of any of the following events:

 

(i)           A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directors who either:

 

(A)         Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or

 

(B)         Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); or

 

(ii)          Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or

 

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(iii)         The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or

 

(iv)         The sale, transfer or other disposition of all or substantially all of the Company’s assets.

 

For purposes of subsection 2(d)(i) above, the term “look-back” date shall mean the date 24 months prior to the date of the event that may constitute a Change in Control.

 

For purposes of subsection 2(d)(iii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock.

 

Any other provision of this Section 2(d) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial offering of Stock to the public.

 

(e)          “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(f)           “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof.

 

(g)          “Company” shall mean Genomic Health, Inc., a Delaware corporation.

 

(h)          “Consultant” shall mean a consultant or advisor who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee.

 

(i)           “Employee” shall mean any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.

 

(j)           “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(k)          “Exercise Price” shall mean, in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, shall mean an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR.

 

(l)           “Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee as follows:

 

(i)           If the Stock was traded over-the-counter on the date in question but was not traded on The Nasdaq Stock Market, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the Pink Sheets LLC;

 

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(ii)          If the Stock was traded on The Nasdaq Stock Market, then the Fair Market Value shall be equal to the last reported sale price quoted for such date by The Nasdaq Stock Market;

 

(iii)         If the Stock was traded on a United States stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported for such date by the applicable composite-transactions report; and

 

(iv)         If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

 

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

 

(m)         “ISO” shall mean an employee incentive stock option described in Section 422 of the Code.

 

(n)          “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO.

 

(o)          “Offeree” shall mean an individual to whom the Committee has offered the right to acquire Shares under the Plan (other than upon exercise of an Option).

 

(p)          “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

 

(q)          “Optionee” shall mean an individual or estate who holds an Option or SAR.

 

(r)           “Outside Director” shall mean a member of the Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary.

 

(s)           “Parent” shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date.

 

(t)           “Participant” shall mean an individual or estate who holds an Award.

 

(u)          “Plan” shall mean this 2005 Stock Incentive Plan of Genomic Health, Inc., as amended from time to time.

 

(v)          “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee.

 

(w)         “Restricted Share” shall mean a Share awarded under the Plan.

 

(x)          “Restricted Share Agreement” shall mean the agreement between the Company and the recipient of a Restricted Share which contains the terms, conditions and restrictions pertaining to such Restricted Shares.

 

(y)          “SAR” shall mean a stock appreciation right granted under the Plan.

 

(z)           “SAR Agreement” shall mean the agreement between the Company and an Optionee which contains the terms, conditions and restrictions pertaining to his or her SAR.

 

(aa)        “Service” shall mean service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Stock Option Agreement, SAR Agreement, Restricted Share Agreement or Stock Unit Agreement. Service does not terminate when an Employee goes on a bona fide leave of absence,

 

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that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating three months after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Company determines which leaves count toward Service, and when Service terminates for all purposes under the Plan.

 

(bb)        “Share” shall mean one share of Stock, as adjusted in accordance with Section 11 (if applicable). All share numbers herein assume, and no adjustment shall be made in respect of, the one-for-three reverse split of the Stock approved by the Board of Directors on the date of initial adoption of the Plan.

 

(cc)         “Stock” shall mean the Common Stock of the Company.

 

(dd)        “Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to such Option.

 

(ee)         “Stock Unit” shall mean a bookkeeping entry representing the equivalent of one Share, as awarded under the Plan.

 

(ff)          “Stock Unit Agreement” shall mean the agreement between the Company and the recipient of a Stock Unit which contains the terms, conditions and restrictions pertaining to such Stock Unit.

 

(gg)        “Subsidiary” shall mean any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

(hh)        “Total and Permanent Disability” shall mean permanent and total disability as defined by section 22(e)(3) of the Code.

 

SECTION 3.        ADMINISTRATION.

 

(a)          Committee Composition.  The Plan shall be administered by the Committee. The Committee shall consist of two or more directors of the Company, who shall be appointed by the Board. In addition, the composition of the Committee shall satisfy (i) such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for grandfather treatment under Section 162(m)(4)(C) of the Code.

 

(b)          Committee for Non-Officer Grants.  The Board of Directors may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants.  Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. The Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so award.

 

(c)          Committee Procedures.  The Board of Directors shall designate one of the members of the Committee as chairman.  The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of

 

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the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing (including via email) by all Committee members, shall be valid acts of the Committee.

 

(d)          Committee Responsibilities.  Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:

 

(i)           To interpret the Plan and to apply its provisions;

 

(ii)          To adopt, amend or rescind rules, procedures and forms relating to the Plan;

 

(iii)         To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws including qualifying for preferred tax treatment under applicable foreign tax laws;

 

(iv)         To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;

 

(v)          To determine when Awards are to be granted under the Plan;

 

(vi)         To select the Offerees and Optionees;

 

(vii)        To determine the number of Shares to be made subject to each Award;

 

(viii)       To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award;

 

(ix)         To amend any outstanding Award agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired;

 

(x)          To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;

 

(xi)         To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;

 

(xii)        To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business;

 

(xiii)       To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award agreement;

 

(xiv)       To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and

 

(xv)        To take any other actions deemed necessary or advisable for the administration of the Plan.

 

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Options or other rights under the Plan to persons subject to Section 16 of the Exchange Act.  All decisions, interpretations and other actions of the Committee shall be final and binding on all Offerees, all Optionees, and all persons deriving their rights

 

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from an Offeree or Optionee.  No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan, any Option, or any right to acquire Shares under the Plan.

 

SECTION 4.        ELIGIBILITY.

 

(a)          General Rule.  Only common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.  Only Employees, Consultants and Outside Directors shall be eligible for the grant of Restricted Shares, Stock Units, Nonstatutory Options or SARs.

 

(b)          Automatic Grants to Outside Directors.

 

(i)           Each Outside Director who first joins the Board of Directors on or after the Restatement Date, and who was not previously an Employee, shall receive a Nonstatutory Option and Stock Units or Restricted Shares (each a “Full Value Award”) on the date of his or her election by the Company’s stockholders or the Board of Directors, as applicable. Such Award shall have an aggregate fair market value equal to $350,000, as calculated based on the closing Share price on the grant date with the number of Shares subject to such Option determined using a conversion ratio of 2.3 (or such other conversion ratio determined by the Board of Directors) Option Shares to each Share subject to a Full Value Award. Twenty-five percent (25%) of the Shares subject to each Award granted under this Section 4(b)(i) shall vest and become exercisable on the first anniversary of the date of grant. The balance of the Shares subject to such Award (i.e. the remaining seventy-five percent (75%)) shall vest and become exercisable monthly over a three (3) year period beginning on the day which is one month after the first anniversary of the date of grant, at a monthly rate of 2.0833% of the total number of Shares subject to such Award. Stock Units and Restricted Shares shall vest annually in equal installments over a three (3) year period from the date of grant. Notwithstanding the foregoing, each such Award shall become vested if a Change in Control occurs with respect to the Company during the Outside Director’s Service.

 

(ii)          On the first business day following the conclusion of each regular annual meeting of the Company’s stockholders, commencing with the annual meeting occurring on or after the Restatement Date, each Outside Director who was not elected to the Board of Directors for the first time at such meeting and who will continue serving as a member of the Board of Directors thereafter shall receive a Nonstatutory Option and Stock Units or Restricted Shares, provided that such Outside Director has served on the Board of Directors for at least six months. Such Award shall have an aggregate fair market value equal to $200,000, as calculated based on the closing Share price on date of the annual meeting of the Company’s stockholders with the number of Shares subject to such Option determined using a conversion ratio of 2.3 (or such other conversion ratio determined by the Board of Directors) Option Shares to each Share subject to a Full Value Award. Each Award granted under this Section 4(b)(ii) shall vest and become exercisable on the first anniversary of the date of grant; provided, however, that each such Award shall become exercisable in full immediately prior to the next regular annual meeting of the Company’s stockholders following such date of grant in the event such meeting occurs prior to such first anniversary date. Notwithstanding the foregoing, each Award granted under this Section 4(b)(ii) shall become vested if a Change in Control occurs with respect to the Company during the Outside Director’s Service.

 

(iii)         The Exercise Price of all Nonstatutory Options granted to an Outside Director under this Section 4(b) shall be equal to 100% of the Fair Market Value of a Share on the date of grant, payable in one of the forms described in Section 8(a), (b) or (d).

 

(iv)         All Nonstatutory Options granted to an Outside Director under this Section 4(b) shall terminate on the earlier of (A) the day before the tenth anniversary of the date of grant of such Options or (B) the date twelve months after the termination of such Outside Director’s Service for any reason; provided, however, that any such Options that are not vested upon the termination of the Outside Director’s Service as a member of the Board of Directors for any reason shall terminate immediately and may not be exercised.

 

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(c)          Ten-Percent Stockholders.  An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

 

(d)          Attribution Rules.  For purposes of Section 4(c) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

 

(e)          Outstanding Stock.  For purposes of Section 4(c) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

 

SECTION 5.        STOCK SUBJECT TO PLAN.

 

(a)          Basic Limitation.  Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares.  The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed 14,980,000 Shares (the “Absolute Share Limit”). Any Shares issued in connection with an Option or SAR Award shall be counted against the Absolute Share Limit as one (1) Share for every one (1) Option or SAR awarded. Any Shares issued in connection with a Restricted Share or Stock Unit Award shall be counted against the Absolute Share Limit as one (1) Share for every one (1) Share issued in connection with such Award that was granted prior to January 31, 2018 and shall be counted against the Absolute Share Limit as 1.9 Shares for every one (1) Share issued in connection with such Award that was granted on or after January 31, 2018. To the extent that a Share that was subject to an Award that counted as one Share is returned to the Plan pursuant to Section 5(c), the Absolute Share Limit will be credited with one (1) Share. To the extent that a Share that was subject to a Restricted Share or Stock Unit Award that counted as 1.9 Shares against the Absolute Share Limit is returned to the Plan pursuant to Section 5(c), the Absolute Share Limit will be credited with 1.9 Shares. The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 11. The number of Shares that are subject to Options or other Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.

 

(b)          Award Limitation.  Subject to the provisions of Section 11, no Participant may receive Options, SARs, Restricted Shares or Stock Units under the Plan in any calendar year that relate to more than 1,650,000 Shares.

 

(c)          Additional Shares.  If Restricted Shares or Shares issued upon the exercise of Options are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any other reason before being exercised or settled, then the corresponding Shares shall again become available for Awards under the Plan.  If Stock Units are settled, then the full number of Shares settled shall reduce the number of Shares available under Section 5(a) regardless of the number of Shares actually issued in settlement of such Stock Units. The full number of SARs settled shall be counted against the number of Shares available for award under the Plan, regardless of the number of Shares actually issued in settlement of such SARs.  Notwithstanding the foregoing, the number of Shares that may be delivered in the aggregate pursuant to the exercise of ISOs granted under the Plan shall not exceed the Absolute Share Limit, as adjusted pursuant to Section 11, plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to this Section 5(c).

 

SECTION 6.        RESTRICTED SHARES.

 

(a)          Restricted Stock Agreement.  Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.

 

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(b)          Payment for Awards.  Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services.

 

(c)          Vesting.  Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement. A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares of thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.

 

(d)          Voting and Dividend Rights.  The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders. Holders of Restricted Shares must invest any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Award with respect to which the dividends were paid.

 

(e)          Restrictions on Transfer of Shares.  Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Stock Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

SECTION 7.        TERMS AND CONDITIONS OF OPTIONS.

 

(a)          Stock Option Agreement.  Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a reduction in the Optionee’s other compensation.

 

(b)          Number of Shares.  Each Stock Option Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 11.

 

(c)          Exercise Price.  Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in 4(c), and the Exercise Price of an NSO shall not be less 85% of the Fair Market Value of a Share on the date of grant.  Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee at its sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8.

 

(d)          Withholding Taxes.  As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

 

(e)          Exercisability and Term.  Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for Employees described in Section 4(c)). A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing

 

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in this Section 7(e), the Committee at its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire.

 

(f)           Exercise of Options.  Each Stock Option Agreement shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Optionee’s estate or any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

 

(g)         Effect of Change in Control.  The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company.

 

(h)          No Rights as a Stockholder.  An Optionee, or a transferee of an Optionee, shall have no rights (including voting, dividend and other rights) as a stockholder with respect to any Shares covered by his Option until such person has satisfied all of the terms and conditions to receive such Shares, has satisfied any applicable withholding or tax obligations relating to the Award and the Shares have been issued (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company). The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustments shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 11.

 

(i)           Modification, Extension and Renewal of Options.  Within the limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price; provided, however, that other than in connection with an adjustment of Awards pursuant to Section 11, the Committee may not modify outstanding Options to lower the Exercise Price nor may the Committee assume or accept the cancellation of outstanding Options in return for cash or the grant of new Options or SARs with a lower Exercise Price, unless such action has been approved by the Company’s stockholders.  The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, materially impair his or her rights or obligations under such Option.

 

(j)           Restrictions on Transfer of Shares.  Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

(k)           Buyout Provisions.  Except with respect to an Option whose Exercise Price exceeds the Fair Market Value of the Shares subject to the Option, the Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

 

SECTION 8.        PAYMENT FOR SHARES.

 

(a)          General Rule.  The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(g) below.

 

(b)          Surrender of Stock.  To the extent that a Stock Option Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Optionee or his representative. Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if

 

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such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

 

(c)          Services Rendered.  At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary prior to the award. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the award) of the value of the services rendered by the Offeree and the sufficiency of the consideration to meet the requirements of Section 6(b).

 

(d)          Cashless Exercise.  To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.

 

(e)          Exercise/Pledge.  To the extent that a Stock Option Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price.

 

(f)           Promissory Note.  To the extent that a Stock Option Agreement or Restricted Stock Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note.

 

(g)          Other Forms of Payment.  To the extent that a Stock Option Agreement or Restricted Stock Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules.

 

(h)          Limitations under Applicable Law.  Notwithstanding anything herein or in a Stock Option Agreement or Restricted Stock Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

 

SECTION 9.        STOCK APPRECIATION RIGHTS.

 

(a)          SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionee’s other compensation.

 

(b)          Number of Shares.  Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 11.

 

(c)          Exercise Price.  Each SAR Agreement shall specify the Exercise Price. A SAR Agreement may specify an Exercise Price that varies in accordance with a predetermined formula while the SAR is outstanding.

 

(d)          Exercisability and Term.  Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable.  The SAR Agreement shall also specify the term of the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s service.  SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.

 

(e)          Effect of Change in Control.  The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company

 

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(f)           No Rights as a Stockholder.  An Optionee, or a transferee of an Optionee, shall have no rights (including voting, dividend and other rights) as a stockholder with respect to any Shares pertaining to his SAR until the date such person has satisfied all of the terms and conditions to receive such Shares, has satisfied any applicable withholding or tax obligations relating to the Award and the Shares have been issued (as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company). No adjustments shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 11.

 

(g)          Exercise of SARs.  Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price.

 

(h)          Modification or Assumption of SARs.  Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different Exercise Price; provided, however, that other than in connection with an adjustment of Awards pursuant to Section 11, the Committee may not modify outstanding SARs to lower the Exercise Price nor may the Committee assume or accept the cancellation of outstanding SARs in return for cash or the grant of new Options or SARs with a lower Exercise Price, unless such action has been approved by the Company’s stockholders. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR.

 

(i)            Buyout Provisions.  Except with respect to a SAR whose Exercise Price exceeds the Fair Market Value of the Shares subject to the SAR, the Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents a SAR previously granted, or (b) authorize an Optionee to elect to cash out a SAR previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

 

SECTION 10.      STOCK UNITS.

 

(a)          Stock Unit Agreement.  Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Stock Unit Agreements entered into under the Plan need not be identical. Stock Units may be granted in consideration of a reduction in the recipient’s other compensation.

 

(b)          Payment for Awards.  To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.

 

(c)          Vesting Conditions.  Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement. A Stock Unit Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company.

 

(d)          Voting and Dividend Rights.  The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding.  Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Dividend equivalents shall not be distributed prior to settlement of the Stock Unit to which the dividend equivalents pertain. Prior to distribution, any dividend equivalents which are not paid shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach.

 

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(e)          Form and Time of Settlement of Stock Units.  Settlement of vested Stock Units may be made in the form of (a) cash, (b) Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments. The distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 11.

 

(f)           Death of Recipient.  Any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient’s death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after the recipient’s death shall be distributed to the recipient’s estate.

 

(g)          Creditors’ Rights.  A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.

 

SECTION 11.      ADJUSTMENT OF SHARES.

 

(a)          Adjustments.  In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and equitable adjustments in:

 

(i)           The number of Options, SARs, Restricted Shares and Stock Units available for future Awards under Section 5;

 

(ii)          The limitations set forth in Section 5(b);

 

(iii)         The number of NSOs to be granted to Outside Directors under Section 4(b);

 

(iv)         The number of Shares covered by each outstanding Option and SAR;

 

(v)          The Exercise Price under each outstanding Option and SAR; and

 

(vi)         The number of Stock Units included in any prior Award which has not yet been settled.

 

Except as provided in this Section 11, a Participant shall have no rights by reason of any issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.

 

(b)          Dissolution or Liquidation.  To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.

 

(c)          Reorganizations. In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Subject to compliance with Section 409A of the Code, such agreement shall provide for:

 

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(i)           The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation;

 

(ii)          The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary;

 

(iii)         The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards;

 

(iv)         Full exercisability or vesting and accelerated expiration of the outstanding Awards; or

 

(v)          Settlement of the full value of the outstanding Awards in cash or cash equivalents followed by cancellation of such Awards.

 

(d)          Reservation of Rights.  Except as provided in this Section 11, an Optionee or Offeree shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class.  Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Option.  The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.

 

SECTION 12.      DEFERRAL OF AWARDS.

 

(a)          Committee Powers.  Subject to compliance with Section 409A of the Code, the Committee (in its sole discretion) may permit or require a Participant to:

 

(i)           Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books;

 

(ii)          Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Stock Units; or

 

(iii)         Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books.  Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant.

 

(b)          General Rules.  A deferred compensation account established under this Section 12 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 12.

 

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SECTION 13.      AWARDS UNDER OTHER PLANS.

 

The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under this Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

 

SECTION 14.      PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

 

(a)          Effective Date.  No provision of this Section 14 shall be effective unless and until the Board of Directors has determined to implement such provision.

 

(b)          Elections to Receive NSOs, Restricted Shares or Stock Units.  An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 14 shall be filed with the Company on the prescribed form.

 

(c)          Number and Terms of NSOs, Restricted Shares or Stock Units.  The number of NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The terms of such NSOs, Restricted Shares or Stock Units shall also be determined by the Board.

 

SECTION 15.      LEGAL AND REGULATORY REQUIREMENTS.

 

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable. The Company shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan.

 

SECTION 16.      TAXES.

 

(a)          Withholding Taxes.  To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

 

(b)          Share Withholding.  The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash.  In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the legally required minimum tax withholding.

 

(c)          Section 409A.  Each Award that provides for “nonqualified deferred compensation” within the meaning of Section 409A of the Code shall be subject to such additional rules and requirements as specified by the Committee from time to time in order to comply with Section 409A. If any amount under such an Award is payable upon a “separation from service” (within the meaning of Section 409A) to a Participant who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service, or (ii) the Participant’s death, but only to the extent such delay

 

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is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. In addition, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

 

SECTION 17.      OTHER PROVISIONS APPLICABLE TO AWARDS.

 

(a)          Transferability.  Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 17(a) shall be void and unenforceable against the Company.

 

(b)          Performance Criteria.  The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals.

 

(i)           The Committee may utilize performance criteria including, but not limitied to any of the following performance criteria: (a) cash flow (including operating cash flow), (b) earnings per share, (c) earnings before any combination of interest, taxes, depreciation or amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin (including as a percentage of revenue), (n) return on operating revenue, (o) return on invested capital, (p) market segment shares, (q) costs, (r) expenses, (s) achievement of target levels of discovery and/or development of products or services, including but not limited to research or regulatory achievements, (t) third party coverage and/or reimbursement objectives, (u) test volume metrics, (v) objective customer indicators (including, without limitation, customer satisfaction), (w) improvements in productivity, (x) attainment of objective operating goals, or (y) objective employee metrics (“Qualifying Performance Criteria”), any of which may be measured either individually, alternatively or in any combination, applied to either the individual, the Company as a whole or to a business unit or subsidiary of the Company, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, or on the basis of any other specified period, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, and subject to specified adjustments, in each case as specified by the Committee in the Award.

 

(ii)          Unless specified otherwise by the Committee at the time the performance goals are established, the Committee shall appropriately adjust the method of evaluating performance under a Qualifying Performance Criteria for a performance period as follows: (a) to exclude asset write-downs, (b) to exclude litigation or claim judgments or settlements, (c) to exclude the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (d) to exclude accruals for reorganization and restructuring programs, (e) to exclude any extraordinary nonrecurring items as determined under generally accepted accounting principles and/or described in managements’ discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, (f) to exclude the dilutive and/or accretive effects of acquisitions or joint ventures, (g) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a performance period following such divestiture, (h) to exclude the effect of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends, (i) to exclude the effects of stock based compensation; and (j) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles.

 

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(iii)         The Committee shall establish in writing the applicable performance goals (and any variation to the adjustments specified in the preceding subparagraph (ii)), and an objective method for determining the Award earned by a Participant if the goals are attained, while the outcome is substantially uncertain, and shall determine and certify in writing, for each Participant, the extent to which the performance goals have been met prior to payment or vesting of the Award. The Committee may reserve the right, in its sole discretion, to reduce the amount of compensation otherwise payable under the Plan upon the attainment of the pre-established performance goals.

 

(c)          Vesting Restrictions on Awards.  Except with respect to a maximum of five percent (5%) of the total number of Shares authorized under the Plan or, in the case of automatic Option grants to Outside Directors, as otherwise permitted under Section 4(b), no Award may vest sooner than twelve (12) months from the date of grant; provided, however, that notwithstanding the foregoing, the Committee may provide that such vesting restrictions may lapse or be waived upon the Participant’s death or disability, or the consummation of a merger or other reorganization pursuant to Section 11(c).

 

(d)          Recoupment.  In the event that the Company is required to prepare restated financial results owing to an executive officer’s intentional misconduct or grossly negligent conduct, the Board of Directors (or a designated committee) shall have the authority, to the extent permitted by applicable law (including California law), to require reimbursement or forfeiture to the Company of the amount of bonus or incentive compensation (whether cash-based or equity-based) such executive officer received during the three fiscal years preceding the year the restatement is determined to be required, to the extent that such bonus or incentive compensation exceeds what the officer would have received based on an applicable restated performance measure or target. The Company will recoup incentive-based compensation from executive officers to the extent required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules, regulations and listing standards that may be issued under that act. Any right of recoupment under this policy will be in addition to, and not in lieu of, any other rights of recoupment that may be available to the Company. This Section 17(d) shall apply to Awards granted on or after the Restatement Date.

 

SECTION 18.      NO EMPLOYMENT RIGHTS.

 

No provision of the Plan, nor any right or Option granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee.  The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice.

 

SECTION 19.      DURATION AND AMENDMENTS.

 

(a)          Term of the Plan.  The Plan, as set forth herein, shall terminate automatically on March 18, 2024 and may be terminated on any earlier date pursuant to Subsection 19(b) below.

 

(b)          Right to Amend or Terminate the Plan.  The Board of Directors may amend or terminate the Plan at any time and from time to time.  Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant.  An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.

 

(c)          Effect of Termination.  No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan.

 

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