Document:

Exhibit 10.7

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Supply Agreement for a Liposomal Formulation

 

November 2012

 

between

 

Mirna Therapeutics, Inc., a corporation duly registered under the laws of the State of Delaware, USA, having its principal place of business at 2150 Woodward St., Suite 100, Austin, TX 78744, USA, and duly licensed to do business there

 

- hereinafter called MIRNA -

 

and

 

Polymun Scientific Immunbiologische Forschung GmbH, a corporation duly incorporated under the laws of the Federal Republic of Austria having its principal place of business at Donaustr. 99, A-3400 Klosterneuburg, Austria, and duly licensed to do business there

 

- hereinafter called POLYMUN -

 

MIRNA and POLYMUN also herein referred to individually as PARTY or collectively as PARTIES.

 

PREAMBLE

 

1.                                      POLYMUN is owner and authorized to dispose of the POLYMUN LIPOSOME TECHNOLOGY.

 

2.                                      Furthermore, POLYMUN has POLYMUN KNOW-HOW.

 

3.                                      MIRNA owns or otherwise controls the INGREDIENT.

 

4.                                      The PARTIES intend to apply the POLYMUN LIPOSOME TECHNOLOGY and the POLYMUN KNOW-HOW for the efficient production of the PRODUCT and to co-operate for that purpose (the “PROJECT”).

 

§ 1.                            DEFINITIONS

 

1.                                      AFFILIATE shall mean any corporation or business entity, which directly or indirectly (i) CONTROLS a PARTY, (ii) is CONTROLLED by a PARTY or (iii) is under common control with a PARTY (the terms “CONTROLS” and “CONTROLLED” meaning (i) ownership of more than fifty percent of the voting rights and equity of such corporation or business entity and/or (ii) the power to direct the management of such corporation or business entity).

 

 

2.                                      AGREEMENT shall mean the body of this AGREEMENT for the development, manufacturing, and supply of the PRODUCT, signed by both PARTIES including all annexes and amendments thereto.

 

3.                                      APPLICABLE LAWS shall mean all laws, statutes, ordinances, codes, rules and regulations that have been enacted by a GOVERNMENT AUTHORITY and are in force as of the EFFECTIVE DATE or come into force during the term of this AGREEMENT, in each case to the extent that the same are applicable to the performance by the PARTIES of their respective obligations under this AGREEMENT or otherwise to the subject matter of this AGREEMENT.  For purposes of this AGREEMENT, cGMP shall be deemed to be included within the term APPLICABLE LAWS.

 

4.                                      BACKGROUND RIGHTS OF MIRNA shall mean all know-how and proprietary rights of MIRNA existing on the EFFECTIVE DATE or arising during the term of this AGREEMENT from the separate and independent efforts of MIRNA.

 

5.                                      BACKGROUND RIGHTS OF POLYMUN shall mean all know-how and proprietary rights of POLYMUN existing on the EFFECTIVE DATE hereof or arising during the term of this AGREEMENT from the separate and independent efforts of POLYMUN.

 

6.                                      cGMP shall mean those current good manufacturing practices applicable in the United States (under the regulations set forth in 21 C.F.R. Subchapter C and the requirements imposed thereunder by the United States Food and Drug Administration) for clinical supply in effect from time to time during the term of this AGREEMENT, together with equivalent regulations and requirements in the European Union and other Governmental Authorities designated in the SOW.

 

7.                                      EFFECTIVE DATE shall mean the date of the last signature necessary to render this AGREEMENT valid.

 

8.                                      FCA shall mean FCA (Free Carrier) as defined by INCOTERMS 2010.

 

9.                                      GOVERNMENTAL AUTHORITY means any supranational, national, regional, state or local government, court, governmental agency, authority, board, bureau, instrumentality or regulatory body.

 

10.                               INFORMATION shall mean any data, information, know-how, results etc. related to this AGREEMENT.

 

11.                               INGREDIENT shall mean the mimic of mir-34A as described in the SOW.

 

12.                               MATERIALS shall mean materials, documentation, substances, equipment, including but not limited to the INGREDIENTS, delivered to POLYMUN by MIRNA, and [***].

 

13.                               PLT RESULTING PROPRIETARY RIGHTS shall mean all proprietary rights [***].

 

14.                               POLYMUN KNOW-HOW shall mean POLYMUN’s technical and operational experience, knowledge, as well as other information and know-how in the field of [***].

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

15.                               POLYMUN LIPOSOME TECHNOLOGY shall mean POLYMUN’s patents and patent applications listed in Annex 1 of this AGREEMENT.

 

16.                               PRODUCT shall mean the liposomal formulation of the INGREDIENT with the NOV340 formula of the Smarticle® technology owned by Marina Biotech, Inc. that MIRNA intends to use, as described in the SOW.

 

17.                               PRODUCT RESULTING PROPRIETARY RIGHTS shall mean all proprietary rights arising from [***] activities of POLYMUN and/or its agents and subcontractors, solely by POLYMUN, or jointly or severally with the assistance of MIRNA, [***].  For further clarity, it is understood that the PRODUCT RESULTING PROPRIETARY RIGHTS shall include [***].

 

18.                               PRODUCT SPECIFICATIONS shall mean the specifications for the PRODUCT contained in Exhibit 1 to the SOW set forth in Annex 2 (as the same may be amended from time to time by the mutual agreement of the PARTIES) together with applicable manufacturing protocols set forth in Annex 2 (as the same may be amended from time to time by the mutual agreement of the PARTIES) and cGMP.

 

19.                               QUALITY AGREEMENT shall mean the QUALITY AGREEMENT signed by the PARTIES during the term of this AGREEMENT.

 

20.                               STATEMENT OF WORK OR SOW shall mean the detailed description of how the PROJECT will be performed as set forth in Annex 2.

 

21.                               SUBJECT MATTER OF AGREEMENT shall mean (a) the development of a suitable production process for the PRODUCT by POLYMUN under application and utilization of the POLYMUN LIPOSOME TECHNOLOGY and the POLYMUN KNOW-HOW for preclinical and clinical application and (b) the manufacture and supply of the PRODUCT as set forth in the SOW.  For this purpose, MIRNA will make available the INGREDIENT including all relevant physical and chemical properties.

 

22.                               WORK PRODUCT shall mean all work in progress and the results of the development and/or manufacturing activities pursuant to this AGREEMENT, including but not limited to POLYMUN reports prepared for MIRNA.

 

§ 2.                            PROPRIETARY RIGHTS

 

1.                                      BACKGROUND RIGHTS OF MIRNA shall be the sole and exclusive property of MIRNA.  POLYMUN shall have no right or license to use any such BACKGROUND RIGHTS OF MIRNA except as may be necessary to manufacture the PRODUCT pursuant to this AGREEMENT.

 

2.                                      BACKGROUND RIGHTS OF POLYMUN shall be the sole and exclusive property of POLYMUN.  MIRNA shall have no right or license to use any such BACKGROUND RIGHTS OF POLYMUN except as may be necessary for performing hereunder.  Notwithstanding the foregoing, POLYMUN and MIRNA may negotiate in good faith license terms for BACKGROUND RIGHTS OF POLYMUN at any further point in time.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

3.                                      Regardless of which PARTY generated PRODUCT RESULTING PROPRIETARY RIGHTS, all rights in PRODUCT RESULTING PROPRIETARY RIGHTS shall be the sole and exclusive property of MIRNA.  MIRNA shall have the right to prepare, file, prosecute, obtain and maintain at its sole expense patent applications and patents relating to PRODUCT RESULTING PROPRIETARY RIGHTS in countries of its choice.  POLYMUN agrees that it shall identify and memorialize PRODUCT RESULTING PROPRIETARY RIGHTS for MIRNA and shall deliver such information to MIRNA in a form requested by MIRNA.  POLYMUN hereby assigns and conveys to MIRNA all right, title, and interest in and to such PRODUCT RESULTING PROPRIETARY RIGHTS and agrees to execute any and all legal instruments reasonably requested by MIRNA to effect, acknowledge, or perfect such assignment and conveyance.  POLYMUN represents and warrants that each and every officer, employee, agent and subcontractor assigned to work for MIRNA hereunder shall have entered into an agreement with POLYMUN for the assignment of relevant PRODUCT RESULTING PROPRIETARY RIGHTS to POLYMUN.  In addition, POLYMUN, its agents, and subcontractors shall treat such PRODUCT RESULTING PROPRIETARY RIGHTS confidentially under the provisions of § 9 and shall have no right or license to use such PRODUCT RESULTING PROPRIETARY RIGHTS for any purpose other than as expressly set forth herein to manufacture the PRODUCT.  MIRNA will name those employees and consultants of POLYMUN as inventors on patent applications consistent with patent law.  However, MIRNA has no obligation whatsoever to compensate such inventors named on such patent application.

 

4.             Regardless of which PARTY generated PLT RESULTING PROPRIETARY RIGHTS, all rights in PLT RESULTING PROPRIETARY RIGHTS shall be the sole and exclusive property of POLYMUN.  POLYMUN shall have the right to prepare, file, prosecute, obtain and maintain at its sole expense patent applications and patents relating to PLT RESULTING PROPRIETARY RIGHTS in countries of its choice.  Both PARTIES agree that each will identify and memorialize PLT RESULTING PROPRIETARY RIGHTS for itself and the other PARTY.  MIRNA hereby assigns and conveys to POLYMUN all right, title, and interest in and to such PLT RESULTING PROPRIETARY RIGHTS and agrees to execute any and all legal instruments reasonably requested by POLYMUN to effect, acknowledge, or perfect such assignment and conveyance.  MIRNA represents and warrants that each and every officer, employee, agent and subcontractor assigned to work for MIRNA hereunder shall have entered into an agreement with MIRNA for the assignment of relevant PLT RESULTING PROPRIETARY RIGHTS to MIRNA.  In addition, MIRNA, its agents, and subcontractors shall treat such PLT RESULTING PROPRIETARY RIGHTS confidentially under the provisions of § 9 and shall have no right or license to use such PLT RESULTING PROPRIETARY RIGHTS for any purpose other than as expressly set forth herein.  POLYMUN will name those employees and consultants of MIRNA as inventors on patent applications consistent with patent law.  However, POLYMUN has no obligation whatsoever to compensate such inventors named on such patent application.  Notwithstanding the foregoing, and except as set forth herein, POLYMUN and MIRNA may negotiate in good faith license terms for PLT RESULTING PROPRIETARY RIGHTS at any further point in time.  However, POLYMUN shall disclose in writing any such PLT RESULTING PROPRIETARY RIGHTS as soon as practicable or prior to use with the PRODUCT, whichever occurs first, so that MIRNA may have the opportunity to accept its use, provide alternatives or terminate this AGREEMENT at MIRNA’s sole discretion.

 

 

5.                                      INGREDIENTS shall be the sole and exclusive property of MIRNA.  MIRNA shall have the right to prepare, file, prosecute, obtain and maintain at its sole expense patent applications and patents relating to INGREDIENTS in countries of its choice.  In addition, POLYMUN, its agents, and subcontractors shall treat such INGREDIENTS confidentially under the provisions of § 9 and shall have no right or license to use INGREDIENTS for any purpose other than as expressly set forth herein to manufacture the PRODUCT.

 

§ 3.                            DEVELOPMENT AND MANUFACTURING ACTIVITIES AND RELATED OBLIGATIONS

 

1.                                      POLYMUN shall deliver (i) the SUBJECT MATTER OF AGREEMENT in the form of one or more reports about the development and/or manufacture of PRODUCT and (ii) the PRODUCT produced according to this AGREEMENT.  A binding SOW, including a production and delivery schedule, is given in Annex 2 of this AGREEMENT.  No additional SOW will be effective unless and until it has been agreed to and signed by authorized representatives of both PARTIES.  Neither PARTY will make any changes to the SOW, including the PRODUCT SPECIFICATIONS contained therein, without the other PARTY’s prior written approval.

 

2.                                      POLYMUN shall manufacture the PRODUCT hereunder in conformance with the PRODUCT SPECIFICATIONS and in compliance with APPLICABLE LAWS.  POLYMUN shall obtain and maintain all necessary licenses, permits or approvals required by APPLICABLE LAWS in connection with the manufacture, storage, and shipment of the PRODUCT, including without limitation permits relating to manufacturing facilities.

 

3.                                      During the term of this AGREEMENT, both PARTIES shall cooperate closely to facilitate the development and manufacture of the PRODUCT.  POLYMUN shall maintain sufficient capacity in POLYMUN’s manufacturing facilities and shall apply and assign all necessary personnel, equipment, supplies, and all other appropriate resources at its disposal to perform its obligations under this AGREEMENT.  POLYMUN shall take all reasonable steps to ensure that its personnel are properly trained and proficient in the PRODUCT SPECIFICATIONS and manufacturing process and in handling the MATERIALS and the PRODUCT.

 

4.                                      POLYMUN shall keep MIRNA regularly and periodically informed of the progress of the development and manufacturing activities via meetings and technical reviews.  Should POLYMUN experience or anticipate any problems in performing this AGREEMENT, POLYMUN shall immediately notify MIRNA in writing of such problems, their expected duration and the reasons thereof.  The PARTIES will consult and agree to a resolution of the problem.

 

 

5.                                      POLYMUN shall not subcontract all or any part of the development or manufacturing activities under this Agreement to third parties without the prior written consent of MIRNA.  In any event, POLYMUN shall remain responsible for the performance of its obligations hereunder.

 

6.                                      POLYMUN will manufacture PRODUCT at its facilities located in Klosterneuburg, Austria, and POLYMUN shall not change the location of such manufacture without MIRNA’s prior written consent, not to be unreasonably withheld.

 

7.                                      The QUALITY AGREEMENT shall govern an quality related matters pertaining to each PARTY’s obligations under this AGREEMENT.

 

§ 4.                            TERM AND TERMINATION

 

1.                                      The term of this AGREEMENT begins at the EFFECTIVE DATE and continues until completion of the PROJECT pursuant to the STATEMENT OF WORK or this AGREEMENT is otherwise terminated pursuant to this § 4, whichever is earlier, and may be extended upon written agreement of both PARTIES.  Timelines are given in the working schedule described in Annex 2 of this AGREEMENT.

 

2.                                      MIRNA or POLYMUN may terminate this AGREEMENT upon thirty (30) days prior written notice to the other PARTY if (i) the other PARTY shall become insolvent or (ii) the other PARTY shall make a general assignment for the benefit of creditors, or (iii) the opening of bankruptcy proceedings over the other PARTY is denied for lack of assets. In case of termination by MIRNA for any of the grounds specified in this § 4.21 MIRNA shall have a perpetual, world-wide, non-exclusive license to use any process technology owned by or licensed to POLYMUN to the extent required in order to produce the PRODUCT.

 

3.                                      MIRNA or POLYMUN may terminate this AGREEMENT at any time for any material breach by the other PARTY of any of the provisions hereof upon thirty (30) days prior written notice to such other PARTY, provided that during such thirty (30) day period the default is not cured to the reasonable satisfaction of the PARTY giving notice. In case of termination by MIRNA for any of the grounds specified in this § 4.3, MIRNA shall have a perpetual, world-wide, non-exclusive license to use any process technology owned by or licensed to POLYMUN to the extent required in order to produce the PRODUCT.

 

4.                                      In the event of termination of this AGREEMENT pursuant to any of the above provisions, POLYMUN shall have a duty to mitigate its damages, including (a) to cease all development activities for MIRNA pursuant to this AGREEMENT, (b) to take all steps necessary to cancel or to limit to a minimum any commitments with third parties ancillary to the development activities pursuant to this AGREEMENT, (c) to inventory and provide a list to MIRNA of all WORK PRODUCT, and (d) upon request of MIRNA, to promptly deliver to MIRNA all WORK PRODUCT and transfer to MIRNA all drawings, all partially or fully completed deliverables, and all other know-how comprising or forming a basis for or relating to PRODUCT RESULTING PROPRIETARY RIGHTS.

 

 

5.                                      Termination of the AGREEMENT for any reason will not relieve the PARTIES of any obligation accruing prior thereto and will be without prejudice to the rights and remedies of either PARTY with respect to any antecedent breach of the provisions of the AGREEMENT.  The following shall survive any termination or expiration of the AGREEMENT and continue to be enforceable: §1, §2, §3.7, §6.4, §6.5, and §§7 through and including 12.

 

6.                                      Upon the successful conclusion of POLYMUN’s development activities under this AGREEMENT, or any extensions thereof, or upon any earlier termination hereof, POLYMUN shall return to MIRNA all MATERIALS and INGREDIENTS.  Any MATERIALS shall be the property of MIRNA and, for so long as such MATERIALS are permitted to be in the possession or control of POLYMUN, shall be used by POLYMUN only as directed by MIRNA and only for the purposes of this Agreement.  In order to assist MIRNA in the disposition of such MATERIALS and INGREDIENTS, POLYMUN shall, promptly upon the conclusion of the development and manufacturing activities or termination of this AGREEMENT, provide MIRNA with a written inventory of all such MATERIALS and INGREDIENTS.  Such inventory shall be in sufficient detail to enable MIRNA to identify and confirm the return of the MATERIALS previously delivered by MIRNA.  MIRNA shall further be given reasonable access to the facilities of POLYMUN and any authorized third party contractors of POLYMUN in order to identify and inspect such MATERIALS and INGREDIENTS.

 

§ 5.                            PRICE, PAYMENT AND DELIVERY

 

1.                                      The price for the SUBJECT MATTER OF AGREEMENT is given in Annex 2 of this AGREEMENT including all applicable taxes except sales/use tax.  If the PARTIES contract for additional work under this AGREEMENT in furtherance of the SUBJECT MATTER OF AGREEMENT, the amendment(s) to Annex 2 will include the price for such additional work.

 

2.                                      POLYMUN shall send to MIRNA individual invoices in Euro showing the applicable sales/use tax with a reference to this AGREEMENT within thirty (30) days after the condition for a payment is fulfilled (see the Payment Schedule provided in Annex 2 of this Agreement).  MIRNA shall pay the invoiced amounts within thirty (30) days after receipt of a correct invoice.  Payment shall be considered made on the date MIRNA transfers the payment to POLYMUN.  Payments for undisputed invoiced amounts that are not received within sixty (60) days after MIRNA receives the applicable invoice will be assessed interest at the rate of [***] commencing as on the 31st day after MIRNA receiving the according invoice.  MIRNA’s payment obligation under this § 5 shall survive any termination or expiration of this AGREEMENT.  Payment shall not constitute acceptance of the delivery.  Payment shall not prejudice MIRNA’s right to return nonconforming PRODUCT, to receive credit or reimbursement for such nonconforming PRODUCT, and/or to receive reimbursement for the costs by then borne by MIRNA to replace the MATERIALS used in the manufacture of the nonconforming PRODUCT.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

3.                                      Reports will be delivered in form of electronic files as well as hard copies.  PRODUCT will be stored and packaged at Polymun following all applicable guidelines as set forth in Annex 2.  Transport to MIRNA or to a third party indicated by MIRNA will be performed by Polymun FCA by a transport service designated by MIRNA.

 

§ 6.                            SHIPPING, STORAGE AND INSPECTION

 

1.                                      POLYMUN and MIRNA will ensure that PRODUCT will be packaged and shipped pursuant to the QUALITY AGREEMENT, in accordance with recognized standards for the maintenance of the cold chain from POLYMUN’s manufacturing facility to a MIRNA-designated facility through an air courier service designated by MIRNA.  To permit the proper tracking of such shipments, the air waybill number will be transmitted to MIRNA as soon as practicable after shipment.

 

2.                                      POLYMUN shall be responsible for testing all PRODUCT prior to shipment to MIRNA for compliance with the PRODUCT SPECIFICATIONS and for maintaining PRODUCT as required for stability and quality testing under the QUALITY AGREEMENT POLYMUN will promptly notify MIRNA of such test results once received.  POLYMUN shall retain a sufficient quantity of PRODUCT to perform at least full duplicate quality control testing.

 

3.                                      MIRNA or its designated consignee will promptly store PRODUCT immediately upon receipt in appropriate cold storage and will, as soon as practicable after receipt of any the PRODUCT, inspect the shipment and advise POLYMUN of conformity with the PRODUCT SPECIFICATIONS.

 

4.                                      After receipt, MIRNA may arrange for the PRODUCT to be tested by a mutually agreed-upon independent third party to determine whether the PRODUCT SPECIFICATIONS are met.  In the event that MIRNA elects to do so, then at the request of either MIRNA or POLYMUN, the PARTIES shall make arrangement to have the independent third party also test a sample from the same PRODUCT lot retained by POLYMUN pursuant to § 6.2.  MIRNA will promptly notify POLYMUN of such test results once received.

 

5.                                      If the testing conducted under §§ 6.2 and/or 6.4 determines that the PRODUCT failed to meet the PRODUCT SPECIFICATIONS, MIRNA will be entitled to receive from POLYMUN as promptly as commercially reasonable (i) a replacement shipment of the PRODUCT and (ii) reimbursement for the cost of the MATERIALS used to manufacture the replacement PRODUCT.  MIRNA will use commercially reasonable efforts to supply replacement INGREDIENT to POLYMUN to manufacture the replacement PRODUCT.  In the event that MIRNA has paid for any PRODUCT that failed to meet the PRODUCT SPECIFICATIONS, then POLYMUN shall promptly refund such payment to MIRNA.  Notwithstanding the foregoing, if the results of testing of POLYMUN’s retention sample pursuant to Section 6.4 indicate that the PRODUCT does meet the PRODUCT SPECIFICATIONS, POLYMUN and MIRNA will use good faith efforts to resolve the discrepancy and make a determination as to the suitability of the shipment and allocation between the PARTIES of the cost for replacement PRODUCT and MATERIALS.

 

 

6.                                      MIRNA, on behalf of itself and/or its Affiliates may arrange for cGMP compliance audits to be conducted at POLYMUN’s manufacturing facilities.  MIRNA will give POLYMUN not less than forty-five (45) days’ notice prior to conduct of such audits, unless POLYMUN agrees to a lesser period of time.  MIRNA will not conduct or permit its Affiliates to conduct ‘no-notice’ audits of POLYMUN’s manufacturing facilities.

 

§ 7.                            WARRANTIES; INDEMNIFICATION; INSURANCE

 

1.                                      POLYMUN warrants that it (i) is the unrestricted owner of the BACKGROUND RIGHTS OF POLYMUN and the POLYMUN KNOW-HOW and (ii) that it can freely dispose of it and it has all rights necessary to use the BACKGROUND RIGHTS OF POLYMUN and the POLYMUN KNOW-HOW to manufacture the PRODUCT.

 

2.                                      POLYMUN warrants the completeness and accuracy of its INFORMATION relating to the BACKGROUND RIGHTS OF POLYMUN, the POLYMUN KNOW-HOW, and the SUBJECT MATTER OF AGREEMENT.

 

3.                                      MIRNA warrants that to the best of its knowledge it is entitled to provide the INGREDIENTS and the liposomal delivery technology known as NOV340 owned by Marina Biotech, Inc. for the PRODUCT under this AGREEMENT (the “NOV340 TECHNOLOGY”).

 

4.                                      Except to the extent that POLYMUN is entitled to be indemnified by POLYMUN pursuant to § 7.5, POLYMUN hereby agrees to indemnify, defend and hold harmless MIRNA from any claim or liability arising out of: (i) [***]; or (ii) POLYMUN’s gross negligence or intentional misconduct in the performance of its obligations hereunder.

 

5.                                      Except to the extent that MIRNA is entitled to be indemnified by POLYMUN pursuant to § 7.41 MIRNA hereby agrees to indemnify, defend and hold harmless POLYMUN from any claim or liability arising out of (i) the use and/or distribution of the PRODUCT by MIRNA, including but not limited to use in preclinical and clinical studies; (ii) claims or liability relating to [***]; or (iii) MIRNA’s gross negligence or intentional misconduct in the performance of its obligations hereunder.

 

6.                                      The PARTY seeking indemnification (“INDEMNIFIED PARTY”) pursuant to this Section 7 shall promptly provide notice to the indemnifying PARTY (“INDEMNIFYING PARTY”) of such claim in reasonable detail, provided that the failure to provide such notice shall not affect the obligations of the INDEMNIFYING PARTY unless and only to the extent said INDEMNIFYING PARTY is actually materially prejudiced thereby.  The INDEMNIFIED PARTY shall furnish promptly to the INDEMNIFYING PARTY copies of all papers and official documents received in respect of any claim.  Commencing within thirty (30) days after receipt of the aforesaid notice, the INDEMNIFYING PARTY shall undertake, conduct and control, through counsel of its own choosing (but reasonably acceptable to the INDEMNIFIED PARTY) and at its own expense, the settlement or defense of the claim, provided that the INDEMNIFIED PARTY may participate in such settlement or defense through counsel chosen by the INDEMNIFIED PARTY, at the expense of the INDEMNIFIED PARTY and reasonably 

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

acceptable to the INDEMNIFYING PARTY.  The INDEMNIFYING PARTY shall not, without the prior written consent of the INDEMNIFIED PARTY, which consent shall not be unreasonably withheld, settle or compromise any claim, unless such settlement or compromise includes an unconditional release of the INDEMNIFIED PARTY.  The INDEMNIFYING PARTY and the INDEMNIFIED PARTY shall cooperate fully in all aspects of any investigation, defense, pre-trial activities, trial, compromise, settlement or discharge of any claim in respect of which indemnity is sought pursuant to this § 7.6, including, but not limited to, providing the other PARTY with reasonable access to employees and officers (including as witnesses) and other information.

 

7.                                      POLYMUN shall procure and maintain throughout the term of this AGREEMENT property, casualty, and liability insurance, with such types and amounts of coverage as are customary in the industry (but with limits of no less than [***] per occurrence and [***] in the aggregate providing coverage on a worldwide basis for occurrences and claims made), covering POLYMUN’s manufacturing activities hereunder and all MATERIALS and PRODUCT intended for manufacture or supply provided by MIRNA to POLYMUN pursuant to this AGREEMENT.  Within ten (10) days of any change of insurer, POLYMUN shall provide MIRNA notice of such change.  Upon request, POLYMUN shall provide MIRNA with evidence that such insurance is in effect.

 

§ 8.                            MAINTENANCE OF THE BACKGROUND RIGHTS

 

POLYMUN shall maintain the BACKGROUND RIGHTS OF POLYMUN and MIRNA shall maintain the BACKGROUND RIGHTS OF MIRNA during the term of this AGREEMENT, each at its own cost.

 

§ 9.                            CONFIDENTIALITY

 

1.                                      POLYMUN and MIRNA agree that during the term of this Agreement and for a period of ten (10) years after MIRNA notifies POLYMUN that MIRNA’s license with Marina Biotech, Inc. to the NOV340 technology has expired or terminated, a Party receiving INFORMATION of the other Party shall (i) maintain in confidence such INFORMATION; (ii) not disclose such INFORMATION to any third party without prior written consent of the disclosing Party, except as permitted in the this Section 9; and (iii) not use such INFORMATION for any purpose other than its performance under this Agreement; provided, however, that MIRNA in its sole discretion shall not be required to keep WORK PRODUCT, PRODUCT RESULTING PROPRIETARY RIGHTS or the PRODUCT confidential.  The INFORMATION will be transferred by the receiving PARTY only to its employees to the extent necessary for the implementation of this AGREEMENT, who are themselves obliged to written obligations of confidentiality at least as restrictive as those contained in this Agreement.

 

2.                                      The obligation for confidentiality does not apply to INFORMATION that:

 

a)                                     the receiving PARTY already possess, as evidenced by its written records, prior to receipt from the disclosing PARTY;

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

b)                                     is now, or hereafter becomes, generally available to the public through no fault of the receiving PARTY, or any entity that obtained such information or materials from the receiving PARTY;

 

c)                                      is obtained without restriction from a third party that had the legal right to disclose the same to the receiving PARTY; or

 

d)                                     has been independently developed by the receiving PARTY without the aid, application or use of any INFORMATION of the disclosing PARTY, as demonstrated by competent written proof.

 

If, based on the advice of legal counsel skilled in the subject matter, a PARTY is required to disclose specific INFORMATION of the other Party to comply with an applicable law, regulation, legal process, or order of a government authority or court of competent jurisdiction, the PARTY may disclose such INFORMATION only to the entity or person required to receive such disclosure; provided, however, that the PARTY required to disclose such INFORMATION shall (a) to the extent permitted by such law, regulation, process order or rules, first have given prompt (but in no event less than five (5) business days) advance notice to such other PARTY to enable it to seek any available exemptions from or limitations on such disclosure requirement and shall reasonably cooperate in such efforts by the other PARTY; (b) furnish only the portion of the INFORMATION which is legally required to be disclosed; (c) use all reasonable efforts to secure confidential protection of such INFORMATION; and (d) continue to perform its obligations of confidentiality and non-use set out in this Section 9.

 

3.                                      It is understood and agreed that MIRNA shall be free to use the MATERIALS, INGREDIENTS, PRODUCT and WORK PRODUCT for its own purposes and that such MATERIALS, INGREDIENTS, PRODUCT AND WORK PRODUCT shall be treated by POLYMUN as confidential hereunder.

 

4.                                      Each PARTY’s confidentiality obligation shall survive for ten (10) years from expiration or termination of this AGREEMENT.  Notwithstanding the foregoing, either PARTY may disclose the existence, terms and conditions of this AGREEMENT to prospective investors, provided that any such party to whom disclosure is permitted has agreed to keep such information confidential subject to written terms at least as restrictive as those contained herein.

 

§ 10.                     FORCE MAJEURE

 

No PARTY shall be liable to the other PARTY in damages or otherwise by reason of any failure or delay in performance of this AGREEMENT if such delay or failure is due to any event beyond the control of the PARTIES, including, without limitation, fire, explosion, weather, disease, war, acts of terrorism, insurrection, civil strife, riots, government action or power failure, provided, however, that the PARTY who is unable to perform resumes performance as soon as possible following the end of the event causing delay or failure.  Any deadline or time for performance specified in this AGREEMENT which falls due during or subsequent to the occurrence of any of the events referred to above shall be automatically extended for a period of time equal to the period of delay caused by any such event; provided, however, that in the event such delay exceed sixty (60) days, the non-delaying PARTY may terminate this AGREEMENT upon notice to the other PARTY.

 

 

§ 11.                     GOVERNING LAW AND DISPUTE RESOLUTION

 

This AGREEMENT shall be construed and governed in accordance with the laws of Delaware, without giving effect to conflict of law provisions of any jurisdiction.  In the event that a PARTY to this AGREEMENT perceives the existence of a dispute with the other PARTY concerning any right or duty provided for herein, the President, Chief Executive Officer or designee with authority to resolve the dispute completely, of each of the PARTIES will, as soon as practicable, confer in an attempt to resolve the dispute.  Any and all claims, disputes or controversies arising under, out of, or in connection with this AGREEMENT, which have not been resolved in good faith negotiations between the PARTIES shall be resolved in accordance with the rules, then in effect, of the American Arbitration Association.  The PARTIES shalt share equally the cost of the arbitrators.  Unless agreed in writing otherwise, the dispute shall be resolved by a board of three (3) arbitrators.  If the arbitration is [***].  Such independent arbitration shall be conducted by arbitrator(s) of sufficient education, scientific experience and national reputation to address such issues.  Unless agreed in writing otherwise, the board shall be composed of one arbitrator selected by MIRNA, one selected by POLYMUN and one selected by MIRNA and POLYMUN.  If MIRNA and POLYMUN cannot agree upon the third arbitrator within fourteen (14) days after the notice of arbitration, the third arbitrator shall be selected by the American Arbitration Association in accordance with its rules.  The decision of such panel shall be final and binding upon the PARTIES and enforceable in any court of competent jurisdiction.

 

§ 12.                     MISCELLANEOUS

 

1.                                      This AGREEMENT shall be executed in two (2) copies in the English language.  Each PARTY shall receive a duly signed copy.  All annexes listed in this AGREEMENT form an integral part thereof.

 

2.                                      The acts to be taken by each PARTY are undertaken by it as an independent contractor and not as an agent or partner of the other PARTY.  Neither PARTY shall enter into or incur, or hold itself out to third parties as having authority to enter into or incur, on behalf of the other PARTY, any contractual obligations, expenses, or liabilities whatsoever.

 

3.                                      Should any provision of this AGREEMENT or any provision subsequently inserted into it be or become completely or partially invalid or impracticable, the validity of the remainder of the provisions of the AGREEMENT shall not be affected thereby.  The same shall apply should the AGREEMENT contain an unintended gap.  The invalid or impracticable provision shall be replaced by, and the gap shall be closed by an appropriate provision which to the extent legally permissible comes closest to what the PARTIES wanted or would have wanted in view of the purpose and intent of this AGREEMENT if they had considered the point when concluding this AGREEMENT, or subsequently inserting the provision into it.

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

4.                                      Without the prior written consent of MIRNA, POLYMUN is not entitled to transfer/assign any rights/obligations under this AGREEMENT to a third party.  MIRNA may transfer or assign any rights/obligations under this AGREEMENT without consent of POLYMUN.

 

5.                                      Any notice of legal content must be sent in writing by registered mail or global courier service to the company address set forth in the preamble of this AGREEMENT to PARTY set forth below.  Notice shall be deemed given upon confirmed delivery.  As to MIRNA, notices shall be sent to President and CEO with a copy to General Counsel; as to POLYMUN notices shall be sent to the CEO.

 

6.                                      No verbal subsidiary agreements have been made. Modifications/amendments to or extensions of this AGREEMENT are only valid if in writing and signed by authorized representatives for and on behalf of both PARTIES.

 

7.                                      This AGREEMENT supersedes all prior agreements, arrangements and undertakings, relating to the subject hereof between the PARTIES save and except (i) the Confidential Disclosure Agreement between the PARTIES from 25th of July 2011, which shall govern the exchange of confidential information between the PARTIES prior to the EFFECTIVE DATE hereof, (ii) the Agreement for a Feasibility Study of a Liposomal Formulation from 18th of January 2012, (iii) the Agreement for Development and Manufacturing of a Liposomal Formulation from 19th of March 2012, and (iv) the Agreement for Development and Manufacturing of a Liposomal Formulation from 13th of July 2012.

 

	
For MIRNA THERAPEUTICS, INC.:
    	
For POLYMUN:
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Paul Lammers 
    	
16 Nov, 2012
    	
 
    	
/s/ Dietmar Katinger 
    	
18.11.2012
    
	
(signature/date)
    	
(signature/date)
    
	
 
    	
 
    
	
Paul Lammers, MD, MSc; President & CEO
    	
Dr. Dietmar Katinger; CEO
    
					

 

Annex 1:               POLYMUN Patents
  Annex 2:               Statement of Work (including Product Specifications and Pricing Schedule)

 

 

Annex 1

 

POLYMUN Patents

 

Title: Method and Device for Producing Lipid Vesicles

 

	
Country/Region
    	
 
    	
Application Date
    	
 
    	
Patent No.
    	
 
    	
Date of Grant
    	
 
    	
Expiration Date
    
	
Australia
    	
 
    	
31. October 2001
    	
 
    	
AU 2002215987
    	
 
    	
10. August 2006
    	
 
    	
31. October 2021
    
	
Canada
    	
 
    	
31. October 2001
    	
 
    	
CA 2,427,640
    	
 
    	
5. September 2006
    	
 
    	
31. October 2021
    
	
Europe
    	
 
    	
31. October 2001
    	
 
    	
EP 1 337 322
    	
 
    	
9. June 2004
    	
 
    	
31. October 2021
    
	
USA
    	
 
    	
28. August 2003
    	
 
    	
US 6,843,942
    	
 
    	
18. January 2005
    	
 
    	
31. October 2021
    

 

 

Annex 2

 

Statement of Work

 

(statement of work follows)

 

 

	

    	
 
    	
SOW-PS003
    

 

SCOPE OF WORK (SOW)

 

	
 
    	
Manufacturing   Development and Production of MRX01
    
	
 
    	
 
    
	
POLYMUN:
    	
Polymun   Scientific Immunbiologische Forschung GmbH
    
	
 
    	
Donaustraße   99
    
	
 
    	
3400   Klosterneuburg, Austria
    
	
 
    	
 
    
	
MIRNA:
    	
Mirna   Therapeutics, Inc.
    
	
 
    	
2150   Woodward, Suite 100
    
	
 
    	
Austin,   TX 78744
    
	
 
    	
 
    
	
SOW   #:
    	
PS003
    
	
VERSION:
    	
A
    
	
DATE:
    	
November 16,   2012
    

 

Scope of Work Acceptance:  With the signatures below, POLYMUN and MIRNA hereby accept SOW-PS003-A.

 

	
Mirna   Therapeutics, Inc
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Dr. Paul Lammers  
    	
 
    	
11/16/2012  
    
	
Signature
    	
 
    	
Date
    
	
 
    	
 
    	
 
    
	
Name: 
    	
Dr. Paul Lammers  
    	
 
    	
 
    
	
Title: 
    	
President & CEO
    	
 
    	
 
    
	
 
    	
 
    
	
Polymun   Scientific Immunbiologische Forschung GmbH
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Dietmar Katinger  
    	
 
    	
18.11.2012  
    
	
Signature
    	
 
    	
Date
    
	
Name:
    	
Dietmar Katinger  
    	
 
    	
 
    
	
Title: 
    	
CEO
    	
 
    	
 
    
					

 

 

	
Contents
    	
 
    
	
 
    	
 
    
	
Scope of Work
    	
3
    
	
Product
    	
3
    
	
INGREDIENT:
    	
3
    
	
Payment Schedule
    	
3
    
	
[***]
    	
3
    

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

	

    	
 
    	
SOW-PS005
    

 

This Scope of Work is governed by the Agreement for Development and Manufacturing of a Liposomal Formulation from July 2012 between POLYMUN and MIRNA.

 

Scope of Work

 

The Scope of Work for developing the drug candidate MRX34 (“PRODUCT”) will be divided into 3 sections

 

·                                [***]

 

Each stage will have defined deliverables as detailed below. Upon initiation of the contract, POLYMUN and MIRNA will develop a target schedule of activities that will govern the project.  This timeline will be reviewed at least monthly to track the project progress.

 

Product

 

The PRODUCT is a liposomal formulation of a mimic of miR-34a (INGREDIENT), which employs the SMARTICLE formulation NOV340.  The Target Specification for the PRODUCT is defined in Error! Reference source not found..

 

INGREDIENT:

 

The INGREDIENT is a mimic of miR-34a, [***].

 

[***]

 

Payment Schedule

 

[***]

 

[***] Four pages in this document have been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Exhibit 1 — Product Specifications

 

	
Assay
    	
 
    	
Method
    	
 
    	
Specification
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    

 

[***] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.Exhibit 10.8(A)

 

MIRNA THERAPEUTICS, INC.

 

2008 LONG TERM INCENTIVE PLAN

 

 

FIRST AMENDMENT

 

TO THE

 

MIRNA THERAPEUTICS, INC.

 

2008 LONG TERM INCENTIVE PLAN

 

This First Amendment to the Mirna Therapeutics, Inc. 2008 Long Term Incentive Plan (the “Plan”) is made by Mirna Therapeutics, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company has established the Plan in order to attract and retain able persons as employees, directors and consultants of the Company, its parent and its subsidiaries;

 

WHEREAS, Section 10(f) of the Plan provides that the Company may amend the Plan under certain circumstances; and

 

WHEREAS, the Company desires to enter into this First Amendment to reduce the number of shares of common stock, par value $0.001, of the Company (the “Stock”), reserved and available for issuance in connection with awards under the Plan.

 

NOW, THEREFORE, Section 4(a) of the Plan is amended in its entirety, effective as of November 3, 2009, as follows:

 

Overall Number of Shares Available for Delivery.  Subject to adjustment in a manner consistent with any adjustment made pursuant to Section 9, the total number of shares of Stock reserved and available for issuance in connection with Awards under this Plan shall not exceed 1,500,000 shares.

 

IN WITNESS WHEREOF, a duly authorized officer of the Company has executed this First Amendment as set forth below.

 

 

	
 
    	
MIRNA   THERAPEUTICS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/S/ LYNNE   HOHLFELD
    
	
 
    	
Name:
    	
Lynne   Hohlfeld
    
	
 
    	
Title:
    	
Chief   Financial Officer
    
	
 
    	
Date:
    	
November 3,   2009
    

 

 

SECOND AMENDMENT

 

TO THE

 

MIRNA THERAPEUTICS, INC.

 

2008 LONG TERM INCENTIVE PLAN

 

This Second Amendment to the Mirna Therapeutics, Inc. 2008 Long Term Incentive Plan, as amended (the “Plan”), is made by Mirna Therapeutics, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company has established the Plan in order to attract and retain able persons as employees, directors and consultants of the Company, its parent and its subsidiaries;

 

WHEREAS, Section 10(f) of the Plan provides that the Company may amend the Plan under certain circumstances; and

 

WHEREAS, the Company desires to enter into this Second Amendment to increase the number of shares of common stock, par value $0.001, of the Company, reserved and available for issuance in connection with awards under the Plan.

 

NOW, THEREFORE, Section 4(a) of the Plan is amended in its entirety, effective as of October 22, 2012, as follows:

 

Overall Number of Shares Available for Delivery.  Subject to adjustment in a manner consistent with any adjustment made pursuant to Section 9, the total number of shares of Stock reserved and available for issuance in connection with Awards under this Plan shall not exceed 4,958,740 shares.

 

IN WITNESS WHEREOF, a duly authorized officer of the Company has executed this Second Amendment as set forth below.

 

 

	
 
    	
MIRNA   THERAPEUTICS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/S/ LYNNE   HOHLFELD
    
	
 
    	
Name:
    	
Lynne   Hohlfeld
    
	
 
    	
Title:
    	
Chief   Financial Officer
    
	
 
    	
Date:
    	
October 22,   2012
    

 

 

THIRD AMENDMENT

TO THE

MIRNA THERAPEUTICS, INC.

2008 LONG TERM INCENTIVE PLAN

 

This Third Amendment to the Mirna Therapeutics, Inc. 2008 Long Term Incentive Plan, as amended (the “Plan”), is made by Mirna Therapeutics, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company has established the Plan in order to attract and retain able persons as employees, directors and consultants of the Company, its parent and its subsidiaries;

 

WHEREAS, Section 10(f) of the Plan provides that the Company may amend the Plan under certain circumstances; and

 

WHEREAS, the Company desires to enter into this Second Amendment to increase the number of shares of common stock, par value $0.001, of the Company, reserved and available for issuance in connection with awards under the Plan.

 

NOW, THEREFORE, Section 4(a) of the Plan is amended in its entirety, effective as of December 31, 2013, as follows:

 

Overall Number of Shares Available for Delivery. Subject to adjustment in a manner consistent with any adjustment made pursuant to Section 9, the total number of shares of Stock reserved and available for issuance in connection with Awards under this Plan shall not exceed 8,321,740 shares.

 

IN WITNESS WHEREOF, a duly authorized officer of the Company has executed this Third Amendment as set forth below.

 

	
 
    	
MIRNA   THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jon Irvin
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Jon   Irvin
    
	
 
    	
Title:
    	
Chief   Financial Officer
    
	
 
    	
Date:
    	
December 31,   2013
    

 

 

FOURTH AMENDMENT

 

TO THE

MIRNA THERAPEUTICS, INC.

2008 LONG TERM INCENTIVE PLAN

 

This Fourth Amendment to the Mirna Therapeutics, Inc. 2008 Long Term Incentive Plan, as amended (the “Plan”), is made by Mirna Therapeutics, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company has established the Plan in order to attract and retain able persons as employees, directors and consultants of the Company, its parent and its subsidiaries;

 

WHEREAS, Section 10(f) of the Plan provides that the Company may amend the Plan under certain circumstances; and

 

WHEREAS, the Company desires to enter into this Fourth Amendment to increase the number of shares of common stock, par value $0.001, of the Company, reserved and available for issuance in connection with awards under the Plan.

 

NOW, THEREFORE, Section 4(a) of the Plan is amended in its entirety, effective as of March 10, 2014, as follows:

 

Overall Number of Shares Available for Delivery. Subject to adjustment in a manner consistent with any adjustment made pursuant to Section 9, the total number of shares of Stock reserved and available for issuance in connection with Awards under this Plan shall not exceed 10,049,028 shares.

 

IN WITNESS WHEREOF, a duly authorized officer of the Company has executed this Fourth Amendment as set forth below.

 

	
 
    	
MIRNA   THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jon Irvin
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Jon   Irvin
    
	
 
    	
Title:
    	
Chief   Financial Officer
    
	
 
    	
Date:
    	
March 10,   2014
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Purpose
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
3.
    	
Administration
    	
6
    
	
 
    	
(a)
    	
Authority of the Committee
    	
6
    
	
 
    	
(b)
    	
Manner of Exercise of Committee Authority
    	
7
    
	
 
    	
(c)
    	
Limitation of Liability
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Stock Subject to Plan
    	
8
    
	
 
    	
(a)
    	
Overall Number of Shares Available for Delivery
    	
8
    
	
 
    	
(b)
    	
Application of Limitation to Grants of Awards
    	
8
    
	
 
    	
(c)
    	
Availability of Shares Not Issued under Awards
    	
8
    
	
 
    	
(d)
    	
Stock Offered
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Eligibility; Per Person Award Limitations
    	
8
    
	
 
    	
 
    	
 
    
	
6.
    	
Specific Terms of Awards
    	
8
    
	
 
    	
(a)
    	
General
    	
8
    
	
 
    	
(b)
    	
Options
    	
9
    
	
 
    	
(c)
    	
Stock Appreciation Rights
    	
10
    
	
 
    	
(d)
    	
Restricted Stock
    	
11
    
	
 
    	
(e)
    	
Restricted Stock Units
    	
12
    
	
 
    	
(f)
    	
Bonus Stock and Awards in Lieu of Obligations
    	
12
    
	
 
    	
(g)
    	
Dividend Equivalents
    	
13
    
	
 
    	
(h)
    	
Other Stock-Based Awards
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
Certain Provisions Applicable to Awards
    	
13
    
	
 
    	
(a)
    	
Termination of Employment
    	
13
    
	
 
    	
(b)
    	
Stand-Alone, Additional, Tandem, and Substitute Awards
    	
13
    
	
 
    	
(c)
    	
Term of Awards
    	
14
    
	
 
    	
(d)
    	
Form and Timing of Payment under Awards; Deferrals
    	
14
    
	
 
    	
(e)
    	
Forfeiture for Detrimental Activity
    	
14
    
	
 
    	
(f)
    	
Exemptions from Section 16(b) Liability
    	
15
    
	
 
    	
(g)
    	
Non-Competition Agreement
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
Performance and Annual Incentive Awards
    	
15
    
	
 
    	
(a)
    	
Performance Conditions
    	
15
    
	
 
    	
(b)
    	
Performance Awards Granted to Designated Covered Employees
    	
15
    
	
 
    	
(c)
    	
Annual Incentive Awards Granted to Designated Covered   Employees
    	
17
    
	
 
    	
(d)
    	
Written Determinations
    	
18
    
	
 
    	
(e)
    	
Status of Subsection 8(b) and   Subsection 8(c) Awards under Section  162(m) of the Code
    	
18
    

 

 

	
9.
    	
Subdivision or Consolidation; Recapitalization; Change in   Control; Reorganization
    	
18
    
	
 
    	
(a)
    	
Existence of Plans and Awards
    	
18
    
	
 
    	
(b)
    	
Subdivision or Consolidation of Shares
    	
19
    
	
 
    	
(c)
    	
Corporate Recapitalization
    	
20
    
	
 
    	
(d)
    	
Additional Issuances
    	
20
    
	
 
    	
(e)
    	
Change in Control
    	
20
    
	
 
    	
(f)
    	
Change in Control Price
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
General Provisions
    	
21
    
	
 
    	
(a)
    	
Restricted Securities
    	
21
    
	
 
    	
(b)
    	
Transferability
    	
22
    
	
 
    	
(c)
    	
Right of First Refusal
    	
23
    
	
 
    	
(d)
    	
Purchase Option
    	
25
    
	
 
    	
(e)
    	
Taxes
    	
26
    
	
 
    	
(f)
    	
Changes to this Plan and Awards
    	
27
    
	
 
    	
(g)
    	
Limitation on Rights Conferred under Plan
    	
27
    
	
 
    	
(h)
    	
Unfunded Status of Awards
    	
27
    
	
 
    	
(i)
    	
Nonexclusivity of this Plan
    	
27
    
	
 
    	
(j)
    	
Fractional Shares
    	
27
    
	
 
    	
(k)
    	
Severability
    	
28
    
	
 
    	
(l)
    	
Governing Law
    	
28
    
	
 
    	
(m)
    	
Conditions to Delivery of Stock
    	
28
    
	
 
    	
(n)
    	
Plan Effective Date
    	
28
    

 

ii

 

MIRNA THERAPEUTICS, INC.

 

2008 Long Term Incentive Plan

 

1.                                      Purpose.  The purpose of the Mirna Therapeutics, Inc. 2008 Long Term Incentive Plan (the “Plan”) is to provide a means through which Mirna Therapeutics, Inc., a Delaware corporation (the “Company”), and its Parent and Subsidiaries may attract and retain able persons as employees, directors and consultants of the Company, its Parent and its Subsidiaries, and to provide a means whereby those persons upon whom the responsibilities of the successful administration and management of the Company, its Parent and its Subsidiaries, rest, and whose present and potential contributions to the welfare of the Company, its Parent and its Subsidiaries, are of importance, can acquire and maintain stock ownership, or awards the value of which is tied to the performance of the Company, thereby strengthening their concern for the welfare of the Company, its Parent and its Subsidiaries, and their desire to remain employed.  A further purpose of this Plan is to provide such employees, directors and consultants with additional incentive and reward opportunities designed to enhance the profitable growth of the Company.  Accordingly, this Plan primarily provides for the granting of Incentive Stock Options, options which do not constitute Incentive Stock Options, Restricted Stock Awards, Restricted Stock Units, Stock Appreciation Rights or any combination of the foregoing, as is best suited to the circumstances of the particular individual as provided herein.

 

2.                                      Definitions.  For purposes of this Plan, the following terms shall be defined as set forth below, in addition to such terms defined in Section 1 hereof:

 

(a)                                 “Annual Incentive Award” means a conditional right granted to a Participant under Subsection 8(c) hereof to receive a cash payment, Stock or other Award, unless otherwise determined by the Committee, after the end of a specified year.

 

(b)                                 “Award” means any Option, SAR (including Limited SAR), Restricted Stock Award, Restricted Stock Unit, Bonus Stock, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual Incentive Award, together with any other right or interest granted to a Participant under this Plan.

 

(c)                                  “Beneficiary” means one or more persons, trusts or other entities which have been designated by a Participant, in his or her most recent written beneficiary designation filed with the Committee, to receive the benefits specified under this Plan upon such Participant’s death or to which Awards or other rights are transferred if and to the extent permitted under Subsection 10(b) hereof.  If, upon a Participant’s death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means the persons, trusts or other entities entitled by will or the laws of descent and distribution to receive such benefits.

 

(d)                                 “Board” means the Company’s Board of Directors.

 

(e)                                  “Business Day” means any day other than a Saturday, a Sunday, or a day on which banking institutions in the state of Texas are authorized or obligated by law or executive order to close.

 

 

(f)                                   “Change in Control” means the occurrence of any of the following events:

 

(i)                                     A “change in the ownership of the Company” which shall occur on the date that any one person, or more than one person acting as a group, acquires ownership of stock in the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; provided, however, if any one person or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons will not be considered a “change in the ownership of the Company” (or to cause a “change in the effective control of the Company” within the meaning of Subsection 2(f)(ii) below) and an increase of the effective percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this paragraph; provided, further, however, that for purposes of this Subsection 2(f)(i), the following acquisitions shall not constitute a Change in Control:  (1) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (2) any acquisition by investors of preferred stock, common stock or other stock or similar securities of the Company or any security convertible or exchangeable into or for preferred stock, common stock or other stock or similar securities of the Company for cash in any financing transaction or series of related financing transactions, as determined by the Committee in its sole discretion.  This Subsection 2(f)(i) applies only when there is a transfer of the stock of the Company (or issuance of stock) and stock in the Company remains outstanding after the transaction.

 

(ii)                                  A “change in the effective control of the Company” which shall occur on the date that either (A) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 35% or more of the total voting power of the stock of the Company, except for (1) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (2) any acquisition by investors of preferred stock, common stock or other stock or similar securities of the Company or any security convertible or exchangeable into or for preferred stock, common stock or other stock or similar securities of the Company for cash in any financing transaction or series of related financing transactions, as determined by the Committee in its sole discretion; or (B) a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.  For purposes of a “change in the effective control of the Company,” if any one person, or more than one person acting as a group, is considered to effectively control the Company within the meaning of this Subsection 2(f)(ii), the acquisition of additional control of the Company by the same person or persons is not considered a “change in the effective control of the Company,” or to cause a “change in the ownership of the Company” within the meaning of Subsection 2(f)(i) above.

 

(iii)                               A “change in the ownership of a substantial portion of the Company’s assets” which shall occur on the date that any one person, or more than one person

 

2

 

acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) assets of the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Company immediately prior to such acquisition or acquisitions.  For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.  Any transfer of assets to an entity that is controlled by the shareholders of the Company immediately after the transfer, as provided in guidance issued pursuant to the Nonqualified Deferred Compensation Rules, shall not constitute a Change in Control.

 

For purposes of this Subsection 2(f), the provisions of section 318(a) of the Code regarding the constructive ownership of stock will apply to determine stock ownership; provided, that, stock underlying unvested options (including options exercisable for stock that is not substantially vested) will not be treated as owned by the individual who holds the option.  In addition, for purposes of this Subsection 2(f) and except as otherwise provided in an Award agreement, “Company” includes (x) the Company, (y) the entity for whom a Participant performs the services for which an Award is granted, and (z) an entity that is a stockholder owning more than 50% of the total fair market value and total voting power (a “Majority Shareholder”) of the Company or the entity identified in (y) above, or any entity in a chain of entities in which each entity is a Majority Shareholder of another entity in the chain, ending in the Company or the entity identified in (y) above.

 

(g)                                  “Detrimental Activity” means any one or more of the following activities in which the Committee determines in its sole and absolute discretion that an employee has engaged without the written consent of the Company:  (i) breach or violation of any employment-related agreement between the employee and the Company, its Parent or any Subsidiary of the Company; (ii) breach or violation of any other written agreement or release of claims between the employee and the Company, its Parent or any Subsidiary of the Company; (iii) violation of a written policy of the Company, its Parent or any Subsidiary of the Company which violation is determined by the Committee in its sole discretion to be detrimental to the Company, its Parent or any Subsidiary of the Company; (iv) improper use or disclosure, either during or subsequent to the employee’s employment with the Company, its Parent or any Subsidiary of the Company, of any proprietary or confidential information of the Company, its Parent or any Subsidiary of the Company; (v) conviction of, or entering a guilty plea with respect to, any felony crime, whether or not connected with the Company, its Parent or any Subsidiary of the Company; (vi) entering into employment or a consulting relationship with a competitor of the Company, its Parent or any Subsidiary of the Company under circumstances suggesting that such employee will be using unique or special knowledge gained as an employee of the Company, its Parent or any Subsidiary of the Company to compete with the Company, its Parent or any Subsidiary of the Company; (vii) solicitation or attempted solicitation of employees from the Company, its Parent or any Subsidiary of the Company; (viii) use of information obtained during the course of the employee’s employment with the Company, its Parent or any Subsidiary of the Company for the employee’s own purposes, such as for the solicitation of business; (ix) engaging in either gross misconduct or criminal activity harmful to the Company, its Parent or any Subsidiary of the Company; or (x) any other action that materially harms the business interests, reputation, or goodwill of the Company, its Parent or any Subsidiary of the Company.

 

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(h)                                 “Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto.

 

(i)                                     “Committee” means a committee of two or more directors designated by the Board to administer this Plan; provided, however, that, unless otherwise determined by the Board, the Committee shall consist solely of two or more directors, each of whom shall be (i) a “nonemployee director” within the meaning of Rule 16b-3, and (ii) an “outside director” as defined under section 162(m) of the Code unless administration of this Plan by “outside directors” is not then required in order to qualify for tax deductibility under section 162(m) of the Code.

 

(j)                                    “Covered Employee” means an Eligible Person who is a Covered Employee as specified in Subsection 8(e) of this Plan.

 

(k)                                 “Dividend Equivalent” means a right, granted to a Participant under Subsection 6(g), to receive cash, Stock, other Awards or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments.

 

(l)                                     “Effective Date” means May 15, 2008.

 

(m)                             “Eligible Person” means all officers and employees of the Company, its Parent or of any Subsidiary, and other persons who provide services to the Company, its Parent or any of the Subsidiaries of the Company, including directors of the Company.  An employee on leave of absence may be considered as still in the employ of the Company, its Parent or a Subsidiary for purposes of eligibility for participation in this Plan.  In addition, the Committee may designate such other Persons as eligible to receive an Award provided that the issuance of any Stock pursuant to such Award is exempt from registration under the Securities Act; and provided further that such other Persons shall not be entitled to receive Incentive Stock Options.

 

(n)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.

 

(o)                                 “Fair Market Value” means, as of any specified date, (i) the mean of the high and low sales prices of the Common Stock either (A) if the Stock is traded on the National Market System of the NASDAQ, as reported on the National Market System of NASDAQ on that date (or if no sales occur on that date, on the last preceding date on which such sales of the Stock are so reported), or (B) if the Stock is listed on a national securities exchange, as reported on the stock exchange composite tape on that date (or if no sales occur on that date, on the last preceding date on which such sales of the Stock are so reported); (ii) if the Stock is not traded on the National Market System of the NASDAQ or a national securities exchange but is traded over the counter at the time a determination of its fair market value is required to be made under the Plan, the average between the reported high and low or closing bid and asked prices of Stock on the most recent date on which Stock was publicly traded; (iii) in the event Stock is not publicly traded at the time a determination of its value is required to be made under the Plan, the amount determined by the Committee in its discretion in such manner as it deems appropriate; or (iv) on the date of an initial public offering of Stock, the offering price under such initial public offering.

 

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(p)                                 “Incentive Stock Option” or “ISO” means any Option intended to be and designated as an incentive stock option within the meaning of section 422 of the Code or any successor provision thereto.

 

(q)                                 “Nonqualified Deferred Compensation Rules” means the limitations or requirements of section 409A of the Code and the regulations promulgated thereunder.

 

(r)                                    “Option” means a right, granted to a Participant under Subsection 6(b) hereof, to purchase Stock or other Awards at a specified price during specified time periods.

 

(s)                                   “Other Stock-Based Awards” means Awards granted to a Participant under Subsection 6(i) hereof.

 

(t)                                    “Parent” means Asuragen, Inc. or any other corporation or other entity that owns, directly or indirectly, a majority of the voting power of voting equity securities or equity interest of the Company.

 

(u)                                 “Participant” means a person who has been granted an Award under this Plan which remains outstanding, including a person who is no longer an Eligible Person.

 

(v)                                 “Performance Unit” means a right, granted to a Participant under Section 8 hereof, to receive Awards based upon performance criteria specified by the Committee.

 

(w)                               “Person” means any person or entity of any nature whatsoever, specifically including an individual, a firm, a company, a corporation, a partnership, a limited liability company, a trust or other entity; a Person, together with that Person’s Affiliates and Associates (as those terms are defined in Rule 12b-2 under the Exchange Act), and any Persons acting as a partnership, limited partnership, joint venture, association, syndicate or other group (whether or not formally organized), or otherwise acting jointly or in concert or in a coordinated or consciously parallel manner (whether or not pursuant to any express agreement), for the purpose of acquiring, holding, voting or disposing of securities of the Company with such Person, shall be deemed a single “Person.”

 

(x)                                 “Qualifying Public Offering” shall mean a firm commitment underwritten public offering of Stock for cash where the shares of Stock registered under the Securities Act are listed on a national securities exchange or the NASDAQ National Market System.

 

(y)                                 “Qualified Member” means a member of the Committee who is a “nonemployee Director” within the meaning of Rule 16b-3(b)(3) and an “outside director” within the meaning of Treasury Regulation 1.162-27 under section 162(m) of the Code.

 

(z)                                  “Restricted Stock” means Stock granted to a Participant under Subsection 6(d) hereof, that is subject to certain restrictions and to a risk of forfeiture.

 

(aa)                          “Restricted Stock Unit” means a right, granted to a Participant under Subsection 6(e) hereof, to receive Stock, cash or a combination thereof at the end of a specified deferral period.

 

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(bb)                          “Rule 16b-3” means Rule 16b-3, promulgated by the Securities and Exchange Commission under section 16 of the Exchange Act, as from time to time in effect and applicable to this Plan and Participants.

 

(cc)                            “Securities Act” means the Securities Act of 1933 and the rules and regulations promulgated thereunder, or any successor law, as it may be amended from time to time.

 

(dd)                          “Service” means an employee’s service in his or her status as an employee of the Company, its Parent or a Subsidiary of the Company or of a corporation, or parent or subsidiary of such corporation, assuming or substituting a new award for an Award granted under this Plan.

 

(ee)                            “Stock” means the Company’s Common Stock, par value $0.001 per share, and such other securities as may be substituted (or resubstituted) for Stock pursuant to Section 9.

 

(ff)                              “Stock Appreciation Rights” or “SAR” means a right granted to a Participant under Subsection 6(c) hereof.

 

(gg)                            “Subsidiary” means with respect to the Company, any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by the Company.

 

3.                                      Administration.

 

(a)                                 Authority of the Committee.  This Plan shall be administered by the Committee except to the extent the Board elects to administer this Plan, in which case references herein to the “Committee” shall be deemed to include references to the “Board.”  Subject to the express provisions of the Plan and Rule 16b-3, the Committee shall have the authority, in its sole and absolute discretion, to (i) adopt, amend, and rescind administrative and interpretive rules and regulations relating to the Plan; (ii) determine the Eligible Persons to whom, and the time or times at which, Awards shall be granted; (iii) determine the amount of cash and the number of shares of Stock, Stock Appreciation Rights, Restricted Stock Units or Restricted Stock Awards, or any combination thereof, that shall be the subject of each Award; (iv) determine the terms and provisions of each Award agreement (which need not be identical), including provisions defining or otherwise relating to (A) the term and the period or periods and extent of exercisability of the Options, (B) the extent to which the transferability of shares of Stock issued or transferred pursuant to any Award is restricted, (C) except as otherwise provided herein, the effect of termination of employment, or the service relationship with the Company, of a Participant on the Award, and (D) the effect of approved leaves of absence (consistent with any applicable regulations of the Internal Revenue Service); (v) accelerate the time of exercisability of any Award that has been granted; (vi) construe the respective Award agreements and the Plan; (vii) make determinations of the Fair Market Value of the Stock pursuant to the Plan; (viii) delegate its duties under the Plan to such agents as it may appoint from time to time, provided that the Committee may not delegate its duties with respect to making Awards to, or otherwise with respect to Awards granted to, Eligible Persons who are subject to section 16(b) of

 

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the Exchange Act or section 162(m) of the Code; and (ix) make all other determinations, perform all other acts, and exercise all other powers and authority necessary or advisable for administering the Plan, including the delegation of those ministerial acts and responsibilities as the Committee deems appropriate.  Subject to Rule 16b-3 and section 162(m) of the Code, the Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan, in any Award, or in any Award agreement in the manner and to the extent it deems necessary or desirable to carry the Plan into effect, and the Committee shall be the sole and final judge of that necessity or desirability.  The determinations of the Committee on the matters referred to in this Subsection 3(a) shall be final and conclusive.

 

(b)                                 Manner of Exercise of Committee Authority.  At any time that a member of the Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to be granted to a Participant who is then subject to section 16 of the Exchange Act in respect of the Company, or relating to an Award intended by the Committee to qualify as “performance-based compensation” within the meaning of section 162(m) of the Code and regulations thereunder, may be taken either (i) by a subcommittee, designated by the Committee, composed solely of two or more Qualified Members, or (ii) by the Committee but with each such member who is not a Qualified Member abstaining or recusing himself or herself from such action; provided, however, that, upon such abstention or recusal, the Committee remains composed solely of two or more Qualified Members.  Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for purposes of this Plan.  Any action of the Committee shall be final, conclusive and binding on all persons, including the Company, its Subsidiaries, stockholders, Participants, Beneficiaries, and transferees under Subsection 10(b) hereof or other persons claiming rights from or through a Participant.  The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee.  The Committee may delegate to officers or managers of the Company, its Parent or any Subsidiary, or committees thereof, the authority, subject to such terms as the Committee shall determine, to perform such functions, including administrative functions, as the Committee may determine, to the extent that such delegation will not result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to section 16 of the Exchange Act in respect of the Company and will not cause Awards intended to qualify as “performance-based compensation” under section 162(m) of the Code to fail to so qualify.

 

(c)                                  Limitation of Liability.  The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or employee of the Company, its Parent or a Subsidiary, the Company’s legal counsel, independent auditors, consultants or any other agents assisting in the administration of this Plan.  Members of the Committee and any officer or employee of the Company, its Parent or a Subsidiary acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to this Plan, and shall, to the fullest extent permitted by law, be indemnified and held harmless by the Company with respect to any such action or determination.

 

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4.                                      Stock Subject to Plan.

 

(a)                                 Overall Number of Shares Available for Delivery.  Subject to adjustment in a manner consistent with any adjustment made pursuant to Section 9, the total number of shares of Stock reserved and available for issuance in connection with Awards under this Plan shall not exceed 5,000,000 shares.

 

(b)                                 Application of Limitation to Grants of Awards.  No Award may be granted if the number of shares of Stock to be delivered in connection with such Award exceeds the number of shares of Stock remaining available under this Plan minus the number of shares of Stock issuable in settlement of or relating to then-outstanding Awards.  The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of shares of Stock actually delivered differs from the number of shares previously counted in connection with an Award.

 

(c)                                  Availability of Shares Not Issued under Awards.  Shares of Stock subject to an Award under this Plan that expire or are canceled, forfeited, settled in cash or otherwise terminated without an issuance of shares to the Participant, including (i) the number of shares withheld in payment of any exercise or purchase price of an Award or taxes relating to Awards, and (ii) the number of shares surrendered in payment of any exercise or purchase price of an Award or taxes relating to any Award, will again be available for Awards under this Plan, except that if any such shares could not again be available for Awards to a particular Participant under any applicable law or regulation, such shares shall be available exclusively for Awards to Participants who are not subject to such limitation.

 

(d)                                 Stock Offered.  The shares to be delivered under the Plan shall be made available from (i) authorized but unissued shares of Stock, (ii) Stock held in the treasury of the Company, or (iii) previously issued shares of Stock reacquired by the Company, including shares purchased on the open market.

 

5.                                      Eligibility; Per Person Award Limitations.  Awards may be granted under this Plan only to Persons who are Eligible Persons at the time of grant thereof or in connection with the severance or retirement of Eligible Individuals; provided, however, Options may not be granted to Persons who are Eligible Persons because they are employees or service providers of Parent.  In each calendar year, during any part of which this Plan is in effect, a Covered Employee may not be granted (a) Awards (other than Awards designated to be paid only in cash or the settlement of which is not based on a number of shares of Stock) relating to more than 2,000,000 shares of Stock, subject to adjustment in a manner consistent with any adjustment made pursuant to Section 9 and (b) Awards designated to be paid only in cash, or the settlement of which is not based on a number of shares of Stock, having a value determined on the date of grant in excess of $2,000,000.

 

6.                                      Specific Terms of Awards.

 

(a)                                 General.  Awards may be granted on the terms and conditions set forth in this Section 6.  In addition, the Committee may impose on any Award or the exercise thereof, at

 

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the date of grant or thereafter (subject to Subsection 10(f)), such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment by the Participant, or termination of the Participant’s service relationship with the Company, and terms permitting a Participant to make elections relating to his or her Award.  The Committee shall retain full power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that is not mandatory under this Plan; provided, however, that the Committee shall not have any discretion to accelerate, waive or modify any term or condition of an Award that is intended to qualify as “performance-based compensation” for purposes of section 162(m) of the Code if such discretion would cause the Award to not so qualify.

 

(b)                                 Options.  The Committee is authorized to grant Options to Participants on the following terms and conditions:

 

(i)                                     Exercise Price.  Each Option agreement shall state the exercise price per share of Stock (the “Exercise Price”); provided, however, that the Exercise Price per share of Stock subject to an ISO shall not be less than the greater of (A) the par value per share of the Stock or (B) 100% of the Fair Market Value per share of the Stock as of the date of grant of the Option (or in the case of an individual who owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or its parent or any subsidiary, 110% of the Fair Market Value per share of the Stock on the date of grant).  The exercise price per share of Stock subject to an Option other than an ISO shall not be less than the greater of (1) the par value per share of the Stock and (2) 100% of the Fair Market Value per share of the stock as of the date of grant of the Option.

 

(ii)                                  Time and Method of Exercise.  The Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the methods by which such exercise price may be paid or deemed to be paid, the form of such payment, including without limitation cash, Stock, other Awards or awards granted under other plans of the Company, its Parent or any Subsidiary, or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis), and the methods by or forms in which Stock will be delivered or deemed to be delivered to Participants, including, but not limited to, the delivery of Restricted Stock subject to Subsection 6(d).  In the case of an exercise whereby the Exercise Price is paid with Stock, such Stock shall be valued as of the date of exercise.

 

(iii)                               ISOs.  The terms of any ISO granted under this Plan shall comply in all respects with the provisions of section 422 of the Code.  Anything in this Plan to the contrary notwithstanding, no term of this Plan relating to ISOs (including any SAR in tandem therewith) shall be interpreted, amended or altered, nor shall any discretion or authority granted under this Plan be exercised, so as to disqualify either this Plan or any ISO under section 422 of the Code, unless the Participant has first requested the change that will result in such disqualification.  ISOs shall not be granted more than ten years after the earlier of the adoption of this Plan or the approval of this Plan by the Company’s stockholders.  Notwithstanding the foregoing, the Fair Market Value of shares of Stock subject to an ISO and the aggregate Fair Market Value of shares of stock of any parent or subsidiary corporation (within the meaning of

 

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sections 424(e) and (f) of the Code) subject to any other ISO (within the meaning of section 422 of the Code)) of the Company or a parent or subsidiary corporation (within the meaning of sections 424(e) and (f) of the Code) that first becomes purchasable by a Participant in any calendar year may not (with respect to that Participant) exceed $100,000, or such other amount as may be prescribed under section 422 of the Code or applicable regulations or rulings from time to time.  As used in the previous sentence, Fair Market Value shall be determined as of the date the ISOs are granted.  Failure to comply with this provision shall not impair the enforceability or exercisability of any Option, but shall cause the excess amount of shares to be reclassified in accordance with the Code.

 

(c)                                  Stock Appreciation Rights.  The Committee is authorized to grant SARs to Participants on the following terms and conditions:

 

(i)                                     Right to Payment.  An SAR shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over (B) the grant price of the SAR as determined by the Committee.

 

(ii)                                  Rights Related to Options.  An SAR granted in connection with an Option shall entitle a Participant, upon exercise, to surrender that Option or any portion thereof, to the extent unexercised, and to receive payment of an amount computed pursuant to Subsection 6(c)(ii)(B).  That Option shall then cease to be exercisable to the extent surrendered.  SARs granted in connection with an Option shall be subject to the terms of the Award agreement governing the Option, which shall comply with the following provisions in addition to those applicable to Options:

 

(A)                               An SAR granted in connection with an Option shall be exercisable only at such time or times and only to the extent that the related Option is exercisable.

 

(B)                               Upon the exercise of an SAR related to an Option, a Participant shall be entitled to receive payment from the Company of an amount determined by multiplying:

 

(1)                                 the difference obtained by subtracting the exercise price of a share of Stock specified in the related Option from the Fair Market Value of a share of Stock on the date of exercise of the SAR, by

 

(2)                                 the number of shares as to which that SAR has been exercised.

 

(iii)                               Right Without Option.  An SAR granted independent of an Option shall be exercisable as determined by the Committee and set forth in the Award agreement governing the SAR, which Award agreement shall comply with the following provisions:

 

(A)                               Each Award agreement shall state the total number of shares of Stock to which the SAR relates.

 

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(B)                               Each Award agreement shall state the time or periods in which the right to exercise the SAR or a portion thereof shall vest and the number of shares of Stock for which the right to exercise the SAR shall vest at each such time or period.

 

(C)                               Each Award agreement shall state the date at which the SARs shall expire if not previously exercised.

 

(D)                               Each SAR shall entitle a participant, upon exercise thereof, to receive payment of an amount determined by multiplying:

 

(1)                                 the difference obtained by subtracting the Fair Market Value of a share of Stock on the date of grant of the SAR from the Fair Market Value of a share of Stock on the date of exercise of that SAR, by

 

(2)                                 he number of shares as to which the SAR has been exercised.

 

(iv)                              Terms.  Except as otherwise provided herein, the Committee shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which an SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Participants, whether or not an SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR.  SARs may be either freestanding or in tandem with other Awards.

 

(d)                                 Restricted Stock.  The Committee is authorized to grant Restricted Stock to Participants on the following terms and conditions:

 

(i)                                     Grant and Restrictions.  Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Committee may determine at the date of grant or thereafter.  During the restricted period applicable to the Restricted Stock, the Restricted Stock may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant.

 

(ii)                                  Certificates for Stock.  Restricted Stock granted under this Plan may be evidenced in such manner as the Committee shall determine.  If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.

 

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(iii)                               Dividends and Splits.  As a condition to the grant of an Award of Restricted Stock, the Committee may require or permit a Participant to elect that any cash dividends paid on a share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock or applied to the purchase of additional Awards under this Plan.  Unless otherwise determined by the Committee, Stock distributed in connection with a Stock split or Stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed.

 

(e)                                  Restricted Stock Units.  The Committee is authorized to grant Restricted Stock Units to Participants, which are rights to receive Stock or cash, as determined by the Committee, at the end of a specified deferral period, subject to the following terms and conditions:

 

(i)                                     Award and Restrictions.  Settlement of an Award of Restricted Stock Units shall occur upon expiration of the deferral period specified for such Restricted Stock Unit by the Committee (or, if permitted by the Committee, as elected by the Participant).  In addition, Restricted Stock Units shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or otherwise, as the Committee may determine.  Restricted Stock Units shall be satisfied by the delivery of cash or Stock in the amount equal to the Fair Market Value of the specified number of shares of Stock covered by the Restricted Stock Units, or a combination thereof, as determined by the Committee at the date of grant or thereafter.

 

(ii)                                  Dividend Equivalents.  Unless otherwise determined by the Committee at date of grant, Dividend Equivalents on the specified number of shares of Stock covered by an Award of Restricted Stock Units shall be either (A) paid with respect to such Restricted Stock Units on the dividend payment date in cash or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Restricted Stock Units and the amount or value thereof automatically deemed reinvested in additional Restricted Stock Units, other Awards or other investment vehicles, as the Committee shall determine or permit the Participant to elect.

 

(f)                                   Bonus Stock and Awards in Lieu of Obligations.  The Committee is authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, provided that, in the case of Participants subject to section 16 of the Exchange Act, the amount of such grants remains within the discretion of the Committee to the extent necessary to ensure that acquisitions of Stock or other Awards are exempt from liability under section 16(b) of the Exchange Act.  Stock or Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee.  In the case of any grant of Stock to an officer of the Company, its Parent or a Subsidiary in lieu of salary or other cash compensation, the number of shares granted in place of such compensation shall be reasonable, as determined by the Committee.

 

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(g)                                  Dividend Equivalents.  The Committee is authorized to grant Dividend Equivalents to a Participant, entitling the Participant to receive cash, Stock, other Awards, or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments.  Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award.  The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or other investment vehicles, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify.

 

(h)                                 Other Stock-Based Awards.  The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the Committee to be consistent with the purposes of this Plan, including without limitation convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the book value of Stock or the value of securities of or the performance of specified Subsidiaries.  The Committee shall determine the terms and conditions of such Awards.  Stock delivered pursuant to an Award in the nature of a purchase right granted under this Subsection 6(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards, or other property, as the Committee shall determine.  Cash awards, as an element of or supplement to any other Award under this Plan, may also be granted pursuant to this Subsection 6(h).

 

7.                                      Certain Provisions Applicable to Awards.

 

(a)                                 Termination of Employment.  Except as provided herein, the treatment of an Award upon a termination of employment or any other service relationship by and between a Participant and the Company, its Parent or any Subsidiary shall be specified in the agreement controlling such Award.

 

(b)                                 Stand-Alone, Additional, Tandem, and Substitute Awards.  Awards granted under this Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, its Parent, any Subsidiary, or any business entity to be acquired by the Company, its Parent or a Subsidiary, or any other right of a Participant to receive payment from the Company, its Parent or any Subsidiary.  Such additional, tandem and substitute or exchange Awards may be granted at any time.  If an Award is granted in substitution or exchange for another Award, the Committee shall require the surrender of such other Award in consideration for the grant of the new Award.  In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company, its Parent or any Subsidiary, in which the value of Stock subject to the Award is equivalent in value to the cash compensation, or in which the exercise price, grant price or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Stock minus the value of the cash compensation surrendered.

 

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(c)                                  Term of Awards.  Except as specified herein, the term of each Award shall be for such period as may be determined by the Committee; provided, however, that in no event shall the term of any Option or SAR exceed a period of ten years (or such shorter term as may be required in respect of an ISO under section 422 of the Code).

 

(d)                                 Form and Timing of Payment under Awards; Deferrals.  Subject to the terms of this Plan and any applicable Award agreement, payments to be made by the Company or a Subsidiary upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including without limitation cash, Stock, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis.  Except as otherwise provided herein, the settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee or upon occurrence of one or more specified events (in addition to a Change in Control).  Installment or deferred payments may be required by the Committee (subject to Subsection 10(f) of this Plan, including the consent provisions thereof in the case of any deferral of an outstanding Award not provided for in the original Award agreement) or permitted at the election of the Participant on terms and conditions established by the Committee.  Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Stock.  Any deferral shall only be allowed as is provided in a separate deferred compensation plan adopted by the Company.  This Plan shall not constitute an “employee benefit plan” for purposes of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.

 

(e)                                  Forfeiture for Detrimental Activity.  Notwithstanding any provision of this Plan to the contrary, if at any time prior to the third anniversary of the most recent termination of an employee’s Service with the Company, its Parent or any Subsidiary of the Company, the Committee in its discretion determines that such employee, at any time during his or her most recent Service with the Company, its Parent or any Subsidiary of the Company, or within the three-year period after termination of such Service, engaged in any Detrimental Activity, such employee shall (i) immediately forfeit the right to exercise any and all Options granted to him or her under the Plan, irrespective of whether the Option Shares constitute Vested Shares, and (ii) upon demand by the Committee, promptly return to the Company any or all shares of Stock acquired pursuant to Awards granted to employee under the Plan and all associated dividends.  The purchase price per share of Stock returned to the Company under this Section 7(e) will be an amount equal to employee’s purchase price per share as reflected in each such Award (the “Repurchase Price”), as adjusted pursuant to Section 9.  The Company will pay the aggregate Repurchase Price to the employee in cash within 30 days after the date of the written notice to the employee of the Company’s exercise of its rights under this Section 7(e).  For purposes of the foregoing, cancellation of any indebtedness of the employee to the Company associated with the purchase of the shares will be treated as payment to the employee in cash to the extent of the unpaid principal and any accrued interest canceled.  The shares being repurchased will be delivered to the Company by the employee at the same time as the delivery of the Repurchase Price to the employee.  If the Committee suspects prior to the third anniversary of the most recent termination of the employee’s Service with the Company, its Parent or any Subsidiary of the Company, that the employee has engaged in any Detrimental Activity at any time during his or her most recent Service with the Company, its Parent or any Subsidiary of the Company or

 

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within the three year period after termination of such Service, the exercisability of the employee’s Options shall be suspended for as long as the Committee deems necessary (but not to extend past such third anniversary) to permit the investigation and final determination of the veracity of such allegation.

 

(f)                                   Exemptions from Section 16(b) Liability.  It is the intent of the Company that the grant of any Awards to or other transaction by a Participant who is subject to section 16 of the Exchange Act shall be exempt from such section pursuant to an applicable exemption (except for transactions acknowledged in writing to be non-exempt by such Participant).  Accordingly, if any provision of this Plan or any Award agreement does not comply with the requirements of Rule 16b-3 as then applicable to any such transaction, such provision shall be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under section 16(b) of the Exchange Act.

 

(g)                                  Non-Competition Agreement.  Each Participant to whom an Award is granted under this Plan may be required to agree in writing as a condition to the granting of such Award not to engage in conduct in competition with the Company, its Parent or any of its Subsidiaries for a period after the termination of such Participant’s employment with the Company and its Parent and Subsidiaries as determined by the Committee.

 

8.                                      Performance and Annual Incentive Awards.

 

(a)                                 Performance Conditions.  The right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee.  The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase the amounts payable under any Award subject to performance conditions, except as limited under Subsections 8(b) and 8(c) hereof in the case of a Performance Award or Annual Incentive Award intended to qualify under section 162(m) of the Code.

 

(b)                                 Performance Awards Granted to Designated Covered Employees.  If the Committee determines that a Performance Award to be granted to an Eligible Person who is designated by the Committee as likely to be a Covered Employee should qualify as “performance-based compensation” for purposes of section 162(m) of the Code, the grant, exercise and/or settlement of such Performance Award may be contingent upon achievement of preestablished performance goals and other terms set forth in this Subsection 8(b).

 

(i)                                     Performance Goals Generally.  The performance goals for such Performance Awards shall consist of one or more business criteria or individual performance criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Subsection 8(b).  Performance goals shall be objective and shall otherwise meet the requirements of section 162(m) of the Code and regulations thereunder (including Treasury Regulation §1.162-27 and successor regulations thereto), including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain.”  The

 

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Committee may determine that such Performance Awards shall be granted, exercised, and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards.  Performance goals may differ for Performance Awards granted to any one Participant or to different Participants.

 

(ii)                                  Business and Individual Performance Criteria

 

(A)                               Business Criteria.  One or more of the following business criteria for the Company, on a consolidated basis, and/or for specified Subsidiaries or business or geographical units of the Company (except with respect to the total stockholder return criteria), shall be used by the Committee in establishing performance goals for such Performance Awards:  (1) earnings per share; (2) revenues, (3) increase in revenues; (4) increase in cash flow; (5) increase in cash flow return; (6) return on net assets; (7) return on assets; (8) return on investment; (9) return on capital; (10) return on equity; (11) economic value added; (12) operating margin; (13) contribution margin; (14) net income before taxes; (15) net income after taxes; (16) pretax earnings; (17) pretax earnings before interest, depreciation and amortization; (18) pretax operating earnings after interest expense and before incentives, service fees, and extraordinary or special items; (19) total stockholder return; (20) debt reduction; (21) market share; (22) change in the Fair Market Value of the Stock; and (23) any of the above goals determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of comparable companies.  One or more of the foregoing business criteria shall also be exclusively used in establishing performance goals for Annual Incentive Awards granted to a Covered Employee under Subsection 8(c) hereof.

 

(B)                               Individual Performance Criteria.  The grant, exercise and/or settlement of Performance Awards may also be contingent upon individual performance goals established by the Committee.  If required for compliance with section 162(m) of the Code, such criteria shall be approved by the stockholders of the Company.

 

(iii)                               Performance Period; Timing for Establishing Performance Goals.  Achievement of performance goals in respect of such Performance Awards shall be measured over a performance period of up to ten years, as specified by the Committee.  Performance goals shall be established not later than 90 days after the beginning of any performance period applicable to such Performance Awards, or at such other date as may be required or permitted for “performance-based compensation” under section 162(m) of the Code.

 

(iv)                              Performance Award Pool.  The Committee may establish a Performance Award pool, which shall be an unfunded pool, for purposes of measuring performance of the Company in connection with Performance Awards.  The amount of such Performance Award pool shall be based upon the achievement of a performance goal or goals based on one or more of the criteria set forth in Subsection 8(b)(ii) hereof during the given performance period, as specified by the Committee in accordance with Subsection 8(b)(iii) hereof.  The Committee may specify the amount of the Performance Award pool as a percentage of any of such criteria, a percentage thereof in excess of a threshold amount, or as another amount which need not bear a strictly mathematical relationship to such criteria.

 

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(v)                                 Settlement of Performance Awards; Other Terms.  After the end of each performance period, the Committee shall determine the amount, if any, of (A) the Performance Award pool, and the maximum amount of the potential Performance Award payable to each Participant in the Performance Award pool, or (B) the amount of the potential Performance Award otherwise payable to each Participant.  Settlement of such Performance Awards shall be in cash, Stock, other Awards or other property, in the discretion of the Committee.  The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with such Performance Awards, but may not exercise discretion to increase any such amount payable to a Covered Employee in respect of a Performance Award subject to this Subsection 8(b).  The Committee shall specify the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of employment by the Participant prior to the end of a performance period or settlement of Performance Awards.

 

(c)                                  Annual Incentive Awards Granted to Designated Covered Employees.  If the Committee determines that an Annual Incentive Award to be granted to an Eligible Person who is designated by the Committee as likely to be a Covered Employee should qualify as “performance-based compensation” for purposes of section 162(m) of the Code, the grant, exercise and/or settlement of such Annual Incentive Award shall be contingent upon achievement of preestablished performance goals and other terms set forth in this Subsection 8(c).

 

(i)                                     Potential Annual Incentive Awards.  Not later than the end of the 90th day of each applicable year, or at such other date as may be required or permitted in the case of Awards intended to be “performance-based compensation” under section 162(m) of the Code, the Committee shall determine the Eligible Persons who will potentially receive Annual Incentive Awards, and the amounts potentially payable thereunder, for that fiscal year, either out of an Annual Incentive Award pool established by such date under Subsection 8(c)(i) hereof or as individual Annual Incentive Awards.  The amount potentially payable, with respect to Annual Incentive Awards, shall be based upon the achievement of a performance goal or goals based on one or more of the business criteria set forth in Subsection 8(b)(ii) hereof in the given performance year, as specified by the Committee.

 

(ii)                                  Annual Incentive Award Pool.  The Committee may establish an Annual Incentive Award pool, which shall be an unfunded pool, for purposes of measuring performance of the Company in connection with Annual Incentive Awards.  The amount of such Annual Incentive Award pool shall be based upon the achievement of a performance goal or goals based on one or more of the business criteria set forth in Subsection 8(b)(ii) hereof during the given performance period, as specified by the Committee in accordance with Subsection 8(b)(iii) hereof.  The Committee may specify the amount of the Annual Incentive Award pool as a percentage of any of such business criteria, a percentage thereof in excess of a threshold amount, or as another amount which need not bear a strictly mathematical relationship to such business criteria.

 

(iii)                               Payout of Annual Incentive Awards.  After the end of each applicable year, the Committee shall determine the amount, if any, of (A) the Annual Incentive Award pool, and the maximum amount of the potential Annual Incentive Award payable to each Participant in the Annual Incentive Award pool, or (B) the amount of the potential Annual

 

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Incentive Award otherwise payable to each Participant.  The Committee may, in its discretion, determine that the amount payable to any Participant as a final Annual Incentive Award shall be reduced from the amount of his or her potential Annual Incentive Award, including a determination to make no final Award whatsoever, but may not exercise discretion to increase any such amount in the case of an Annual Incentive Award intended to qualify under section 162(m) of the Code.  The Committee shall specify the circumstances in which an Annual Incentive Award shall be paid or forfeited in the event of termination of employment by the Participant prior to the end of the applicable year or settlement of such Annual Incentive Award.

 

(d)                                 Written Determinations.  All determinations by the Committee as to the establishment of performance goals, the amount of any Performance Award pool or potential individual Performance Awards, the achievement of performance goals relating to Performance Awards under Subsection 8(b), the amount of any Annual Incentive Award pool or potential individual Annual Incentive Awards, the achievement of performance goals relating to Annual Incentive Awards under Subsection 8(c) shall be made in writing in the case of any Award intended to qualify under section 162(m) of the Code.  The Committee may not delegate any responsibility relating to such Performance Awards or Annual Incentive Awards.

 

(e)                                  Status of Subsection 8(b) and Subsection 8(c) Awards under Section  162(m) of the Code.  It is the intent of the Company that Performance Awards and Annual Incentive Awards under Subsections 8(b) and 8(c) hereof granted to persons who are designated by the Committee as likely to be Covered Employees within the meaning of section 162(m) of the Code and regulations thereunder (including Treasury Regulation §1.162-27 and successor regulations thereto) shall, if so designated by the Committee, constitute “performance-based compensation” within the meaning of section 162(m) of the Code and regulations thereunder.  Accordingly, the terms of Subsections 8(b), (c), (d) and (e), including the definitions of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with section 162(m) of the Code and regulations thereunder.  The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Participant will be a Covered Employee with respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean only a person designated by the Committee, at the time of grant of Performance Awards or an Annual Incentive Award, who is likely to be a Covered Employee with respect to that fiscal year.  If any provision of this Plan as in effect on the date of adoption or any agreements relating to Performance Awards or Annual Incentive Awards that are designated as intended to comply with section 162(m) of the Code does not comply or is inconsistent with the requirements of section 162(m) of the Code or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements.

 

9.                                      Subdivision or Consolidation; Recapitalization; Change in Control; Reorganization.

 

(a)                                 Existence of Plans and Awards.  The existence of this Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting Stock

 

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or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.

 

(b)                                 Subdivision or Consolidation of Shares.  The terms of an Award and the number of shares of Stock authorized pursuant to Section 4 for issuance under the Plan shall be subject to adjustment from time to time, in accordance with the following provisions:

 

(i)                                     If at any time, or from time to time, the Company shall subdivide as a whole (by a Stock split, by the issuance of a distribution on Stock payable in Stock, or otherwise) the number of shares of Stock then outstanding into a greater number of shares of Stock, then (A) the maximum number of shares of Stock available in connection with the Plan or Awards as provided in Sections 4 and 5 shall be increased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any Award shall be increased proportionately, and (C) the price (including the exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions.

 

(ii)                                  If at any time, or from time to time, the Company shall consolidate as a whole (by reverse Stock split, or otherwise) the number of shares of Stock then outstanding into a lesser number of shares of Stock, (A) the maximum number of shares of Stock available in connection with the Plan or Awards as provided in Sections 4 and 5 shall be decreased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any Award shall be decreased proportionately, and (C) the price (including the exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be increased proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions.

 

(iii)                               Whenever the number of shares of Stock subject to outstanding Awards and the price for each share of Stock subject to outstanding Awards are required to be adjusted as provided in this Subsection 9(b), the Committee shall promptly prepare, and deliver to each Participant, a notice setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the change in price and the number of shares of Stock, other securities, cash, or property purchasable subject to each Award after giving effect to the adjustments.

 

(iv)                              Adjustments under Subsections 9(b)(i) and (ii) shall be made by the Committee, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive.  No fractional interest shall be issued under the Plan on account of any such adjustments.

 

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(c)                                  Corporate Recapitalization.

 

(i)                                     If the Company recapitalizes, reclassifies its capital stock, or otherwise changes its capital structure (a “recapitalization”), the number and class of shares of Stock covered by an Option or an SAR theretofore granted shall be adjusted so that such Option or SAR shall thereafter cover the number and class of shares of stock and securities to which the holder would have been entitled pursuant to the terms of the recapitalization if, immediately prior to the recapitalization, the holder had been the holder of record of the number of shares of Stock then covered by such Option or SAR and the share limitations provided in Sections 4 and 5 shall be adjusted in a manner consistent with the recapitalization.

 

(ii)                                  In the event of changes in the outstanding Stock by reason of recapitalization, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any Award and not otherwise provided for by this Section 9, any outstanding Awards and any agreements evidencing such Awards shall be subject to adjustment by the Committee at its discretion as to the number and price of shares of Stock or other consideration subject to such Awards.  In the event of any such change in the outstanding Stock, the share limitations provided in Sections 4 and 5 may be appropriately adjusted by the Committee, whose determination shall be conclusive.

 

(d)                                 Additional Issuances.  Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to Awards theretofore granted or the purchase price per share, if applicable.

 

(e)                                  Change in Control.  Upon a Change in Control the Committee, acting in its sole discretion without the consent or approval of any holder, shall affect one or more of the following alternatives, which may vary among individual holders and which may vary among Options or SARs (collectively “Grants”) held by any individual holder:  (i) accelerate the time at which Grants then outstanding may be exercised so that such Grants may be exercised in full for a limited period of time on or before a specified date (before or after such Change in Control) fixed by the Committee, after which specified date all unexercised Grants and all rights of holders thereunder shall terminate, (ii) require the mandatory surrender to the Company by selected holders of some or all of the outstanding Grants held by such holders (irrespective of whether such Grants are then exercisable under the provisions of this Plan) as of a date, before or after such Change in Control, specified by the Committee, in which event the Committee shall thereupon cancel such Grants and pay to each holder an amount of cash per share equal to the excess, if any, of the amount calculated in Subsection 9(f) (the “Change in Control Price”) of the shares subject to such Grants over the exercise price(s) under such Grants for such shares, or (iii) make such adjustments to Grants then outstanding as the Committee deems appropriate to reflect such Change in Control; provided, however, that the Committee may determine in its sole discretion that no adjustment is necessary to Grants then outstanding; provided, further, however, that the right to make such adjustments shall include, but not be limited to, the modification of

 

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Grants such that the holder of the Grant shall be entitled to purchase or receive (in lieu of the total shares or other consideration that the holder would otherwise be entitled to purchase or receive under the Grant (the “Total Consideration”)), the number of shares of stock, other securities, cash or property to which the Total Consideration would have been entitled to in connection with the Change in Control (A) (in the case of Options), at an aggregate exercise price equal to the exercise price that would have been payable if the total shares had been purchased upon the exercise of the Grant immediately before the consummation of the Change in Control and (B) (in the case of SARs) if the SARs had been exercised immediately before the consummation of the Change in Control.

 

(f)                                   Change in Control Price.  The “Change in Control Price” shall equal the amount determined in clause (i), (ii), (iii), (iv) or (v), whichever is applicable, as follows:  (i) the per share price offered to holders of Stock in any merger or consolidation, (ii) the per share value of the Stock immediately before the Change in Control without regard to assets sold in the Change in Control and assuming the Company has received the consideration paid for the assets in the case of a sale of the assets, (iii) the amount distributed per share of Stock in a dissolution transaction, (iv) the price per share offered to holders of Stock in any tender offer or exchange offer whereby a Change in Control takes place, or (v) if such Change in Control occurs other than pursuant to a transaction described in clauses (i), (ii), (iii), or (iv) of this Subsection 9(f), the Fair Market Value per share of the shares that may otherwise be obtained with respect to such Grants or to which such Grants track, as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Grants.  In the event that the consideration offered to stockholders of the Company in any transaction described in this Subsection 9(f) or Subsection 9(e) consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash.

 

10.                               General Provisions.

 

(a)                                 Restricted Securities.  Prior to a Qualifying Public Offering, the Stock to be issued under this Plan, which may be issued in reliance on the exemption from registration set forth in Rule 701 or another exemption to registration under the Securities Act, shall be deemed to be “restricted securities” as defined in Rule 144, promulgated by the Securities and Exchange Commission under the Securities Act as from time to time in effect and applicable to the Plan and Participants.  Resales of such Stock by the holder thereof shall be in compliance with the Securities Act or an exemption therefrom.  Such Stock may bear a legend if determined necessary by the Committee in substantially the following form:

 

“THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO MIRNA THERAPEUTICS, INC.  (WHICH, IN THE DISCRETION OF MIRNA THERAPEUTICS, INC., MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO MIRNA THERAPEUTICS, INC.) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER

 

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DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE LAWS.”

 

(b)                                 Transferability.

 

(i)                                     Permitted Transferees.  The Committee may, in its discretion, permit a Participant to transfer all or any portion of an Option, or authorize all or a portion of an Option to be granted to an Eligible Person to be on terms which permit transfer by such Participant; provided that, in either case the transferee or transferees must be any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, in each case with respect to the Participant, any person sharing the Participant’s household (other than a tenant or employee of the Company), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, or any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests (collectively, “Permitted Transferees”); provided further that, (X) there may be no consideration for any such transfer and (Y) subsequent transfers of Options transferred as provided above shall be prohibited except subsequent transfers back to the original holder of the Option and transfers to other Permitted Transferees of the original holder.  Agreements evidencing Options with respect to which such transferability is authorized at the time of grant must be approved by the Committee, and must expressly provide for transferability in a manner consistent with this Subsection 10(b)(i).

 

(ii)                                  Qualified Domestic Relations Orders.  An Option, Stock Appreciation Right, Restricted Stock Unit Award, Restricted Stock Award or other Award may be transferred, to a Permitted Transferee, pursuant to a domestic relations order entered or approved by a court of competent jurisdiction upon delivery to the Company of written notice of such transfer and a certified copy of such order.

 

(iii)                               Other Transfers.  Except as expressly permitted by Subsections 10(b)(i) and 10(b)(ii), Awards shall not be transferable other than by will or the laws of descent and distribution.  Notwithstanding anything to the contrary in this Section 10, an Incentive Stock Option shall not be transferable other than by will or the laws of descent and distribution.

 

(iv)                              Effect of Transfer.  Following the transfer of any Award as contemplated by Subsections 10(b)(i), 10(b)(ii) and 10(b)(iii), (A) such Award shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that the term “Participant” shall be deemed to refer to the Permitted Transferee, the recipient under a qualified domestic relations order, or the estate or heirs of a deceased Participant, as applicable, to the extent appropriate to enable the Participant to exercise the transferred Award in accordance with the terms of this Plan and applicable law and (B) the provisions of the Award relating to exercisability shall continue to be applied with respect to the original Participant and, following the occurrence of any applicable events described therein the Awards shall be exercisable by the Permitted Transferee, the recipient under a qualified domestic

 

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relations order, or the estate or heirs of a deceased Participant, as applicable, only to the extent and for the periods that would have been applicable in the absence of the transfer.

 

(v)                                 Procedures and Restrictions.  Any Participant desiring to transfer an Award as permitted under Subsections 10(b)(i), 10(b)(ii) or 10(b)(iii) shall make application therefor in the manner and time specified by the Committee and shall comply with such other requirements as the Committee may require to assure compliance with all applicable securities laws.  The Committee shall not give permission for such a transfer if (A) it would give rise to short swing liability under section 16(b) of the Exchange Act or (B) it may not be made in compliance with all applicable federal, state and foreign securities laws.

 

(vi)                              Registration.  To the extent the issuance to any Permitted Transferee of any shares of Stock issuable pursuant to Awards transferred as permitted in this Subsection 10(b) is not registered pursuant to the effective registration statement of the Company generally covering the shares to be issued pursuant to this Plan to initial holders of Awards, the Company shall not have any obligation to register the issuance of any such shares of Stock to any such transferee.

 

(c)                                  Right of First Refusal.  If any Participant (“Transferor”), regardless of whether such Participant is the original holder of the Award contemplated in this Subsection 10(c), proposes to sell, transfer, assign, hypothecate, make gifts of or in any manner dispose of, encumber, or alienate (each individually constituting a “Transfer”) to a transferee, any Stock, obtained in connection with any Award held by such Transferor, either pursuant to a bona fide offer (“Offer”) from a potential transferee (“Offeror”) or by effecting a gift of the Stock (“Gift”) to a donee (“Donee”) without consideration, then the Transferor must comply with the provisions of this Subsection 10(c), including, without limitation, acknowledging and allowing the applicable time periods to lapse with respect to the rights of the Company as provided herein, before accepting any such Offer or otherwise affecting the Transfer of any Stock pursuant to such Offer, or affecting any such Gift.

 

(i)                                     Statement of Offer.  Before accepting any Offer or affecting any Gift, the Transferor shall obtain from the Offeror or Donee, as the case may be, a statement (“Statement”) in writing addressed to the Transferor and signed by the Offeror or Donee, setting forth:  (i) the date of the Statement (the “Statement Date”); (ii) the number of shares of Stock covered by the Offer or Gift and, in the case of an Offer, the price per share to be paid by the Offeror and the terms of payment of such price; (iii) the Offeror’s or Donee’s willingness to be bound by the terms of this Subsection 10(c) and execute and deliver to the Company such documentation as required under this Subsection 10(c); (iv) the Offeror’s or Donee’s name, address and telephone number; and (v) the Offeror’s or Donee’s willingness to supply any additional information about himself or herself as may be reasonably requested by the Company.  Promptly upon receipt of a Statement, and before accepting the Offer or affecting the Gift to which the Statement relates, the Transferor shall deliver to the Company (1) a copy of the Statement, and (2) in the case of an Offer, evidence reasonably satisfactory to the Company as to the Offeror’s financial ability to consummate the proposed purchase.

 

(ii)                                  Company Rights.  Subject to the provisions of Subsection 10(c)(i), upon receipt of a copy of the Statement, the Company shall have the exclusive right and option

 

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(the “Right”), but not the obligation, to purchase all of the shares of Stock that the Offeror proposes to purchase from the Transferor or, in the case of a Gift, that the Transferor proposes to give to the Donee (collectively, “Subject Securities”) (A) in the case of an Offer, for the per share price and on the terms as set forth in the Statement; provided, however, that if the purchase price is payable in whole or in part in property (which term shall include the securities of any issuer other than the Company) other than cash, the Company may pay, in lieu of such property, a sum of cash equal to the fair market value of such property as determined by the Transferor and the Company in good faith or, if the Transferor and the Company do not agree on the fair market value of such property within five days after the Company delivers written notice (as described below) of its intention to exercise the Right, then the Transferor and the Company shall select one independent appraiser (with each of the Transferor and the Company jointly bearing one-half of the expense of the appraiser) to determine the fair market value of that property and the appraised fair market value of that property as determined by such appraiser shall be deemed the fair market value of that property for purposes of this Subsection 10(c)(ii), or (B) in the case of a Gift, the Fair Market Value of the Subject Securities, as determined in good faith by the Company; provided that the Transferor may elect to retain the Subject Securities rather than sell the Subject Securities at the Fair Market Value as determined by the Company by giving written notice thereof to the Company within five days after such determination by the Company is received in writing by the Transferor.  The Company shall exercise the Right by giving written notice thereof to the Transferor.  Upon exercising the Right, the Company shall have the obligation, to the extent it lawfully may do so, to purchase the Subject Securities within 30 days after the date of the Company’s receipt of its copy of the Statement on and subject to the terms and conditions hereof.  If the terms of the purchase include the Transferor’s release of any pledge or encumbrance on the Subject Securities and the Transferor shall have failed to obtain the release of the pledge or encumbrance by the purchase date, at the Company’s option the purchase shall occur on the scheduled date with the purchase price reduced to the extent of all unpaid indebtedness for which the Subject Securities are then pledged or encumbered.  Failure by the Company to exercise the Right, or failure by the Company to otherwise perform its obligations under this Subsection 10(c)(ii), within the 30 day period herein prescribed shall be deemed an election by the Company not to exercise the Right.  If the Company exercises the Right and is unable for any reason to perform its obligations thereunder in accordance with this Subsection 10(c), the Company may assign all or a portion of its rights under the Right to any one or more of the Company’s stockholders (other than the Transferor) (“Assignee Stockholder”), as the Board shall determine, in its sole and absolute discretion.

 

(iii)                               Purchase of Less Than All Shares.  Anything in Subsection 10(c) to the contrary notwithstanding, the Company and any Assignee Stockholder individually may, pursuant to the exercise of the Right, purchase fewer than all of the Subject Securities provided that such Persons in the aggregate purchase all, and not less than all, of the Subject Securities, and it shall be a condition precedent to the obligation of any of such Persons to purchase any Subject Securities, that all, and not less than all, of the Subject Securities have been elected to be purchased pursuant to the exercise of the Right.

 

(iv)                              Failure to Exercise Right or Consummate Transaction.  If the Company elects not to exercise the Right, or if the Right is exercised and the obligations to be performed thereunder by the Company are not performed in accordance with this Subsection 10(c), or if the Company’s rights are assigned to an Assignee Stockholder and such

 

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Assignee Stockholder fails to perform his or her obligations under the assigned Right in accordance with this Subsection 10(c), then, subject to the application of any applicable state or federal securities laws, the Transferor may dispose of all of the Subject Securities within 90 days after the date of the Statement at the per share price and on the terms, if any, as set forth in the Statement free and clear of the terms of this Subsection 10(c); provided, however, that (A) any subsequent transfer by the Offeror or Donee, as applicable, shall once again be subject to this Subsection 10(c) and (B) if the sale or gift of the Subject Securities is not consummated within such 90-day period, then the Transfer of any such Stock shall once again be subject to the terms of this Subsection 10(c).

 

(v)                                 Legend.  To assure the enforceability of the Company’s rights under this Subsection 10(c), until the date of a Qualifying Public Offering, each certificate or instrument representing Stock or an Award held by him, her, or it may, in the Committee’s discretion, bear a conspicuous legend in substantially the following form:

 

“THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO THE COMPANY’S RIGHT OF FIRST REFUSAL IN THE CASE OF A TRANSFER AS PROVIDED UNDER THE COMPANY’S 2008 LONG TERM INCENTIVE PLAN AND/OR AN AWARD AGREEMENT ENTERED INTO PURSUANT THERETO.  COPIES OF SUCH PLAN AND AWARD AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.”

 

(vi)                              Expiration.  The rights and obligations pursuant to this Subsection 10(c) hereof will terminate upon the date of a Qualifying Public Offering.

 

(d)                                 Purchase Option.

 

(i)                                     Except as otherwise expressly provided in any particular Award, (A) if a Participant ceases to be employed by or perform services for the Company or its Parent or Subsidiaries for any reason at any time or (B) upon the occurrence of a Change in Control, the Company (and/or its designee(s)) shall have the option (the “Purchase Option”) to purchase, and the Participant (or the Participant’s executor or the administrator of the Participant’s estate in the event of the Participant’s death, or the transferee of the Stock or Award in the case of any disposition, or the Participant’s legal representative in the event of the Participant’s incapacity) (hereinafter, collectively with such Participant, the “Grantor”) shall sell to the Company and/or its designee(s), all or any portion (at the Company’s option) of the shares of Stock issued pursuant to this Plan and held by the Grantor (such shares of Stock herein referred to as the “Purchasable Shares”).

 

(ii)                                  The Company shall give notice in writing to the Grantor of the exercise of the Purchase Option within one year of the date of the termination of the Participant’s employment or service relationship or the date of the Change in Control.  Such notice shall state the number of Purchasable Shares to be purchased and the determination of the Board of the Fair

 

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Market Value per share of such Purchasable Shares, or the Change in Control Price as defined in Subsection 9(f), if applicable.  If no notice is given within the time limit specified above, the Purchase Option shall terminate.

 

(iii)                               The purchase price to be paid for the Purchasable Shares purchased pursuant to the Purchase Option shall be, the Fair Market Value per share, or the Change in Control Price if applicable, as of the date of the notice of exercise of the Purchase Option times the number of shares being purchased.  The purchase price shall be paid in cash.  The closing of such purchase shall take place at the Company’s principal executive offices within ten (10) days after the purchase price has been determined.  At such closing, the Grantor shall deliver to the purchasers the certificates or instruments evidencing the Purchasable Shares being purchased free and clear of all liens and encumbrances (if any), duly endorsed (or accompanied by duly executed stock powers) and otherwise in good form for delivery, against payment of the purchase price by check of the purchasers.  In the event that, notwithstanding the foregoing, the Grantor shall have failed to obtain the release of any pledge or other encumbrance on any Purchasable Shares by the scheduled closing date, at the option of the purchasers, the closing shall nevertheless occur on such scheduled closing date, with the cash purchase price being reduced to the extent of all unpaid indebtedness for which such Purchasable Shares are then pledged or encumbered.

 

(iv)                              To assure the enforceability of the Company’s rights under this Subsection 10(d), until the date of a Qualifying Public Offering, each certificate or instrument representing Stock or an Award held by him, her, or it may, in the Committee’s discretion, bear a conspicuous legend in substantially the following form:

 

“THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE COMPANY’S 2008 LONG TERM INCENTIVE PLAN AND/OR AN AWARD AGREEMENT ENTERED INTO PURSUANT THERETO.  COPIES OF SUCH PLAN AND AWARD AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.”

 

(v)                                 The Company’s rights under this Subsection 10(d) shall terminate upon the date of a Qualifying Public Offering.

 

(e)                                  Taxes.  The Company, its Parent and any Subsidiary is authorized to withhold from any Award granted, or any payment relating to an Award under this Plan, including from a distribution of Stock, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company, its Parent or any Subsidiary and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award.  This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Participant’s tax obligations, either on a mandatory or elective basis in the discretion of the Committee.

 

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(f)                                   Changes to this Plan and Awards.  The Board may amend, alter, suspend, discontinue or terminate this Plan or the Committee’s authority to grant Awards under this Plan without the consent of stockholders or Participants, except that any amendment or alteration to this Plan, including any increase in any share limitation, shall be subject to the approval of the Company’s stockholders not later than the annual meeting next following such Board action if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the Stock may then be listed or quoted, and the Board may otherwise, in its discretion, determine to submit other such changes to this Plan to stockholders for approval; provided, however, that, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any previously granted and outstanding Award.  The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award agreement relating thereto, except as otherwise provided in this Plan; provided, however, that, without the consent of an affected Participant, no such Committee action may materially and adversely affect the rights of such Participant under such Award.

 

(g)                                  Limitation on Rights Conferred under Plan.  Neither this Plan nor any action taken hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company, its Parent or a Subsidiary, (ii) interfering in any way with the right of the Company, its Parent or a Subsidiary to terminate any Eligible Person’s or Participant’s employment or service relationship at any time, (iii) giving an Eligible Person or Participant any claim to be granted any Award under this Plan or to be treated uniformly with other Participants or employees or other service providers, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award.

 

(h)                                 Unfunded Status of Awards.  This Plan is intended to constitute an “unfunded” plan for certain incentive awards.

 

(i)                                     Nonexclusivity of this Plan.  Neither the adoption of this Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable, including incentive arrangements and awards which do not qualify under section 162(m) of the Code.  Nothing contained in this Plan shall be construed to prevent the Company, its Parent or any Subsidiary from taking any corporate action which is deemed by the Company, its Parent or such Subsidiary to be appropriate or in its best interest, whether or not such action would have an adverse effect on this Plan or any Award made under this Plan.  No employee, beneficiary or other person shall have any claim against the Company, its Parent or any Subsidiary as a result of any such action.

 

(j)                                    Fractional Shares.  No fractional shares of Stock shall be issued or delivered pursuant to this Plan or any Award.  The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

 

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(k)                                 Severability.  If any provision of this Plan is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included herein.  If any of the terms or provisions of this Plan or any Award agreement conflict with the requirements of Rule 16b-3 (as those terms or provisions are applied to Eligible Persons who are subject to section 16(b) of the Exchange Act) or section 422 of the Code (with respect to Incentive Stock Options), then those conflicting terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3 (unless the Board or the Committee, as appropriate, has expressly determined that the Plan or such Award should not comply with Rule 16b-3) or section 422 of the Code.  With respect to Incentive Stock Options, if this Plan does not contain any provision required to be included herein under section 422 of the Code, that provision shall be deemed to be incorporated herein with the same force and effect as if that provision had been set out at length herein; provided, further, that, to the extent any Option that is intended to qualify as an Incentive Stock Option cannot so qualify, that Option (to that extent) shall be deemed an Option not subject to section 422 of the Code for all purposes of the Plan.

 

(l)                                     Governing Law.  All questions arising with respect to the provisions of the Plan and Awards shall be determined by application of the laws of the State of Delaware, without giving effect to any conflict of law provisions thereof, except to the extent Delaware law is preempted by federal law.  The obligation of the Company to sell and deliver Stock hereunder is subject to applicable federal and state laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Stock.

 

(m)                             Conditions to Delivery of Stock.  Nothing herein or in any Award granted hereunder or any Award agreement shall require the Company to issue any shares with respect to any Award if that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect.  At the time of any exercise of an Option or Stock Appreciation Right, or at the time of any grant of a Restricted Stock Award, Restricted Stock Unit, or other Award the Company may, as a condition precedent to the exercise of such Option or Stock Appreciation Right or settlement of any Restricted Stock Award, Restricted Stock Unit or other Award, require from the Participant (or in the event of his or her death, his or her legal representatives, heirs, legatees, or distributees) such written representations, if any, concerning the holder’s intentions with regard to the retention or disposition of the shares of Stock being acquired pursuant to the Award and such written covenants and agreements, if any, as to the manner of disposal of such shares as, in the opinion of counsel to the Company, may be necessary to ensure that any disposition by that holder (or in the event of the holder’s death, his or her legal representatives, heirs, legatees, or distributees) will not involve a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable state or federal statute or regulation, or any rule of any applicable securities exchange or securities association, as then in effect.

 

(n)                                 Plan Effective Date.  This Plan has been adopted by the Board effective as of May 15, 2008.

 

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