Document:

EX-10.11

 Exhibit 10.11 

CONFIDENTIAL OPTOELECTRONIC TRANSCEIVER 

PATENT LICENSE AGREEMENT 

THIS PATENT LICENSE AGREEMENT (the “Agreement”) is made and entered into on this 24th day of May, 2014 (the “Effective
Date”), between Finisar Corporation, a corporation organized under the laws of the State of Delaware, having its principal office at 1389 Moffett Park Dr., Sunnyvale, California 94089 (“Finisar”), on the one hand, and InnoLight
Technology (Suzhou) Limited (a/k/a Innolight Technology Corporation, Innolight Tech Company Limited, and 

), a Chinese corporation, having its principal place of business at 328 Xinghu Street, 12-A3, Suzhou Industrial Park Suzhou, Jiangsu, 215123, China, and Innolight Technology USA, Inc., a California corporation
having its principal place of business at 3235 Kifer Road, Suite 150, Santa Clara, California 95051 (collectively, “Licensee”), on the other hand. (Finisar or Licensee may be referred to individually as the “Party” or
collectively as the “Parties”). 
 WHEREAS, Finisar has filed a lawsuit against Licensee in the United States District
Court for the Northern District of California, Finisar Corp. v. Innolight Technology USA, Inc., et al., Case No. 3:14-cv-0505-JD, (the “Finisar California Case”), and has also filed a lawsuit against Licensee in the
Intellectual Property Court in the People’s Republic of China (the “Finisar China Case”); and Licensee has filed reexamination proceedings in the Intellectual Property Court in the People’s Republic of China challenging the
validity of certain Finisar patents (the “Licensee China Reexamination”) (the Finisar California Case, Finisar China Case, and Licensee Reexamination are collectively referred to as the “Litigation”); 

WHEREAS, Finisar and Licensee desire to settle each of the claims and counterclaims asserted by any Party against any other Party in the
Litigation and to dismiss each case in the Litigation on the terms and conditions respectively set forth in this Agreement; and 
 WHEREAS
Licensee does not admit liability to Finisar in the Litigation or otherwise. 
 NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the Parties agree as follows: 
 ARTICLE 1 DEFINITIONS 

1.1 “Acquisition” shall mean the acquisition of a business by Licensee by merger, stock acquisition, asset acquisition or
otherwise. Two or more acquisitions involving the same seller or Affiliate of such seller shall be considered a single Acquisition for purposes of this Agreement if the structure of such acquisitions has no substantial business justification other
than to circumvent the increased Yearly License Fee under Section 9.2. 
 1.2 “Affiliate” shall mean any subsidiary,
parent company, operating division, or other legal entity that directly or indirectly controls, is controlled by, or is under common control of a Party. If an Affiliate ceases to directly or indirectly control, be controlled by, or be under common
control of a Party, then from and after the date of such cessation, such subsidiary, parent company, operating division, or other legal entity shall cease to be an Affiliate for all purposes under this Agreement. For the purpose of this definition,
“control” means the direct or indirect ownership of more than 50% of the outstanding voting securities of the legal entity, the right to receive more than 50% of the profits or earnings of the legal entity, or the right to direct the
policy decisions of the legal entity. Notwithstanding the foregoing, in any jurisdiction where local law shall not permit foreign equity participation of at least 50%, then “control” shall mean the maximum percentage of such outstanding
stock or rights permitted by such local law. 
 1.3 “Assertion” or “Asserted” shall mean an action of any
nature alleging or relating to any claim for monetary or equitable relief, including infringement of any patent right by a product or service, whether through informal communications, written communications, or before any legal, judicial,
arbitration, administrative, executive or other type of body that has or claims to have authority to adjudicate such action in whole or part, such as but not limited to United States state and federal courts, the U.S. International Trade Commission
and any foreign counterparts of the foregoing. 

  
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 1.4 “Change of Control” shall mean means any transaction or event (or series of
transactions or events), whether by an acquisition of securities, merger, consolidation, proxy contest, sale of all or substantially all of Licensee’s assets, or other transaction or event (or series of transactions or events), that results in
Licensee not being controlled, directly or indirectly, by a party (whether alone or with others) that controlled Licensee before such transaction or event (or series of transactions or events), whether or not Licensee survives such transaction or
event (or series of transactions or events). For the sole purpose of this definition and Article 9, “control” means possession of, or the power or right to acquire possession of, directly or indirectly, the power to direct or cause the
direction of the management of Licensee (whether through ownership of securities, partnership or other ownership interests, by contract or otherwise). For clarity, a restructuring or reorganization of Licensee that does not result in a change in
control of Licensee shall not be deemed to be a Change of Control of Licensee. Notwithstanding the foregoing, the initial public offering of Licensee, whether in the United States or outside the United States, shall not constitute a Change of
Control under this Agreement. 
 1.5 “Covered Acquisition” shall mean an Acquisition where the business of the acquired
company includes, as of the closing date of such Acquisition, the sale of products that would be Licensed Products if licensed hereunder. 

1.6 “Covered Change of Control” shall mean a Change of Control where the business of the acquiring party as of the date of
such Change of Control includes the sale of products that would be Licensed Products if licensed hereunder. 
 1.7 “Confidential
Information” shall mean proprietary, non-public information that is disclosed by one Party that owns such information or has the right to disclose such information (“Discloser”) and is received by the other Party
(“Recipient”) in connection with this Agreement. Notwithstanding the foregoing, “Confidential Information” shall not include information that the Recipient can demonstrate through competent, written evidence: (i) was in its
knowledge or possession prior to disclosure, (ii) was in the public domain at the time of disclosure or subsequently entered the public domain through no fault of Recipient, (iii) was disclosed to Recipient by a third party with the right
to make such disclosure prior to disclosure by Discloser, or (iv) was developed independently by Recipient prior to disclosure by the Discloser. 

1.8 “Controller” shall mean an electronic device used to monitor and/or control an Optoelectronic Transceiver. 

1.9 “Digital Diagnostic Standards” shall mean: (a) the SFP, SFP+, SFF-8472, SFF-8436, XFP, QSFP+, QSFP28, CWDM, DWDM,
PON, EPON, GPON, NGPON, XGPON, CFP, CFP2 and CFP4 standards, and (b) the portion of other standards, including, without limitation, successor standards to those in Subsection (a), that incorporate by reference and/or extend any of the standards
in Subsection (a). 
 1.10 “Finisar Digital Diagnostics Patent Family” shall mean: (a) the patents and patent
applications listed in Exhibit A, which is attached hereto and made a part hereof, including all patents granted from the patent applications listed in Exhibit A, and (b) all other patent claims encompassed by other Patent Rights owned or
controlled by Finisar or its Affiliates either prior to or after the Effective Date that must necessarily be infringed directly or indirectly as a result of implementation of the Digital Diagnostic Standards (including both optional and mandatory
features) but for the license granted under this Agreement; including any other Patent Rights that claim priority to the foregoing (a) and (b). 

  
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 1.11 “Licensed Products” means Optoelectronic Transceivers that have been made
for or are used, made, imported, sold, or offered for sale anywhere in the world by Licensee or its Affiliates. 
 1.12 “Licensed
Transceiver Patent Claims” shall mean all patent claims in the Finisar Digital Diagnostics Patent Family. 
 1.13
“Optoelectronic Transceiver” shall mean a fiber optic transceiver operating or capable of operating at any speed, bandwidth, or capacity, including but not limited to one that implements any of the Digital Diagnostic Standards;
which expressly includes, but is not limited to, all products accused of infringement in the Litigation and/or offered for sale by Licensee as of the Effective Date. 

1.14 “Patent Rights” shall mean (a) all national, regional and international patents and patent applications, including
provisional patent applications, (b) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from any of these, including divisionals, continuations,
continuations-in-part, provisionals, converted provisionals, and continued prosecution applications, (c) any and all patents that have issued or in the future issue from the foregoing patent applications ((a) and (b)), including utility models,
petty patents and design patents and certificates of invention, and (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions
(including any supplementary protection certificates and the like) of the foregoing patents or patent applications ((a), (b) and (c)) in each case ((a), (b), (c) and (d)) anywhere in the world. 

1.15 “Revenue” means the gross amount received on all sales of Licensed Products by Licensee or assignee, as the case may be,
and, as applicable, its Affiliates to third parties less the following items: (i) trade, quantity, and cash discounts or rebates actually allowed and taken and any adjustments thereto, including, without limitation, those granted on account of
price adjustments, billing errors, rejected goods, damaged goods, and recall returns; (ii) credits, refunds, rebates, charge-backs, prime vendor rebates, fees, reimbursements, or similar payments granted or given to wholesalers and other
distributors, and buyer groups; (iii) any tax, tariff, customs duties, excise, or other duties or governmental charges (other than an income tax) levied on the sale, transportation, or delivery of a Licensed Product and borne by the seller
thereof; (iv) payments or rebates paid in connection with sales of Licensed Products to any governmental or regulatory authority in respect of any state or federal payment or reimbursement scheme or similar program; and (v) any charge for
freight, insurance, or other transportation costs borne by the seller. For purposes of determining Revenue, a sale shall be deemed to have occurred when payment has been received. In the event that Licensee sells a Licensed Product for which there
is no distinct invoice (e.g., for Licensed Products that are sold and/or used as part of a System), the Revenue shall be calculated as follows: 
  

	 	(a)	If all Licensed Products contained in the System are available separately, the average sales price of such Licensed Products when sold separately multiplied by the number of applicable units sold. 

 

	 	(b)	If the Licensed Products contained in the System are not sold separately, but all other components of the System are available separately (“Other Items”), the Revenue for purposes of royalty payments will be
calculated by subtracting the average sales price of all Other Items when sold separately multiplied by the number of applicable Other Items in the System from the Revenue for the System. 

 

	 	(c)	If neither the Licensed Products contained in the System nor the Other Items are sold separately, the parties agree to negotiate a reduction in the royalty rate to be applied in such a situation to reflect the fair
value that the Licensed Product. 

  
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 1.16 “Sale” or “Sold” or “Sell” shall mean any
sale, transfer, assignment, commercial exploitation, consignment, or lease of a product. 
 1.17 “System” or
“Systems” shall mean any device, system, apparatus, assembly, or combination thereof that uses or includes at least one Optoelectronic Transceiver. 

ARTICLE 2 GRANTS 
 2.1
License Grant. Finisar, on behalf of Finisar and its Affiliates, hereby grants to Licensee and its Affiliates a nonexclusive, worldwide, non-transferable (except as explicitly authorized under the terms of this Agreement) license under the
Licensed Transceiver Patent Claims solely to make, Have Made, use, Sell, offer for Sale, and import Optoelectronic Transceivers, wherein the right to “Have Made” shall mean that Licensee and its Affiliates may contract with a third party
or parties including suppliers, co-manufacturers, and component producers (together “Contract Manufacturers”) to make Optoelectronic Transceivers, or portions thereof, for supply to Licensee or its Affiliates or for Sale by Licensee or its
Affiliates pursuant to this Agreement, provided, however: 
  

	 	2.1.1	Neither Licensee nor its Affiliates are permitted to resell, rent, sublicense or subcontract its Have Made rights other than to procure manufacturing services and products for the Licensed Products; 

 

	 	2.1.2	The detailed manufacturing drawings and specifications used by Contract Manufacturers to make the Optoelectronic Transceivers must be owned or licensed by Licensee or its Affiliates and/or their Optoelectronic
Transceiver customers; 

  

	 	2.1.3	The Have Made Optoelectronic Transceivers must be made at the direction of Licensee or its Affiliates; and 

  

	 	2.1.4	Finisar shall have the right to request from Licensee, on 20 days’ notice, confirmation that a particular Contract Manufacturer is in fact a Contract Manufacturer for Licensee, as well as the part names and/or part
numbers of the Optoelectronic Transceivers that such Contract Manufacturer(s) make for Licensee or its Affiliates (and such information shall be considered the Confidential Information of Licensee) if Finisar has a good faith belief that such
Contract Manufacture’s activities are infringing the Licensed Transceiver Patent Claims; and 

  

	 	2.1.5	The license granted by Finisar hereunder to Licensee and its Affiliates to manufacture Licensed Products for a third party or parties shall only apply to Licensed Products made for Licensee or its Affiliates and/or
their Optoelectronic Transceiver customers. 

  

	 	2.1.6	The license granted by Finisar to the patent claims identified in Section 1.10(b) is granted only with respect to Optoelectronic Transceivers meeting the applicable Digital Diagnostic Standard that caused the
applicable patent claim to be included in Section 1.10(b). 

 Notwithstanding the foregoing, the parties acknowledge and
agree that the Have Made rights include the purchase of components and parts for a Optoelectronic Transceiver that do not meet the criteria of 2.1.1 – 2.1.3, but are purchased for use in a Licensed Product (e.g., the purchase of an off the
shelf component to be used in a Licensed Product would be covered by the have made rights even if the design of that component was not created or owned by Licensee). The parties also acknowledge and agree that the Have Made rights granted hereunder
do not limit Finisar’s ability to assert infringement of a patent against a Contract Manufacturer based on a product that is not a Licensed Product. 

  
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 2.2 For purposes of clarity, the Parties acknowledge and agree that the doctrine of exhaustion as
set forth in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008) applies upon the use and distribution of a Licensed Product pursuant to the rights granted under this Agreement. In any jurisdiction where the foregoing doctrine is
not (or comes to be not) in effect, Finisar agrees that the foregoing doctrine applies to the use, distribution and disposition of a Licensed Product to the extent the Licensed Product would have been protected by such doctrine had it been in effect
and agrees to not assert infringement of a Licensed Transceiver Patent Claim against any such person or entity for such use, distribution or disposition. The parties also acknowledge and agree that this Section 2.2 shall not limit
Finisar’s ability to assert infringement of a patent against a customer of Licensee based on a product that is not a Licensed Product. 

2.3 License Restrictions. The License Grant in Section 2.1 is limited to Optoelectronic Transceivers and does not extend to other
components or Systems that incorporate Optoelectronic Transceivers except to the extent that those portions or components are incorporated into Optoelectronic Transceivers. For illustration, the License Grant in Section 2.1 does not permit
Licensee to make, use, Sell, offer to Sell, Have Made or import, under the Finisar Digital Diagnostics Patent Family, Controllers apart from their use in Optoelectronic Transceivers that fall within the License Grant in Section 2.1. 

2.4 Payment Condition on License. The license rights granted herein pursuant to Article 2.1 are conditioned on the payment of the fees
set forth in this Agreement. 
 2.5 Future Patent Transfer. Finisar may freely assign, sell, or otherwise transfer the Licensed
Transceiver Patent Claims and/or any exclusionary rights thereof to another entity, provided such entity agrees in writing to be also bound by the terms of this Section 2 prior to, or as part of, such transfer. 

2.6 No Other Rights. EXCEPT FOR THE LICENSE RIGHTS GRANTED PURSUANT TO ARTICLE 2.1, NOTHING HEREIN SHALL BE CONSTRUED AS GRANTING
LICENSEE OR ITS AFFILIATES ANY OTHER RIGHT OR LICENSE, EITHER EXPRESS OR IMPLIED, UNDER ANY RIGHT OF FINISAR NOW OR HEREAFTER OWNED OR CONTROLLED BY FINISAR. THE LICENSE GRANTED PURSUANT TO ARTICLE 2.1 DOES NOT INCLUDE THE RIGHT TO SUBLICENSE ANY OF
THE LICENSED RIGHTS. 
 2.7 No Sale and No Support. The license rights granted pursuant to Article 2.1 do not constitute or include a
sale, lease, loan, or transfer of any portion of the Finisar Digital Diagnostics Patent Family in any form. Nothing in this Agreement shall be construed as any agreement or obligation by Finisar to provide any service, support, or assistance of any
nature to Licensee or its Affiliates. Finisar shall not be obligated to file or continue prosecution of any patent applications within the Finisar Digital Diagnostics Patent Family. 

2.8 Finisar’s Covenant Not to Sue. Commencing as of the Effective Date until the earlier of: (i) April 30, 2017 and
(ii) thirty (30) days following the uncured failure of Licensee to pay any portion of the aggregate one-time $7,000,000 payment set forth in Section 3.1 (the “Finisar Covenant Period”), Finisar, for itself and on behalf of
its Affiliates, and its and their respective successors and assigns, agrees and covenants that neither Finisar, any of its Affiliates, nor any of their respective successors and assigns shall file or cause to be filed or make any Assertion,
including any administrative or judicial proceeding against Licensee, or any Licensee Affiliate, for infringement of any patent based on a product that is made or sold by Licensee as of the Effective Date of this Agreement (the “Existing
Products”). Finisar agrees and covenants that it shall not be permitted to seek a willful infringement finding or enhanced damages in any patent infringement suit subsequent to May 31, 2017 based on Licensee’s or its Affiliates’
conduct or knowledge through May 31, 2017. Finisar shall not be permitted to offer any evidence of Licensee’s or its Affiliates’ conduct or knowledge of Finisar’s patents prior to June 1, 2017 for any purpose whatsoever in
any patent litigation subsequent to May 31, 2017, including this Agreement for any reason whatsoever, including but not limited to royalty rates, royalty payments, or consideration. 

  
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 2.9 Licensee’s Covenant Not to Sue. Commencing as of the Effective Date, Licensee,
for itself and on behalf of its Affiliates, and its and their respective successors and assigns, hereby covenants to not sue Finisar or any of its Affiliates for infringement of any patent that has a priority date prior to December 31, 2017,
regardless of whether Licensee currently owns such patent or owns such patent in the future; provided, however, this covenant shall be suspended during any period when Finisar is asserting a patent against Licensee. In the event of a Change of
Control of Licensee, this covenant shall only apply to the patents controlled by Licensee prior to the Change of Control. 
 2.10 The
Parties agree that the covenants set forth in Section 2.8 and 2.9 shall run with the Parties’ patents described herein and shall be binding on any successors-in-interest thereto. Either Party may freely assign, sell, or otherwise transfer
their respective patents and/or any exclusionary rights thereof to another entity, respectively, provided such entity agrees in writing to be also bound by the terms of this Section 2 prior to, or as part of, such transfer. 

2.11 Dismissal of the Litigation. By no later than May 29, 2014, Finisar shall file papers requesting dismissal with prejudice of
the Finisar California Case and the Finisar China Case, and Licensee shall file papers requesting dismissal or withdrawal of the Licensee China Reexamination. The Parties agree to bear their own costs, expenses, and attorneys’ fees incurred in
connection with the foregoing proceedings and shall specifically note this, where applicable, in the filings seeking dismissal or withdrawal. 

2.12 Non-Aggression. If Finisar institutes patent litigation (the “Asserting Party”) against Licensee or its Affiliates (the
“Defending Party”) alleging that the Licensed Products constitutes direct or indirect patent infringement, then any covenant not to sue granted by Licensee under this Agreement shall automatically terminate as of the date such litigation
is filed. 
 ARTICLE 3 CONSIDERATION 

3.1 License Fee. Licensee shall remit to Finisar a one-time payment of the License Fee to Finisar in the amount of seven million
dollars ($7,000,000.00) payable as follows: three million dollars ($3,000,000.00) due on. May 28, 2014; one million dollars ($1,000,000.00) due on August 31, 2014; one million dollars ($1,000,000.00) due on December 31, 2014; one
million dollars ($1,000,000.00) due on April 30, 2015; and one million dollars ($1,000,000.00) due on August 31, 201.5. When paid in full, this seven million dollar ($7,000,000.00) fee shall constitute a fully paid-up license through
April 30, 2019. 
 3.2 From May 1, 2019 to December 31, 2022, Licensee shall remit to Finisar three million three hundred
thousand dollars ($3,300,000) for each twelve (12) month period beginning May 1, 2019, and for each successive twelve (12) month period thereafter (the “Yearly License Fee”). Each Yearly License Fee shall be payable in four
(4) quarterly installments during the applicable twelve (12) month period as set forth in Section 3.3. This license fee is for convenience only and is not deemed to be an established royalty rate. No further payment shall be due for
sales after December 31, 2022 and all licenses granted under this Agreement shall automatically become irrevocable and fully-paid. Notwithstanding the foregoing, Licensee shall owe no payments for any Optoelectronic Transceivers that Licensee
sells that were obtained from any entity that is separately licensed to the Licensed Transceiver Patent. Claims (“Licensed Entity”). 

3.3 Time of Payment. All payments under Section 3.2 shall be due and payable for each successive three month period 45 days prior
to the close of such three month period during the Term of this Agreement (e.g., period from May 1, 2019 to July 31, 2019 shall be paid by June 16, 2019). 

  
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 3.4 Form of Payment. All sums payable under this Agreement: are exclusive of any
value-added goods and services, sales, or other tax, duty, or levy; are net of any withholding or similar tax payment required by law to be paid by Licensee on behalf of Finisar; and shall be payable in U.S. Dollars. Payments shall be made by wire
transfer to Finisar’s designated bank account. 
 3.5 Late Payments. On all amounts outstanding and payable to Finisar, interest
shall accrue from the date such amounts are due and payable at the rate of 1% per month or the Daily Treasury Bill Rate, whichever is lower. 

ARTICLE 4 OMITTED 

ARTICLE 5 RELEASE 
 5.1
Enforcement. Finisar shall have the right in its sole discretion to enforce the Finisar Digital Diagnostics Patent Family against a third party. Nothing in this Agreement shall be construed as giving Licensee or its Affiliates any right to
enforce the Finisar Digital Diagnostics Patent Family against any third party. 
 5.2 Release. Upon payment of the entire License Fee
under Section 3.1, Finisar, on behalf of itself, Affiliates, successors, and assigns releases, acquits, and forever discharges Licensee and all of their respective Affiliates, current and former predecessors, successors, officers, employees,
agents, directors, shareholders, owners, users, customers, distributors, resellers (including value-added resellers), manufacturers (including original equipment or device manufacturers), assemblers, replicators, and integrators from any and all
claims, demands, damages, liabilities, costs, attorneys’ fees, expenses, and causes of action asserting infringement by Licensee or its Affiliates of infringement of any of the Licensed Transceiver Patent Claims, whether known or unknown,
including without limitation those asserted by Finisar in the Litigation. 
 5.3 Waiver of Certain Rights. In connection with this
Agreement, the Parties, on behalf of themselves and their respective Affiliates, and their assigns and successors, expressly waive and relinquish all rights and benefits afforded by Section 1542 of the California Civil Code, which provides as
follows: 
 “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR EXPECT TO EXIST IN HIS
OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” 

Further, the Parties and all of their Affiliates expressly waive and relinquish all rights and benefits afforded by any law in any other jurisdiction similar
to Section 1542 of the California Civil Code. 
 ARTICLE 6 REPRESENTATIONS AND WARRANTIES, DISCLAIMERS, 

LIMITATION OF LIABILITY, AND INDEMNIFICATION 

6.1 Representations and Warranties. Each Party represents and warrants that as of the Effective Date of this Agreement: 

 

	 	6.1.1	Such Party is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is incorporated; 

 

	 	6.1.2	Such Party has the corporate power and authority and the legal power to enter into this Agreement and to perform its obligations under this Agreement, including the grant of license rights pursuant to this Agreement,
and that such Party has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; 

  
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	 	6.1.3	All necessary consents, approvals, and authorizations of all governmental authorities required to be obtained by such Party in connection with the execution and performance of this Agreement have been obtained;

  

	 	6.1.4	The execution and performance of this Agreement does not conflict with or violate any requirement of applicable laws or regulations and does not conflict with, or constitute a default under, any contractual obligation
of such Party; and 

  

	 	6.1.5	Such Party has not made and will not make any commitments to any third party inconsistent or in conflict with the rights granted pursuant to this Agreement. 

6.2 Additional Representation and Warranty of Finisar. Finisar represents and warrants that as of the Effective Date of this Agreement
it controls all right, title and interest to .the Licensed Transceiver Patent Claims and is entitled to grant the rights and licenses specified herein. 

6.3 Disclaimer of Other Warranties and Representations. FINISAR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND EXPRESSLY
DISCLAIMS ANY SUCH IMPLIED REPRESENTATION OR WARRANTY, REGARDING NON-INFRINGEMENT OF ANY THIRD-PARTY RIGHTS, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE OF THE FINISAR DIGITAL DIAGNOSTICS PATENT FAMILY AND ANY OTHER INFORMATION LICENSED OR
PROVIDED HEREUNDER. 
 6.4 Limitation of Liability. Notwithstanding anything to the contrary contained herein, in no event shall the
Parties, under any circumstances, be liable or obligated in any manner for any special, incidental, consequential, or exemplary damages arising out of or related to this Agreement, even if the Parties are informed in advance of the possibility of
such damages occurring. 
 6.5 Licensee represents, warrants and covenants that, except as required by law (such as in response to a lawful
subpoena), neither Licensee nor Affiliates of Licensee shall contest or assist in the contesting in any forum in the world, including the Federal Courts, the United States Patent and Trademark Office, and/or the International Trade Commission, that
any patent or claim of the Finisar Digital Diagnostics Patent Family is invalid or unenforceable; provided, however, that this covenant shall not apply in the event that Finisar or other person or entity asserts against Licensee or Affiliates of
Licensee infringement of such patent or claim of the Finisar Digital Diagnostics Patent Family in any forum, including the Federal Courts and/or the International Trade Commission. 

ARTICLE 7 CONFIDENTIALITY 

7.1 Confidentiality. Except as expressly provided herein, the Parties agree that, for the Term of this Agreement and for five years
thereafter, each Party shall keep completely confidential, shall not publish or otherwise disclose, and shall not use for any purpose any Confidential Information disclosed to it by the other Party (the Party disclosing such Confidential
Information, “Discloser”) except as contemplated in this Agreement or as reasonably necessary for the performance of such Party’s obligations or the exercise of such Party’s rights under this Agreement (the Party receiving such
Confidential Information, “Recipient”). Accordingly, Confidential Information furnished by a Discloser shall not be used by a Recipient in or during the prosecution of patent applications, and in the event that disclosure of such
Confidential Information is required by applicable law or regulations with respect to the prosecution of a patent application, the Party prosecuting the patent application shall abandon or otherwise refrain from prosecuting the patent application.
Except as expressly set forth herein, including Section 10.3, the Parties agree that all teams and conditions of this Agreement, including terms and conditions negotiated or discussed pursuant to this Agreement and the existence of this
Agreement, are the Confidential Information of both Parties, and each Party shall be deemed the both the Discloser and Recipient thereof 

  
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 7.2 Permitted Disclosures. Notwithstanding the prohibited disclosure in Section 7.1,
each Party as a Recipient may disclose Confidential Information disclosed to it by the other Party as a Discloser only to the extent such disclosure is reasonably necessary in prosecuting or defending litigation; complying with applicable law or
other governmental regulations; making either public or private share or debt offerings; or engaging in merger or acquisition discussions, provided that if the Recipient of Confidential Information intends to make any such disclosure, such Recipient
will: (i) give reasonable advance notice to the Discloser of the anticipated disclosure to allow the Discloser to oppose such disclosure, (ii) use its best efforts to secure confidential treatment of the Confidential Information to be
disclosed (whether through protective order, confidentiality agreements, or other means), and (iii) in any event only disclose the exact Confidential Information, or portion thereof, specifically requested by the required disclosure. 

7.3 Disclosures to Employees. Employees and consultants who are privy to Confidential Information disclosed in furtherance of this
Agreement shall be subject to an obligation of confidentiality commensurate in scope with the confidentiality obligations between the Parties in this Agreement. 

ARTICLE 8 TERM AND TERMINATION 

8.1 Term of Agreement. The term of this Agreement and the license rights granted hereunder shall commence on the Effective Date of this
Agreement and shall continue in effect until the last to expire of the patents within the Licensed Transceiver Patent Claims, unless such license rights are terminated sooner as provided for in Section 8.3. 

8.2 Articles Surviving Termination. The following Articles shall survive any expiration or termination to the degree necessary to
permit their complete fulfillment or discharge: Article 1 (in its entirety), 2.5, 2.6, 2.7, 2.10, 3 (in its entirety), 5 (in its entirety), 6.2, 6.3, 7 (in its entirety), 8.2, 8.4, 9.2, 9.3, 9.4, 10.2, 10.3, 10.5 and 10.7. In addition, after
December 30, 2022, Article 2 shall survive any termination of this Agreement. 
 8.3 Termination for Breach. Either Party shall
have the right to terminate this Agreement in the event that the other Party fails to perform any of its material obligations under this Agreement and such breach is not cured within 90 days after receipt of written notice of such breach by the
non-breaching Party. The right of any Party to terminate this Agreement pursuant to this Section 8.3 shall not be affected in any way by that Party’s waiver or failure to take action with respect to any other breach. The non-breaching
Party shall be entitled to terminate this Agreement without prejudice to any other rights conferred on it by this Agreement or under law or equity. Such termination pursuant to this Section 8.3 shall not relieve a Party from any obligations
that are expressly indicated to survive termination or expiration of this Agreement. 
 8.4 Return of Confidential Records. Upon
expiration or termination of this Agreement, each Party shall promptly return or destroy (with written confirmation provided to the Discloser of such destruction) all relevant records in its possession or control containing or constituting
Confidential Information furnished to it under this Agreement by the other Party and to which the former Party does not retain rights hereunder. 

  
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 ARTICLE 9 ASSIGNMENT, ACQUISITION, AND CHANGE OF CONTROL 

9.1 Assignment. Licensee shall not transfer or assign any rights and/or privileges under this Agreement under action of law or
otherwise, including in connection with any acquisition by or of Licensee or the insolvency or bankruptcy of Licensee, without the prior written consent of Finisar, except that Licensee may assign this Agreement without Finisar’s consent to an
entity that acquires all or substantially all of the business or assets of Licensee in respect of the Licensed Products, in each case whether by sale, assignment, merger, acquisition, or otherwise, provided the acquiring party assumes this Agreement
in writing or by operation of law. In addition, Licensee may assign this Agreement without Finisar’s consent to an entity that acquires a Licensed Product line from Licensee or an Affiliate of Licensee (e.g., Licensee’s Optoelectronic
Transceiver business is sold in an asset transfer); provided, however, that (i) the such an assignment shall be deemed a Change of Control hereunder (and a Covered Change in Control, if applicable), (ii) Licensee and its post-acquisition
Affiliates shall retain no rights under this Agreements for periods after such acquisition, (ii) Licensee shall retain its obligations under this Agreements for all periods prior to such acquisition, (iv) such assignee of this Agreement
shall not be entitled to any rights or benefits under this Agreement for any period or actions prior to such acquisition, and (v) the effectiveness of such an assignment shall be contingent on Licensee paying all amounts due (regardless of
scheduled payment date) to Finisar under this Agreement for sales of Licensed Product through the date immediately prior to the date of such assignment. Subject to the following Sections 9.2, 9.3, and 9.4, all of the terms, conditions, covenants,
and agreements set forth herein shall inure to the benefit of, and be binding upon, any successor corporation and any permitted assignees of the respective Parties. For the sake of clarity, the rights and/or privileges under this Agreement shall
inure to the benefit of, and be binding upon, any permitted successor corporation of Licensee. 
 9.2 Effect of a Covered
Acquisition. Following a Covered Acquisition, in the event that the revenue generated by the acquired business from the sale of products that would be Licensed Products if licensed hereunder in the most recently completed twelve (12) month
period ending on the last day of the last full month preceding the Covered Acquisition is greater than an amount equal to 15% of Licensee’s Revenue in that same twelve month (12) period, .then the existing Yearly License Fee for the next
one year period beginning on May 1 shall be increased proportionally. As an example of how this provision shall operate, if a Covered Acquisition occurred on January 1, 2020, and at that time Licensee’s trailing twelve month Revenues
were $200 million and the acquired business’s trailing twelve (12) months revenues from the sale of products that would be Licensed Products if licensed hereunder were $100 million, then the Yearly License Fee for the successive year
beginning on May 1, 2020 would increase from $3.3 million by a factor of 1.5 to $4.95 million. 
 9.3 Effect of a Covered Change of
Control. Following a Covered Change of Control, the license of the Agreement shall be deemed to be limited to, and cover, the sale of Licensed Products solely to the Licensed Products offered for sale or use by Licensee and its Affiliates at any
time in the one (1) year prior to the time of the Covered Change of Control and incremental improvements and bug fixes to the features and functions of such Licensed Products existing at any time in the one (1) year prior to the time of
the Covered Change of Control (i.e., changes that would result in a product change notice to a customer but not a new product number), and shall not apply to any third party that Controls Licensee or any products, services, features or functionality
developed after the date of the Covered Change of Control. The Licensee or the assignee, as the case may be, may elect, in its sole discretion, to pay or cause to be paid to Finisar a 5% royalty on that portion of the worldwide Revenue attributable
to the sale of products that would be Licensed Products if they were covered by the license granted under this Agreement (in which event such products will be deemed to be Licensed Products and be within, and covered by, the scope of the license).
The Licensee or assignee may make this election by giving written notice to Finisar of its intent to take such a license and be effective as of the date of such notice (the “Notice”). After the Notice has been delivered all such
assignee’s products and new Licensee products shall be deemed to be Licensed Products (the “New Licensed Products”). The 5% royalty on such New Licensed Products would be made in addition to the Yearly License Fee payments due under
Section 3.2. For avoidance of doubt, in the event the Licensee or the assignee, as the case may be, does not pay or cause to be paid the royalty described above, the sale of New Licensed Products shall not be considered licensed. 

  
 10 

 9.4 Reporting and Record Keeping Requirements. Within thirty (30) days after each
successive Acquisition or Change of Control, Licensee or the assignee, as the case may be (the “Reporting Party”), shall provide written notice to Finisar of such Acquisition or Change of Control and whether such Acquisition or Change of
Control is a Covered Acquisition or Covered Change of Control. Licensee or the Reporting Party (as applicable) shall also provide written confirmation of the existence of and the details required to be disclosed herein of all Acquisitions and
Changes of Control upon written request of Finisar, which requests may be made no more often than once per calendar quarter and which confirmation shall be delivered within thirty (30) days of such a request. This notice shall either
acknowledge that the Reporting Party is subject to the Yearly License Fee or shall provide all information reasonably necessary to verify that the Reporting Party is not subject to the Yearly License Fee. Unless the Reporting Party has reported that
it is not subject to the Yearly License Fee, the Reporting Party shall comply with the provisions of Sections 9.4(a), (b), and (c) below. 
  

	 	(a)	Yearly License Fee Determination. Within sixty (60) business days after the first Covered Acquisition or Covered Change of Control, the Reporting Party shall provide to Finisar a report of the worldwide
Revenue generated by the sale of Licensed Products in the most recently completed twelve (12) full months preceding such Covered Acquisition or Covered Change of Control. Such report shall also include a list of all revenue generating products
of the Reporting Party and an indication with respect to each product as to whether or not such product is a Licensed Product. Such report shall provide all information necessary to determine the Yearly License Fee. For the avoidance of doubt, the
Reporting Party will not be required to disclose pricing information or customer information. All such information shall be deemed Confidential Information of Licensee. 

 

	 	(b)	Records Retention. The Reporting Party shall keep true and accurate records and books of accounting data reasonably required for the computation and verification of reports provided pursuant to this Agreement.
The Reporting Party shall retain records or books with respect to such reports for a period of three (3) years from the date such record is generated. This retention requirement shall not be deemed to reduce any statute of limitations period
applicable to any potential claim and shall survive any expiration of this Agreement. 

  

	 	(c)	Right of Inspection. All records and books maintained pursuant to Section 9.4(b) shall be open for inspection upon reasonable notice (which shall not be less than ten (10) days in advance) during
business hours by an independent certified accountant reasonably selected by Finisar and reasonably acceptable to the Reporting Party, provided that such inspection shall not occur more than once annually. This Right of Inspection shall survive for
two years following any expiration or termination of this Agreement. The party performing the inspection will be required to sign a confidentiality agreement limiting the disclosure of information solely to (1) conclusions regarding the
accuracy of prior reports; (2) the method used to calculate Revenue, and (3) other information agreed to by the Parties as necessary to evaluate the calculation of revenue. The confidentiality agreement will further limit the disclosure of
information to the Parties’ representatives identified in Section 10.5. 

 ARTICLE 10 MISCELLANEOUS 

10.1 Export Control. Licensee acknowledges that the laws and regulations of the United States, including without limitation the Export
Administration Regulations, restrict the export and re-export of certain commodities and technical data of United States origin. Licensee agrees that it will not export or re-export Optoelectronic. Transceivers in any form in violation of such laws
and regulations in a manner that creates liability for Finisar. 

  
 11 

 10.2 Dispute Resolution. All disputes or controversies arising out of or in connection
with this Agreement, its interpretation, performance, or termination shall be submitted initially to informal dispute resolution in which case one representative from each Party will meet at a neutral location within 30 days of the commencement of
the conflict in order to attempt in good faith to resolve the dispute. The Parties shall share equally the costs of the mediation. If the Parties are unable to resolve the dispute, either informally or by non-binding mediation, the Parties shall
submit the dispute to binding arbitration in Santa Clara County, CA conducted by JAMS under its Comprehensive Arbitration Rules and Procedures then in effect. The costs of the arbitration, including administrative and arbitrators’ fees, shall
be shared equally by the Parties. Each Party shall bear its own costs and attorneys’ and witnesses’ fees. The arbitration award shall be final, and each Party shall comply in good faith and submit itself to the jurisdiction of the
appropriate state or federal courts in Santa Clara, CA for the sole purpose of the entry of such arbitrator’s award to render effective such arbitration decision. The arbitration award may include, in addition to a monetary award, injunctive
relief that directs the offending Party to refrain from performance of specified injurious activities. Notwithstanding the foregoing, judgment on the award by the arbitrator may be entered in any court having jurisdiction. If judicial enforcement or
review of the arbitrator’s decision is sought, the prevailing Party shall be entitled to costs and reasonable attorney’s fees in addition to any amount of recovery. 

10.3 Use of Parties’ Names. The Parties may, pursuant to Section 7.1, use the name of the other Party when disclosing the
existence of this Agreement for the limited purpose of identifying the Parties to this Agreement and, notwithstanding anything to the contrary in this Agreement, Licensee may identify itself as a licensee of Finisar. Except as specifically provided
herein, neither Party may use the name of the other Party, any adaptation thereof, or the names of any of its employees for any purpose without its prior written consent, except as may be required or legally advisable under applicable law. 

10.4 Waiver. No waiver by either Party of any breach of this Agreement, no matter how long continuing or how often repeated, shall be
deemed a waiver of any subsequent breach thereof, nor shall any delay or omission on the part of either Party to exercise any right, power, or privilege hereunder be deemed a waiver of such right, power, or privilege. 

10.5 Notices. All notices, reports, requests, or statements required or permitted to be given to either Party shall be in writing, and
addressed to the Parties as follows: 
 If to Finisar: 

General Counsel 
 Finisar
Corporation 
 1389 Moffett Park Drive 

Sunnyvale, CA 94089 
 If to
Licensee: 
 Anthony Stiegler 

Cooley LLP 
 4401 Eastgate Mall

 San Diego, CA 92121 
 Delivery of such
notice may be by personal service, registered mail or any courier service, such as Federal Express, requiring signature upon receipt, and shall be deemed effective upon receipt. Either Party may at any time give written notice of a change of address
to the other Party. 

  
 12 

 10.6 No Admission; No Decision on the Merits. This Agreement sets forth a compromise and
settlement of disputed claims for the purpose of avoiding the costs, disruptions, and uncertainties associated with litigation. Such compromise and settlement does not constitute a ruling on the merits, an admission as to any issue of fact or
principle at law or an admission of liability of any Party or any Affiliate of any Party. Any such admission of liability is expressly denied. It is also expressly agreed that neither this Agreement, its execution, the performance of any of its
terms nor any of its contents shall be offered in any proceeding as evidence or an admission of liability for patent infringement, validity, or willfulness, or for the determination of royalty rights, lost royalties, damages, or for any other
purpose, including with respect to any claim, suit, or cause of action brought by a Party against an Affiliate of the other. 
 10.7
Governing Law, Jurisdiction, and Venue. This Agreement shall be governed by and construed in accordance with laws of the State of California without regard to its conflicts of law principles. The Parties agree that the applicability of the
United Nations Convention on Contracts for the International Sale of Goods (1980) in its entirety is specifically excluded from application to this Agreement. 

10.8 Entire Understanding. This Agreement, along with Exhibits A and B, contains the entire understanding of the Parties with respect
to the subject matter contained herein and shall supersede all prior agreements and understandings, whether written or oral. There are no restrictions, promises, covenants, or understandings other than those expressly set forth herein, and no rights
or duties on the part of either Party are to be implied or inferred beyond those expressly provided for herein. In the event of any conflict between the terms and conditions of any purchase order, invoice, or other writing and those set forth in
this Agreement, the terms and conditions of this Agreement shall control. 
 10.9 Severance. If any provision of this Agreement is
held unenforceable or in conflict with the law of any jurisdiction, the validity of the remaining provisions shall not be affected by such holding. The Parties agree to negotiate and amend in good faith such provision in a manner consistent with the
intentions of the Parties as expressed in the Agreement if any invalid or unenforceable provision affects the consideration of either Party. 

10.10 Modifications and Additions. No modification or addition to the terms and conditions of this Agreement shall be binding unless in
writing and signed by both Parties. 
 10.11 Singular and Plural Terms. Where the context of this Agreement requires, singular terms
shall be considered plural, and plural terms shall be considered singular. 
 10.12 Headings. The article and paragraph headings and
numberings in this Agreement are intended as a convenience only and shall not affect the interpretation of its provisions. 
 10.13
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. 

signature page follows 

  
 13 

 IN WITNESS WHEREOF, each of the Parties hereto has caused its duly authorized representatives to
execute this Agreement: 
  

							
	 FINISAR CORPORATION
		INNOLIGHT TECHNOLOGY (SUZHOU) LIMITED
				
	 (“Finisar”)
				(“Licensee”)		
				
	 By:
		/s/ Chris Brown		By:		/s/ Sheng Liu
				
	 Printed Name:
		Chris Brown		Printed Name:		Sheng Liu
				
	 Title:
		EVP & Chief Counsel		Title:		CEO
				
	 Date:
		May 26, 2014		Date:		May 25, 2014
			
	 INNOLIGHT TECHNOLOGY USA, INC.
				
				
	 (“Licensee”)
						
				
	 By:
		/s/ Sheng Liu				
				
	 Printed Name:
		Sheng Liu				
				
	 Title:
		CEO				
				
	 Date:
		May 25, 2014				

 signature page to license agreementExhibit 10.1

 

LPATH, INC.

AMENDED AND RESTATED 2005 EQUITY INCENTIVE PLAN

 

ARTICLE ONE

GENERAL PROVISIONS

 

I.             PURPOSE OF THE PLAN

 

This Amended and Restated 2005 Equity Incentive Plan is intended to promote the interests of Lpath, Inc., a Nevada corporation, by providing eligible persons in the Corporation’s employ or service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to continue in such employ or service.

 

Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix.

 

II.            STRUCTURE OF THE PLAN

 

The Plan shall permit, through the Option Grant Program, the Stock Issuance Program, and the Award Grant Program, the grant of options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units.

 

III.          ADMINISTRATION OF THE PLAN

 

A.            The Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board may be delegated to the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee. Either the Board or the Committee thus designated by the Board is hereinafter referred to as the “Plan Administrator.”

 

B.            The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option or stock issuance thereunder.

 

C.            The Plan Administrator will have the authority, in its discretion to: to determine the Fair Market Value; to select the individuals eligible to receive Awards hereunder; to determine the number of shares of Common Stock to be covered by each Award granted hereunder; to approve forms of Award Agreements for use under the Plan; to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the shares of Common Stock relating thereto, based in each case on such factors as the Plan Administrator will determine; to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws; to modify or amend each Award, including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards and to extend the maximum term of an option; to allow Participants to satisfy withholding tax obligations in such manner as prescribed in the Plan; to authorize any person to execute on behalf of the Corporation any instrument required to effect the grant of an Award previously granted by the Plan Administrator; to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award pursuant to such procedures as the Plan Administrator may determine; and to make all other determinations deemed necessary or advisable for administering the Plan. The Plan Administrator shall not have the authority to reduce the exercise price of an outstanding Award unless pre-approved by the Corporation’s stockholders. In addition, without stockholder approval, no option granted hereunder shall be amended to reduce the exercise price under such option, surrendered in exchange for a replacement option having a lower exercise price, or surrendered in exchange for cash or another Award.

 

 

D.            Different Committees with respect to different groups of eligible individuals may administer the Plan. To the extent that the Plan Administrator determines it to be desirable or necessary to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3of the Exchange Act, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.

 

IV.ELIGIBILITY

 

A.The persons eligible to participate in the Plan are as follows:

 

(i)Employees,

 

(ii)non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and

 

(iii)consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

 

B.The Plan Administrator shall have full authority to determine, (i) with respect to the grants made under the Option Grant Program, the Stock Issuance Program, or the Award Grant Program, which eligible persons are to receive the option or stock appreciation right grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option and/or stock appreciation right is to become exercisable, the vesting schedule (if any) applicable to the Award and the maximum term for which the Award is to remain outstanding, and (ii) with respect to stock issuances made under the Stock Issuance Program or the Award Grant Program, which eligible persons are to receive such Awards, the time or times when those issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid by the Participant for such shares.

 

C.The Plan Administrator shall have the absolute discretion to grant Awards in accordance with the Option Grant Program, the Stock Issuance Program, or the Award Grant Program, and to establish and determine such terms and conditions as the Plan Administrator deems appropriate and necessary under any such program.

 

V.STOCK SUBJECT TO THE PLAN

 

A.The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 4,200,000 shares, unless amended by approval of the Board and the Stockholders.

 

B.Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent the options expire or terminate for any reason prior to exercise in full. Unvested shares issued under the Plan and subsequently repurchased by the Corporation, at the option exercise or direct issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan.  Shares withheld or tendered (actually or through attestation) to pay the tax and/or exercise price of an Award will not become available for future grant or sale under the Plan.

 

 

C.Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to: (i) the maximum number and/or class of securities issuable under the Plan and (ii) the number and/or class of securities and the exercise price per share in effect under each outstanding option in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation’s preferred stock into shares of Common Stock.

 

VI.LIMITATIONS

 

Except as specified in this Section VI, no Employee, or other eligible individual, shall be granted, in any fiscal year of the Corporation, (A) options or stock appreciation rights to purchase more than 714,286 of shares of Common Stock, (B) restricted stock, restricted stock units or performance shares covering more than 714,286 of shares of Common Stock, or (C) performance units which could result in any such individual receiving more than $2,000,000.  The limits in this Section VI are doubled for Awards granted during the fiscal year in which an Employee, or other eligible individual, first performs Services for the Corporation.  In addition, for an Award that vests or becomes exercisable based on attainment of one or more Performance Goals during a Performance Period longer than one year, the limits in this Section VI are multiplied by the number of full or partial fiscal years over which the Performance Period spans.

 

ARTICLE TWO

OPTION GRANT PROGRAM

 

I.OPTION TERMS

 

Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator, provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.

 

A.Exercise Price.

 

1.The exercise price per share shall be fixed by the Plan Administrator in accordance with the following provisions;

 

(i)The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

 

(ii)If the person to whom the option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date.

 

2.The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in cash or check made payable to the Corporation. Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the exercise price may also be paid as follows:

 

(i)in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or

 

 

(ii)to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (A) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (B) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale; or

 

(iii)by net exercise through the cancellation of vested shares of Common Stock;

 

(iv)any method approved by the Plan Administration; or

 

(v)any combination of the foregoing methods of payment.

 

Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

 

B.Exercise and Term of Options. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant. However, no option shall have a term in excess of ten (10) years measured from the option grant date.

 

C.Effect of Termination of Service.

 

1.The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:

 

(i)Should the Optionee cease to remain in Service for any reason other than death, Disability or Misconduct, then the Optionee shall have a period of three (3) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

 

(ii)Should Optionee’s Service terminate by reason of Disability, then the Optionee shall have a period of twelve (12) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

 

(iii)If the Optionee dies while holding an outstanding option, then the personal representative of his or her estate or the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance shall have a twelve (12)-month period following the date of the Optionee’s death to exercise such option.

 

(iv)Under no circumstances, however, shall any such option be exercisable after the specified expiration of the option term.

 

(v)During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be outstanding with respect to any and all option shares for which the option is not otherwise at the time exercisable or in which the Optionee is not otherwise at that time vested.

 

(vi)Should Optionee’s Service be terminated for Misconduct, then all outstanding options held by the Optionee shall terminate immediately and cease to remain outstanding.

 

2.The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to;

 

(i)extend the period of time for which the option is to remain exercisable following Optionee’s cessation of Service or death from the limited period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or

 

 

(ii)permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the Optionee continued in Service.

 

D.Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become the recordholder of the purchased shares.

 

E.Unvested Shares. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right. The Plan Administrator may not impose a vesting schedule upon the option grant or any shares of Common Stock subject to that option which is more restrictive than twenty percent (20%) per year vesting, with the initial vesting to occur not later than one (1) year after the option grant date. However, such limitation shall not apply (i) at any time applicable law does not require such mandatory minimum vesting; or (ii) to any grant of stock options to the officers of the Corporation, non-employee Board members or independent consultants.

 

F.Limited Transferability of Options. During the lifetime of the Optionee, the option shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or by the laws of descent and distribution following the Optionee’s death.

 

G.Withholding. The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any options granted under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.

 

II.INCENTIVE OPTIONS

 

The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of the Plan shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II.

 

A.Eligibility. Incentive Options may only be granted to Employees.

 

B.Exercise Price. The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

 

C.Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

 

D.10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the option term shall not exceed five (5) years measured from the option grant date.

 

 

III.CORPORATE TRANSACTION

 

A.The shares subject to each option outstanding under the Plan at the time of a Corporate Transaction shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become fully exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, the shares subject to an outstanding option shall not vest on such an accelerated basis if and to the extent: (i) such option is assumed by the successor corporation (or parent thereof) in the Corporate Transaction and the Corporation’s repurchase rights with respect to the unvested option shares are concurrently assigned to such successor corporation (or parent thereof) or (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to those unvested option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant.

 

B.All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

 

C.Immediately following the consummation of the Corporate Transaction, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof).

 

D.Each option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction, had the option been exercised immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to (i) the number and class of securities available for issuance under the Plan following the consummation of such Corporate Transaction and (ii) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same.

 

E.The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to provide for the automatic acceleration (in whole or in part) of one or more outstanding options (and the immediate termination of the Corporation’s repurchase rights with respect to the shares subject to those options) upon the occurrence of a Corporate Transaction, whether or not those options are to be assumed in the Corporate Transaction.

 

F.The Plan Administrator shall also have full power and authority, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure such option so that the shares subject to that option will automatically vest on an accelerated basis should the Optionee’s Service terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which the option is assumed and the repurchase rights applicable to those shares do not otherwise terminate. Any option so accelerated shall remain exercisable for the fully-vested option shares until the earlier of (i) the expiration of the option term or (ii) the expiration of the one (1)-year period measured from the effective date of the Involuntary Termination. In addition, the Plan Administrator may provide that one or more of the Corporation’s outstanding repurchase rights with respect to shares held by the Optionee at the time of such Involuntary Termination shall immediately terminate on an accelerated basis, and the shares subject to those terminated rights shall accordingly vest at that time.

 

G.The portion of any Incentive Option accelerated in connection with a Corporate Transaction shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.

 

H.The grant of options under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

 

ARTICLE THREE

STOCK ISSUANCE PROGRAM

 

I.STOCK ISSUANCE TERMS

 

Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.

 

A.Purchase Price.

 

1.The purchase price per share shall be fixed by the Plan Administrator but shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the issue date. However, the purchase price per share of Common Stock issued to a 10% Stockholder shall not be less than one hundred and ten percent (110%) of such Fair Market Value.

 

2.Subject to the provisions of Section I of Article Four, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

 

(i) cash or check made payable to the Corporation, or

 

(ii) past services rendered to the Corporation (or any Parent or Subsidiary).

 

B.Vesting Provisions.

 

1.Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of Performance Goals. However, the Plan Administrator may not impose a vesting schedule upon any stock issuance effected under the Stock Issuance Program which is more restrictive than twenty percent (20%) per year vesting, with initial vesting to occur not later than one (1) year after the issuance date. Such limitation shall not apply (i) at any time applicable law does not require such mandatory minimum vesting; or (ii) to any Common Stock issuances made to the officers of the Corporation, non-employee Board members or independent consultants.

 

2.Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

 

3.The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.

 

4.Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares.

 

 

5.The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to such shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non- attainment of the applicable performance objectives.

 

II.CORPORATE TRANSACTION

 

A.Upon the occurrence of a Corporate Transaction, all outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

 

B.The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation’s repurchase rights with respect to those shares remain outstanding, to provide that those rights shall automatically terminate on an accelerated basis, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant’s Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those repurchase rights are assigned to the successor corporation (or parent thereof).

 

III.SHARE ESCROW/LEGENDS

 

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

 

ARTICLE FOUR

AWARD GRANT PROGRAM

 

I. STOCK APPRECIATION RIGHTS

 

Each stock appreciation right shall be evidenced by one or more documents in the form approved by the Plan Administrator, provided, however, that each such document shall comply with the terms specified below.

 

The Plan Administrator will have complete discretion to determine the number of stock appreciation rights grants to any individual and to determine the terms and conditions of any such Award. Upon exercise of a stock appreciation right, a Participant will be entitled to receive payment from the Corporation in an amount determined by multiplying: (i) the difference between the Fair Market Value of a share of Common Stock on the date of exercise over the exercise price; times (ii) the number of shares of Common Stock with respect to which the stock appreciation right is exercised. Other than as provided in this Article Four, each stock appreciation right shall be subject to all the same terms and conditions of the Option Grant Program that are applicable to option grants.

 

II. RESTRICTED STOCK UNITS

 

The Plan Administrator, at any time and from time to time, may grant restricted stock units in such amounts as the Plan Administrator, in its sole discretion, will determine. After the Plan Administrator determines that it will grant restricted stock units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of restricted stock units.

 

The Plan Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of restricted stock units that will be paid out to the Participant. The Plan Administrator may set vesting criteria based upon the achievement of Performance Goals, or any other Corporation-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the Plan Administrator in its discretion.

 

 

Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Plan Administrator. Notwithstanding the foregoing, at any time after the grant of restricted stock units, the Plan Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

 

Payment of earned restricted stock units will be made as soon as practicable after the date(s) determined by the Plan Administrator and set forth in the Award Agreement. The Plan administrator, in its sole discretion, may only settle earned restricted stock units in cash, shares of Common Stock, or a combination of both.

 

On the date set forth in the Award Agreement, all unearned restricted stock units will be forfeited to the Corporation.

 

III. PERFORMANCE UNITS AND PERFORMANCE SHARES

 

Performance units and performance shares may be granted to eligible individuals at any time and from time to time, as will be determined by the Plan Administrator, in its sole discretion. The Plan Administrator will have complete discretion in determining the number of performance units and performance shares granted to each Participant.

 

Each performance unit will have an initial value that is established by the Plan Administrator on or before the date of grant. Each performance share will have an initial value equal to the Fair Market Value of a share of Common Stock on the date of grant.

 

The Plan Administrator will set performance objectives or other vesting provisions (including, without limitation, any Performance Goal, continued status as an Employee, consultant or director) in its discretion which, depending on the extent to which they are met, will determine the number or value of performance units/shares that will be paid out to the Participant. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period.” Each Award of performance units/shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Plan Administrator, in its sole discretion, will determine. The Plan Administrator may set performance objectives based upon the achievement of Performance Goals, or any other Corporation-wide, divisional, or individual goals, or any other basis determined by the Plan Administrator in its discretion.  The Plan Administrator may specify in an Award Agreement that any dividend paid on shares of Common Stock subject to performance units or performance shares will be credited as additional performance shares or performance units, as applicable, and paid at the same time and subject to the same conditions as the underlying performance shares or performance units.

 

After the applicable Performance Period has ended, the holder of performance units/shares will be entitled to receive a payout of the number of performance units/shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a performance unit/share, the Plan Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance unit/share.

 

Payment of earned performance units/shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Plan Administrator, in its sole discretion, may pay earned performance units/shares in the form of cash, in shares of Common Stock (which have an aggregate Fair Market Value equal to the value of the earned performance units/shares at the close of the applicable Performance Period) or in a combination thereof.  On the date set forth in the Award Agreement, all unearned or unvested performance units/shares will be forfeited to the Corporation, and again will be available for grant under the Plan.

 

 

ARTICLE FIVE

MISCELLANEOUS

 

I.FINANCING

 

The Plan Administrator may permit any Optionee or Participant to pay the option exercise price or the purchase price for shares issued to such person under the Plan by delivering a full-recourse, interest-bearing promissory note payable in one or more installments and secured by the purchased shares. However, any promissory note delivered by a consultant must be secured by collateral in addition to the purchased shares of Common Stock. In no event shall the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase.

 

II.EFFECTIVE DATE AND TERM OF PLAN

 

A.The Plan shall become effective when adopted by the Board, but no option granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation’s stockholders. If such stockholder approval is not obtained within twelve (12) months after the date of the Board’s adoption of the Plan, then all options previously granted under the Plan shall terminate and cease to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan. Subject to such limitation, the Plan Administrator may grant options and issue shares under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan.

 

B.The Plan shall terminate upon the earliest of (i) the expiration of the ten (10)-year period measured from the date the Plan is adopted by the Board, (ii) the date on which all shares available for issuance under the Plan shall have been issued as vested shares or (iii) the termination of all outstanding options in connection with a Corporate Transaction. All options and unvested stock issuances outstanding at that time under the Plan shall continue to have full force and effect in accordance with the provisions of the documents evidencing such options or issuances.

 

III.AMENDMENT OF THE PLAN

 

A.The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to options or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require stockholder approval pursuant to applicable laws and regulations.

 

B.Options may be granted under the Option Grant Program and shares may be issued under the Stock Issuance Program which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first such excess issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and cease to be outstanding.

 

C.As approved and adopted by the Board of Directors of Lpath, Inc. (then known as Neighborhood Connections Inc.) on November 29, 2005 and approved by Stockholders on November 29, 2005. The Board of Directors of Lpath, Inc. approved the first amendment and restatement of the Plan on August 21, 2007 and the Stockholders approved such amendment and restatement on October 9, 2007. The second amendment and restatement of the Plan was approved by the Board of Directors of Lpath, Inc. on and effective as of April 11, 2013, subject to approval by the Stockholders and the Stockholders approved such amendment and restatement on June 19, 2013.  This third amendment and restatement of the Plan was approved by the Board of Directors of Lpath, Inc. on and effective as of April 22, 2015, subject to approval by the Stockholders, and the Stockholders approved such amendment and restatement on June 16, 2015.

 

 

IV.USE OF PROCEEDS

 

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

 

V.WITHHOLDING

 

The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any options or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.

 

VI.REGULATORY APPROVALS

 

The implementation of the Plan, the granting of any options under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any option or (ii) under the Stock Issuance Program or Award Grant Program shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it.

 

VII. NO EMPLOYMENT OR SERVICE RIGHTS

 

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.

 

VIII. FINANCIAL REPORTS

 

The Corporation shall, if required by applicable law, deliver a balance sheet and an income statement at least annually to each individual holding an outstanding option under the Plan, unless such individual is a key Employee whose duties in connection with the Corporation (or any Parent or Subsidiary) assure such individual access to equivalent information.

 

IX. LEAVES OF ABSENCE

 

Unless the Plan Administrator provides otherwise or except as required by applicable laws, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Corporation or (ii) transfers between locations of the Corporation or between the Corporation, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Corporation is not so guaranteed, then three (3) months following the ninety-first (91st) day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Non-Statutory Stock Option.

 

X. CONDITIONS UPON ISSUANCE OF SHARES OF COMMON STOCK

 

Shares of Common Stock will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such shares will comply with applicable laws and will be further subject to the approval of counsel for the Corporation with respect to such compliance.

 

As a condition to the exercise of an Award, the Corporation may require the person exercising such Award to represent and warrant at the time of any such exercise that the shares of Common Stock are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Corporation, such a representation is required.

 

 

The inability of the Corporation to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Corporation’s counsel to be necessary to the lawful issuance and sale of any shares of Common Stock hereunder, will relieve the Corporation of any liability in respect of the failure to issue or sell such shares as to which such requisite authority will not have been obtained.

 

XI.  CLAWBACK OR RECOUPMENT

 

Unless otherwise specified in the Award Agreement or determined in the Plan Administrator’s sole discretion, all Awards, and all shares of Common Stock and cash payable under each Award, are subject to any clawback or recoupment policy adopted by the Company (including any policy required under the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Laws), regardless of whether the policy is adopted after the date on which the Award is granted, vests or becomes exercisable, or is exercised or settled by issuance of shares of Common Stock, payment of cash, or a combination of both.

 

APPENDIX

 

The following definitions shall be in effect under the Plan:

 

A.Award shall mean, individually or collectively, a grant under the Plan of options, stock appreciation rights, restricted stock, restricted stock units, performance shares or performance units.

 

B.Award Grant Program shall mean the Award grant program in effect under the Plan.

 

C.Board shall mean the Corporation’s Board of Directors.

 

D.Code shall mean the Internal Revenue Code of 1986, as amended.

 

E.Committee shall mean a committee of two (2) or more Board members appointed by the Board to exercise one or more administrative functions under the Plan.

 

F.Common Stock shall mean the Corporation’s common stock.

 

G.Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a party:

 

(i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

 

(ii) the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation.

 

H.Corporation shall mean Lpath, Inc., Nevada corporation, and any successor corporation to all or substantially all of the assets or voting stock of Lpath, Inc. which shall by appropriate action adopt the Plan.

 

I.Disability shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances.

 

 

J.Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

 

K.Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise.

 

L.Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

 

(i) If the Common Stock is at the time traded on the Nasdaq Stock Market (or the OTC Bulletin Board), then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the Financial Industry Regulatory Authority, Inc. on the Nasdaq Stock Market (or the OTC Bulletin Board). If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq Stock Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate.

 

M.Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

 

N.Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of:

 

(i) such individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or

 

(ii) such individual’s voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonuses under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected without the individual’s consent.

 

O.Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary).

 

P.1934 Act shall mean the Securities Exchange Act of 1934, as amended.

 

Q.Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

 

R.Option Grant Program shall mean the option grant program in effect under the Plan.

 

 

S.Optionee shall mean any person to whom an option is granted under the Plan.

 

T.Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

U.Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program.

 

V.Performance Goals shall mean the goal(s) determined by the Plan Administrator (in its discretion) to be applicable to a Participant with respect to an Award. As determined by the Plan Administrator, the Performance Goals applicable to an Award may provide for a targeted level or levels of achievement using one or more of the following measures: (i) earnings or profitability metrics: including, but not limited to, earnings/loss (gross, operating, net, or adjusted); earnings/loss before interest and taxes (“EBIT”); earnings/loss before interest, taxes, depreciation and amortization (“EBITDA”); profit margin; operating margin; income (gross, operating or net); expense levels or ratios; in each case adjusted to eliminate the effect of any one or more of the following: interest expense, asset impairments, early extinguishment of debt, stock-based compensation expense, changes in GAAP or critical accounting policies, or other extraordinary or non-recurring items, as specified by the Plan Administrator when establishing the performance goals; (ii) return metrics: including, but not limited to, return on investment, assets, equity or capital (total or invested); (iii) cash flow metrics: including, but not limited to, operating cash flow; cash flow sufficient to achieve financial ratios or a specified cash balance; free cash flow; cash flow return on capital; net cash provided by operating activities; cash flow per share; working capital; (iv) liquidity metrics: including, but not limited to, debt reduction; extension of maturity dates of outstanding debt; debt leverage (debt to capital, net debt-to-capital, debt-to-EBITDA or other liquidity ratios) or access to capital; debt ratings; total or net debt; other similar measures approved by the Plan Administrator; (v) stock price and equity metrics: including, but not limited to, return on stockholders’ equity; total stockholder return; revenue (gross, operating or net); revenue growth; stock price; stock price appreciation; market price of stock; market capitalization; earnings/loss per share (basic or diluted) (before or after taxes); price-to-earnings ratio; and (vi) strategic metrics: including, but not limited to, product research and development; completion of an identified special project; clinical trials; regulatory filings or approvals; patent application or issuance; manufacturing or process development; sales or net sales; market share; market penetration; economic value added; customer service; customer satisfaction; inventory control; balance of cash, cash equivalents and marketable securities; growth in assets; key hires; employee satisfaction; employee retention; business expansion; acquisitions, divestitures, joint ventures; capital or fund raising to support operations; government grants; license arrangements; collaboration or customer agreements or arrangements; legal compliance or safety and risk reduction; or such other measures as determined by the Plan Administrator consistent with these performance measures. The Performance Goals may differ from Participant to Participant and from Award to Award. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including, but not limited to, passage of time and/or against another company or companies), (iii) on a per-share basis, (iv) against the performance of the Corporation as a whole or a segment of the Corporation, and (v) on a pre-tax or after-tax basis.

 

W.Plan shall mean the Corporation’s 2005 Equity Incentive Plan, as set forth in this document, and as amended from time to time.

 

X.Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of the Plan.

 

Y.Service shall mean the provision of services to the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant.

 

Z.Stock Exchange shall mean the American Stock Exchange, the Nasdaq Stock Market, or the New York Stock Exchange.

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