Document:

EX-10.6

Exhibit 10.6

EMPLOYMENT AGREEMENT

WITH

ALIMERA SCIENCES, INC.

     This is an Employment Agreement entered into between Alimera Sciences, Inc., a Delaware
corporation (the “Company”), and Kenneth Green (“Executive”).

RECITALS:

     WHEREAS, the Company is engaged in the business of developing, marketing and selling
ophthalmic pharmaceuticals in the United States and throughout the world;

     WHEREAS, Company and Executive desire that Executive provide the Company employment services
upon the terms and conditions set forth below; and

     WHEREAS, this Employment Agreement is entered into as a condition of the parties consummating
their obligations under the Series A Preferred Stock Purchase Agreement (the “Purchase Agreement”)
dated as of June 29, 2004, by and among the Company and certain investors whose names are set
forth on the signature pages thereto;

     NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the
parties, intending to be legally bound, agree as follows:

AGREEMENT:

SECTION 1. TERM OF EMPLOYMENT

     (a) Effective Date. Subject to the terms and conditions set forth in this Employment
Agreement, the Company agrees to employ Executive, and Executive agrees to be employed by
the Company for the three year period which starts on the First Tranche Closing Date (as
defined
in the Purchase Agreement) (the “Effective Date”).

     (b) Term. The term of this Employment Agreement is subject to automatic three year
extensions starting on the third anniversary of the Effective Date of this Employment
Agreement
and on each subsequent third anniversary date, unless Executive or the Company cancels the
automatic extension at least thirty (30) days prior to the anniversary date.

 

 

SECTION 2. DEFINITIONS

     “Cause” means

     (1) Executive’s gross negligence or willful misconduct with respect to the
business and affairs of the Company which causes material detriment to the Company,
including violation of any material policy of the Company made known to the Executive
in writing and not cured within thirty (30) days after notice to the Executive;

     (2) Executive’s conviction of, or entering a guilty plea or plea of no contest
with respect to, a felony; or

     (3) Executive engages in any material breach of the terms of this Employment
Agreement or fails to fulfill his responsibilities under this Employment Agreement and
such breach or failure, as the case may be, is not cured, or is not capable of being
cured,
within thirty (30) days after written notice thereof is given to the Executive by the
Company.

     “Competing Business” means any business which develops, sells or markets ophthalmic
pharmaceuticals.

     “Disability” means a condition which renders Executive unable (as determined by the Board of
Directors of the Company in good faith after consultation with a physician mutually selected by
the Executive and the Board of Directors of the Company) to regularly perform his duties hereunder
by reason of illness or injury for a period of more than six consecutive months with or without
reasonable accommodation.

     “Earned Bonus” means the bonus, determined based on the actual performance of the Company for
the full fiscal year in which Executive’s employment terminates, that Executive would have earned
for the year in which his employment terminates had he remained employed for the entire year,
prorated based on the ratio of the number of days during such year that Executive was employed to
365. Such Earned Bonus will be determined and paid to Executive no later than sixty (60) days
following the delivery of the auditor’s report for the fiscal year in which Executive’s employment
terminates.

     “Good Reason” means (i) a reduction of the Executive’s base salary from the amount stated in
Section 4(a) hereof by more than fifteen percent (15%), where such reduction is not matched
by reductions by the same percentages in the base salaries of all other members of senior
management of the Company; (ii) a material adverse change in Executive’s primary responsibilities
or title; (iii) a geographical relocation of the Company’s corporate headquarters, or the
Executive’s primary business location, to a location that is more than fifty (50) miles from the
present location of the Company’s corporate headquarters or the Employee’s primary business
location, as the case may be; (iv) any breach by the Company of this Employment Agreement which is
material and which is not cured, or is not capable of being cured, within thirty (30) days after
written notice thereof to the Company from Executive.

     “ISP” means the Alimera Sciences, Inc. 2004 Incentive Stock Plan, as amended from time to
time, and any successor to such plan.

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     “Restricted Period” means the twelve (12) month period beginning on and after the
Executive’s employment with the Company is terminated pursuant to the terms of this Agreement.

SECTION 3. TITLE, POWERS AND RESPONSIBILITIES

     (a) Title.
Executive shall be the Vice-President, Scientific Affairs of the Company.

     (b) Powers and Responsibilities.

     (1) Executive in fulfilling his responsibilities shall have such powers as are
normally and customarily associated with a Vice President, Scientific Affairs in a
company of similar size and operating in a similar industry, [including the power to
hire
and fire employees and executives of the Company reporting to Executive] and such
other powers as authorized by the Board of Directors of the Company.

     (2) Executive, as a condition to his employment under this Employment Agreement, represents and warrants that he can assume and fulfill responsibilities
described in Section 3(b)(l) without any risk of violating any non-compete or
other
restrictive covenant or other agreement to which he is a party.

     (c) Reporting Relationship. Executive shall report to Dan Myers, Chief Executive
Officer and President.

     (d) Full Time Basis. Executive shall undertake to perform all his responsibilities and
exercise all his powers in good faith and on a full-time basis.

SECTION 4. COMPENSATION, BENEFITS, ETC.

     (a) Annual Base Salary. Executive’s base salary shall be one hundred eighty-five
thousand dollars ($185,000) per year, which amount may be reviewed and increased at the
discretion of the Board of Directors of the Company or any committee of the Board of Directors of the Company duly authorized to take such action. Executive’s base salary shall be payable
in accordance with the Company’s standard payroll practices and policies for executives and shall
be subject to such withholdings as required by law or as otherwise permissible under such
practices or policies.

     (b) Annual Bonus. The Company shall pay an annual bonus to Executive no later
than sixty (60) days following the delivery of the auditor’s report for the applicable fiscal
year, in
the amount, and subject to the terms and conditions, set forth in Schedule A attached
hereto.

     (c) Employee Benefit Plans. Executive shall be eligible to participate, on terms no
less favorable to Executive than the terms for participation of any other executive of the
Company at the same level within the Company as Executive, in the employee benefit plans,
programs and policies maintained by the Company in accordance with the terms and conditions
to participate in such plans, programs and policies as in effect from time to time. The
employee

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benefit plans described in this paragraph shall include (if and for as long as the
Company sponsors such plans):

     (d) Stock Options. Executive shall receive stock options at the discretion of the
Board of Directors of the Company, subject to the terms and conditions set forth in the ISP and
any corresponding option certificate granted to Executive under the ISP. As of the Effective Date,
Executive shall be entitled to a grant of stock options as set forth on Schedule B
attached hereto.

     (e) Vacation. Executive shall have the right to four weeks of vacation during each
successive one year period of his employment by the Company, which vacation time shall be
taken at such time or times in each such one year period so as not to materially and adversely
interfere with the performance of his responsibilities under this Employment Agreement.
Executive in addition shall have the right to the same time off work as other employees of the
Company.

     (f) Expense Reimbursements. Executive shall have the right to expense
reimbursements in accordance with the Company’s standard policy on expense reimbursements.

     (g) Indemnification. The Company shall, to the maximum extent permitted by
applicable law and the Company’s governing documents, indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action arising from or out of
Executive’s performance as an officer, director, manager or employee of the Company or in any
other capacity in which Executive serves at the request of the Board of Directors of the
Company. If any claim is asserted hereunder against Executive, the Company shall pay
Executive’s legal expenses (or cause such expenses to be paid) on a quarterly basis, provided
that
Executive shall reimburse the Company, in a timely manner, for such amounts if Executive shall
be found by a final, non-appealable order of a court of competent jurisdiction not to be
entitled to
indemnification. The indemnification obligations of the Company in this paragraph shall
survive
any termination of this Agreement.

     (h) Directors and Officers Liability Insurance. The Company shall maintain directors
and officers liability insurance coverage covering Executive in amounts customary for similarly
situated companies in the pharmaceutical industry and with insurers reasonably acceptable to
Executive. All policies for such coverage shall provide for insurance on an “occurrence” basis, or
if on a “claims-made” basis, with sufficient coverage for claims made after the date on which
Executive’s employment with the Company terminates.

SECTION 5. TERMINATION OF EMPLOYMENT

     (a) General. The Board of Directors of the Company shall have the right to terminate
Executive’s employment at any time with or without Cause, and Executive shall have the right
to
terminate his employment at any time with or without Good Reason.

     (b) Termination by Board of Directors without Cause or by Executive for Good
Reason. If the Board of Directors terminates Executive’s employment without Cause or
Executive resigns for Good Reason, the Company shall pay Executive his earned but unpaid base

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salary plus 100% of his current total annual base salary (subject to such withholdings
as required by law) payable in twelve equal monthly installments during the twelve month period
immediately following such termination and, when actually determined, the Executive’s Earned Bonus
for the fiscal year of termination. This obligation shall remain in effect even if Executive
accepts other employment. In addition, the Company shall make any COBRA continuation coverage
premium payments (not only for Executive, but for Executive’s dependents), for the one year period
following the termination of Executive’s employment or, if earlier, until Executive is eligible to
be covered under another substantially equivalent medical insurance plan by a subsequent employer.

     (c) Termination by the Board of Directors for Cause or by Executive without Good
Reason. If the Board of Directors of the Company terminates Executive’s employment for
Cause
or Executive resigns without Good Reason, the Company’s only obligation to Executive under
this Employment Agreement shall be to pay Executive his earned but unpaid base salary, if any,
up to the date Executive’s employment terminates, and Executive shall have no right to any
Earned Bonus or any bonus payment whatsoever. The Company shall only be obligated to make
such payments and provide such benefits under any employee benefit plan, program or policy in
which Executive was a participant as are explicitly required to be paid to Executive by the
terms
of any such benefit plan, program or policy following the date on which Executive’s
employment terminates.

     (d) Termination for Disability. The Board of Directors of the Company shall have
the right to terminate Executive’s employment on or after the date Executive has a Disability,
and such a termination shall not be treated as a termination without Cause under this
Employment Agreement. If Executive’s employment is terminated on account of a Disability,
the Company shall:

     (1) pay Executive his base salary through the end of the month in
which his employment terminates as soon as practicable after his employment
terminates,

     (2) pay Executive his Earned Bonus for the fiscal year in which such
termination of employment occurs,

     (3) pay or cause the payment of benefits to which Executive is entitled
under the terms of the disability plan of the Company covering the Executive at
the time of such Disability,

     (4) make such payments and provide such benefits as otherwise called
for under the terms of the ISP and each other employee benefit plan, program
and
policy in which Executive was a participant; provided no payments made under
Section 5(d)(l), Section 5(d)(2), or Section 5(d)(3) shall be
taken into account in
computing any payments or benefits described in this Section 5(d)(4),
and

     (5) make any COBRA continuation coverage premium payments (not
only for Executive, but also for Executive’s dependents), for the one year
period
following the termination of Executive’s employment or, if earlier,
until

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Executive is eligible to be covered under another substantially equivalent
medical insurance plan by a subsequent employer.

     (e) Death. If Executive’s employment terminates as a result of his
death, the Company shall:

     (1) pay Executive his base salary through the end of the month in
which his employment terminates as soon as practicable after his employment
terminates,

     (2) pay Executive his Earned Bonus, when actually determined, for the
year in which Executive’s death occurs,

     (3) make such payments and provide such benefits as otherwise called
for under the terms of the ISP and each other employee benefit plan, program
and
policy in which Executive was a participant; provided no payments made under
Section 5(e)(l) or Section 5(e)(2) shall be taken into account
in computing any
payments or benefits described in this Section 5(e)(3), and

     (4) make any COBRA continuation coverage premium payments for
Executive’s dependents, for the one year period following Executive’s death or,
if
earlier, until such dependents are eligible to be covered
under another
substantially equivalent medical insurance plan.

SECTION 6. COVENANTS BY EXECUTIVE

     (a) Company Property. Executive upon the termination of Executive’s employment
for any reason or, if earlier, upon the Company’s request shall promptly return all Company
Property which had been entrusted or made available to Executive by the Company, where the
term “Property” means all records, files, memoranda, reports, price lists, customer
lists,
drawings, plans, sketches, keys, codes, computer hardware and software and other property of
any kind or description prepared, used or possessed by Executive during
Executive’s
employment by the Company (and any duplicates of any such Property) together with any and all
information, ideas, concepts, discoveries, and inventions and the like conceived,
made,
developed or acquired at any time by Executive individually or, with others during Executive’s
employment which relate to the Company or its products or services.

     (b) Trade Secrets. Executive agrees that Executive shall hold in a fiduciary capacity
for the benefit of the Company and its affiliates and shall not directly or indirectly use or
disclose
any Trade Secret that Executive may have acquired during the term of Executive’s employment
by the Company or any of its predecessors for so long as such information remains a Trade
Secret, where the term “Trade Secret” means information, including, but not limited to,
technical
or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a drawing or a process that (1) derives economic value, actual or potential, from
not
being generally known to, and not being generally readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use and (2) is the subject
of
reasonable efforts by the Company and any of its affiliates to maintain its secrecy. This
Section 6(b) is intended to provide rights to the Company and its affiliates which are
in addition

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to, not in lieu of, those rights the Company and its affiliates have under the common
law or applicable statutes for the protection of trade secrets.

     (c) Confidential Information. Executive while employed by the Company or its
affiliates and for the three (3) year period thereafter shall hold in a fiduciary capacity for
the
benefit of the Company and its affiliates, and shall not directly or indirectly use or
disclose, any
Confidential Information that Executive may have acquired (whether or not developed or
compiled by Executive and whether or not Executive is authorized to have access to such
information) during the term of, and in the course of, or as a result of Executive’s
employment
by the Company or its predecessors without the prior written consent of the Board of Directors
of
the Company unless and except to the extent that such disclosure is (i) made in the ordinary
course of Executive’s performance of his duties under this Employment Agreement or (ii)
required by any subpoena or other legal process (in which event Executive will give the
Company prompt notice of such subpoena or other legal process in order to permit the Company
to seek appropriate protective orders). For the purposes of this Employment Agreement, the
term “Confidential Information” means any secret, confidential or proprietary information
possessed by the Company or any of its affiliates, including, without limitation, trade
secrets,
customer or supplier lists, details of client or consultant contracts, current and anticipated
customer requirements, pricing policies, price lists, market studies, business plans,
operational
methods, marketing plans or strategies, product development techniques or flaws, computer
software programs (including object code and source code), data and documentation data, base
technologies, systems, structures and architectures, inventions and ideas, past current and
planned research and development, compilations, devices, methods, techniques, processes,
financial information and data, business acquisition plans and new personnel acquisition plans
(not otherwise included as a Trade Secret under this Employment Agreement) that has not
become generally available to the public, and the term “Confidential Information” may include,
but not be limited to, future business plans, licensing strategies, advertising
campaigns,
information regarding customers or suppliers, executives and independent contractors and the
terms and conditions of this Employment Agreement. Notwithstanding the provisions of this
Section 6(c) to the contrary, Executive shall be permitted to furnish this Employment
Agreement
to a subsequent employer or prospective employer.

     (d) Non-solicitation of Customers or Employees.

     (1) Executive (i) while employed by the Company or any of its affiliates shall not, on
Executive’s own behalf or on behalf of any person, firm, partnership, association,
corporation or business organization, entity or enterprise (other than the Company or one
of its affiliates), solicit business for a Competing Business from customers or suppliers
of the Company or any of its affiliates and (ii) during the Restricted Period shall not, on
Executive’s own behalf or on behalf of any person, firm, partnership, association,
corporation or business organization, entity or enterprise, solicit business for a
Competing Business from customers or suppliers of the Company or any of its affiliates with
whom Executive, in the case of both clauses (i) and (ii) above, had or made material
business contact with in the course of Executive’s employment by the Company within the
twenty-four (24) month period immediately preceding the beginning of the Restricted Period.

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     (2) Executive (i) while employed by the Company or any of its affiliates shall
not, either directly or indirectly, call on, solicit or attempt to induce any other officer,
employee or independent contractor of the Company or any of its affiliates to terminate his
or her employment with such business and shall not assist any other person or entity in such
a solicitation (regardless of whether any such officer, employee or independent contractor
would commit a breach of contract by terminating his or her employment), and (ii) during
the Restricted Period, shall not, either directly or indirectly, call on, solicit or attempt
to induce any other officer, employee or independent contractor of such business with whom
Executive had contact, knowledge of, or association in the course of Executive’s employment
with the Company or any of its predecessors or affiliates, as the case may be, during the
twelve (12) month period immediately preceding the beginning of the Restricted Period, to
terminate his or her employment with the Company or any of its affiliates and shall not
assist any other person or entity in such a solicitation (regardless of whether any such
officer, employee or independent contractor would commit a breach of contract by terminating
his or her employment). Notwithstanding the foregoing, nothing shall prohibit any person
from contacting Executive about employment or other engagement during the Restricted Period,
provided that Executive does not solicit the contact.

     (e) Non-competition
Obligation. Without the prior written consent of the Company,
Executive, while employed by the Company or any of its affiliates and thereafter until the end
of
the Restricted Period, will not engage in any of the activities described in Section
3(b)(l) hereof
within the geographical area in which the Company or any of its affiliates is actively engaged
in
developing, marketing and selling ophthalmic pharmaceuticals, for himself or on behalf of any
other person, partnership, corporation or other business entity which is in a Competing
Business
for purposes of competing with the Company. Notwithstanding the preceding sentence,
Executive will not be prohibited from owning less than five (5%) percent of any publicly
traded
corporation, whether or not such corporation is in a Competing Business.

     (f) Reasonable and Continuing Obligations. Executive agrees that Executive’s
obligations under this Section 6 are obligations which will continue beyond the date
Executive’s
employment terminates and up to the end of the restricted period and that such obligations are
reasonable, fair and equitable in scope, terms and duration, are necessary to protect the
Company’s legitimate business interests and are a material inducement to the Company to enter
into this Employment Agreement.

     (g) Remedy for Breach. Executive agrees that the remedies at law of the Company
for any actual or threatened breach by Executive of the covenants in this Section 6
would be
inadequate and that the Company shall be entitled to specific performance of the covenants in
this Section 6, including entry of a temporary restraining order in state or federal
court,
preliminary and permanent injunctive relief against activities in violation of this
Section 6, or
both, or other appropriate judicial remedy, writ or order, in addition to any damages and
legal
expenses which the Company may be legally entitled to recover. The Company agrees,
however, to give Executive and, if known, Executive’s attorney reasonable advance notice of
any
legal proceeding, including any application for a temporary restraining order, relating to an
attempt to enforce the covenants in this Section 6 against Executive. Executive
acknowledges
and agrees that the covenants in this Section 6 shall be construed as agreements
independent of

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any other provision of this Employment Agreement or any other agreement between the
Company and Executive, and that the existence of any claim or cause of action by Executive against
the Company, whether predicated upon this Employment Agreement or any other agreement, shall not
constitute a defense to the enforcement by the Company of such covenants.

     (h) Termination of Restrictive Covenants. In addition to any other right or remedy
available to Executive, Executive shall no longer be bound by any of the restrictions set forth in
this Section 6 if the Company fails to pay or to provide Executive when due the amounts and
benefits due hereunder or under any agreement ancillary hereto, and Executive’s pursuit of such
remedy shall not relieve the Company from its obligations to pay and to provide such amounts and
benefits to Executive.

     (i) Ownership of Inventions, Discoveries, Improvements, Etc.

     (1) Executive shall promptly disclose and describe to the Company all
inventions, improvements, discoveries and technical developments, whether or not
patentable, made or conceived by Executive, either alone or with others, during such
time
as Executive is employed with the Company, and within one (1) year after the date upon
such employment terminates, and that (i) are based in whole or in part upon
Confidential
Information, or (ii) during such time as Executive is employed with the Company are
along the lines of, useful in or related to the business of the Company, or (iii)
result from,
or are suggested by, any work that may be done by Executive for or on behalf of the
Company (“Inventions”). Executive hereby assigns and agrees to assign to the Company
Executive’s entire right, title and interest in and to such Inventions, and agrees to
cooperate with the Company both during and after such time as Executive is employed
with the Company in the procurement and maintenance, at the Company’s expense and at
its direction, of patents, copyright registrations and/or protection of the Company’s
rights
in such Inventions. Executive shall keep and maintain adequate and current written
records of all such Inventions, which shall be and remain the property of the Company.

     (2) If a patent applicable or copyright registration is filed by Executive or on
Executive’s behalf, or a copyright notice indicating Executive’s authorship is used by
Executive or on Executive’s behalf, within one (1) year after the date on which
Executive’s employment with the Company terminates, that describes or identifies any
Invention within the scope of Executive’s work for the Company or that otherwise
related
to a portion of the Company’s business (or any division thereof) of which Executive had
knowledge such time as Executive was employed with the Company, it is to be
conclusively presumed that the Invention was conceived by Executive during the such
time as Executive was employed with the Company. Executive agrees to notify the
Company promptly of any such application or registration and to assign to the Company
Executive’s entire right, title and interest in such Invention and in such application
or
registration.

SECTION 7. MISCELLANEOUS

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     (a) Notices. Notices and all other communications shall be in writing and
shall be
deemed to have been duly given when personally delivered or when mailed by United States
registered or certified mail. Notices to the Company shall be sent to:

Alimera Sciences, Inc. 6120

Windward
Parkway, Suite 290
 Alpharetta, Georgia
30005
 Attention: Chief Executive
Officer
 Facsimile: 678-990-5744

     Notices and communications to Executive shall be sent to the address Executive most recently
provided to the Company. If such notices and/or communications are returned to the Company as
undeliverable due to the Executive having moved, then the Company will make a reasonable and good
faith effort to locate Executive for purposes of delivering communication.

     (b) No Waiver. Except for the notice described in Section 7(a), no failure
by either
the Company or Executive at any time to give notice of any breach by the other of, or to
require
compliance with, any condition or provision of this Employment Agreement shall be deemed a
waiver of any provisions or conditions of this Employment Agreement.

     (c) Georgia Law. This Employment Agreement shall be governed by the law of the
State of Georgia, without regard to its provisions relating to choice of law or conflicts of
law.
Any litigation that may be brought by either the Company or Executive involving the
enforcement of this Employment Agreement or any rights, duties, or obligations under this
Employment Agreement, shall be brought exclusively in a Georgia state or Superior Court or
United States District Court in Georgia.

     (d) Assignment. This Employment Agreement shall be binding upon and inure to the
benefit of the Company and any successor in interest to the Company. The Company may assign
this Employment Agreement to any affiliate or successor that acquires all or substantially all
of
the assets and business of the Company or a majority of the voting interests of the Company,
and
no such assignment shall be treated as a termination of Executive’s employment under this
Employment Agreement. Executive’s rights and obligations under this Employment Agreement
are personal and shall not be assigned or transferred.

     (e) Other Agreements. This Employment Agreement replaces and merges any and all
previous agreements and understandings regarding all the terms and conditions of Executive’s
employment relationship with the Company, and this Employment Agreement constitutes the
entire agreement between the Company and Executive with respect to such terms and conditions.

     (f) Amendment. No amendment to this Employment Agreement shall be effective
unless it is in writing and signed by the Company and by Executive.

     (g) Invalidity. If any part of this Employment Agreement is held by a court of
competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be
unaffected and shall continue in full force and effect, and the invalid or otherwise
unenforceable
part shall be deemed not to be part of this Employment Agreement.

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     (h) Litigation. In the event that either party to this Employment Agreement
institutes litigation against the other party to enforce his or its respective rights under this
Employment Agreement, each party shall pay its own costs and expenses incurred in connection with
such litigation.

[The remainder of this page intentionally left blank.]

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     IN WITNESS WHEREOF, the Company and Executive have executed
this Employment Agreement in multiple originals effective as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	ALIMERA SCIENCES, INC.	 	 	 	EXECUTIVE
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Dan Myers	 	 	 	/s/ Kenneth Green
	 	 	 	 	 	 	   	 	 	 	 
	Name:

	 	Dan Myers
	 	 	 	Name:
	 	Kenneth Green	 	 	 	 
	Title:

	 	President, CEO	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	8/2/04
	 	 	 	Date:
	 	10/17/04	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 	 	 

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SCHEDULE A 

BONUS PROGRAM

The Executive shall be eligible for an annual performance bonus of up to twenty percent (20%) of
the Executive’s base salary, which will be contingent upon Alimera achieving board approved
objectives for the period.

 

SCHEDULE B 

OPTION GRANT AT EFFECTIVE DATE

Effective upon the execution of this Agreement, the Executive shall be entitled to a grant of
options to purchase two hundred fifty thousand (250,000) shares of common stock under the Alimera
Sciences, Inc. 2004 Stock Incentive Plan on the terms set forth in the Stock Option Agreement.

You shall be entitled to a grant of options to purchase fifty thousand (50,000) shares of common
stock under the Alimera Sciences, Inc. 2004 Stock Incentive Plan on the terms set forth in the
Stock Option Agreement upon the enrollment of the first patient into a phase 3 trial, providing the
trial occurs by December 31, 2005.EX-10.7

Exhibit 10.7

ALIMERA SCIENCES, INC.

2004 INCENTIVE STOCK PLAN

 

 

TABLE OF CONTENTS

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

 

 

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

 -ii-

 

 

§ 1.

BACKGROUND AND PURPOSE

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

§ 2

DEFINITIONS

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

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

     2.3 Change Effective Date — means either

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

 

 

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

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

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

-2-

 

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

-3-

 

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

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

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

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

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

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

-4-

 

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

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

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

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

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

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

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

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

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

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

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

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

-5-

 

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

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

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

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

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

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

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

-6-

 

§ 3

SHARES AND GRANT LIMITS

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

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

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

-7-

 

§ 4

EFFECTIVE DATE

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

§ 5

COMMITTEE

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

§ 6

ELIGIBILITY AND ANNUAL GRANT CAPS

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

-8-

 

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

§ 7

OPTIONS

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

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

-9-

 

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

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

     7.5 Exercise.

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

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

-10-

 

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

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

§ 8

STOCK APPRECIATION RIGHTS

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

     8.2 Terms and Conditions.

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

-11-

 

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

-12-

 

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

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

§ 9.2

STOCK GRANTS

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

-13-

 

     9.2 Conditions.

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

-14-

 

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

     9.3 Dividends, Voting Rights and Creditor Status.

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

-15-

 

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

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

-16-

 

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

§ 10

NON-TRANSFERABILITY

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

§ 11

SECURITIES REGISTRATION

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

-17-

 

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

§ 12

LIFE OF PLAN

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

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

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

§ 13

ADJUSTMENT

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

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

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

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

§ 14

CHANGE IN CONTROL

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

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

§ 15

AMENDMENT OR TERMINATION

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

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

§ 16

MISCELLANEOUS

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

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

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

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

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

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

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

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

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

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

	 	 	 	 	 	 	 
	 	 	ALIMERA SCIENCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Daniel White, VP
Finance and Corporate Development	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 

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