THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC
INDICATIONS ABOVE. IN THE ABSENCE OF SUCH INDICATIONS, THIS PROXY,
IF OTHERWISE DULY EXECUTED, WILL BE VOTED FOR EACH OF THE MATTERS
SET FORTH ABOVE.
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Date ___________________________, 2016
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Number of Shares ______________________
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Please sign exactly as
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Your name appears on
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Your stock certificate(s).
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If your stock is issued in
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Signature
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the names of two or more
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Print Name Here:
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Persons, all of them must
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Sign this proxy. If signing
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in representative capacity
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Signature
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Please indicate your title.
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Print Name
Here:
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PLEASE SIGN AND RETURN THIS PROXY
PRIOR TO
NOVEMBER 14,
2016
Mail To: Innovus Pharmaceuticals, Inc.,
Weintraub Law Group, PC
Attn: Jennifer Trowbridge
10085 Carroll Canyon Rd
Suite 230,
San Diego, CA 92131
Fax (858) 566-7015
jennifer@weintraublawgroup.com
CERTIFICATE
OF
AMENDED
AND RESTATED ARTICLES OF INCORPORATION
OF
INNOVUS
PHARMACEUTICALS, INC.
Pursuant to the
provisions of Nevada Revised Statutes 78.390 and 78.403, the
undersigned officer of Innovus Pharmaceuticals, Inc., a Nevada
corporation, does hereby certify as follows:
A. The
board of directors of the corporation has duly adopted resolutions
proposing to amend and restate the articles of incorporation of the
corporation as set forth below, declaring such amendment and
restatement to be advisable and in the best interests of the
corporation.
B. The
amendment and restatement of the articles of incorporation as set
forth below has been approved by at least a majority of the voting
power of the stockholders of the corporation, which is sufficient
for approval thereof.
C. This
certificate sets forth the text of the articles of incorporation of
the corporation as amended and restated in their entirety to this
date as follows:
AMENDED
AND RESTATED ARTICLES OF INCORPORATION
OF
INNOVUS
PHARMACEUTICALS, INC.
ARTICLE I
NAME
The
name of the corporation is Innovus Pharmaceuticals, Inc. (the
“
Corporation
”).
ARTICLE
II
REGISTERED
OFFICE
The
Corporation may, from time to time, in the manner provided by law,
change the registered agent and registered office within the State
of Nevada. The Corporation may also maintain an office or offices
for the conduct of its business, either within or without the State
of Nevada.
ARTICLE III
PURPOSE
The
Corporation is formed for the purpose of engaging in any lawful
activity for which corporations may be organized under the laws of
the State of Nevada.
ARTICLE IV
AUTHORIZED CAPITAL
STOCK
The
total authorized capital stock of the Corporation consists of three
hundred million (300,000,000) shares of capital stock, par value
$0.001 per share, consisting of (a) two hundred ninety two million
five hundred thousand (292,500,000) shares of common stock, par
value $0.001 per share, and (b) seven million five hundred thousand
(
7
,500,000) shares of
preferred stock, par value $0.001 per share (“
Preferred Stock
”). The
board of directors of the Corporation is hereby vested, to the
fullest extent permitted under the Nevada Revised Statutes (the
“
NRS
”),
with the authority to designate from time to time, by duly adopted
resolution(s), one or more series of the Preferred Stock, to fix
the number of shares constituting such series and to prescribe the
voting powers, designations, preferences, qualifications,
limitations, restrictions and relative, participating, optional and
other rights of such series. Any such resolution prescribing a
series of Preferred Stock must include a distinguishing designation
for such series. Except as otherwise required by law, holders of
any series of Preferred Stock shall be entitled to only such voting
rights, if any, as shall expressly be granted thereto by these
Amended and Restated Articles of Incorporation (as the same may be
further amended from time to time, the “
Articles of
Incorporation
”), including the certificate of
designation relating to such series of Preferred Stock, or the NRS.
To the extent provided in the certificate of designation relating
to a series of Preferred Stock, the board of directors may increase
(but not above the total number of then authorized and undesignated
shares of Preferred Stock) or decrease (but not below the number of
shares of that series then outstanding) the number of shares of
such series.
ARTICLE V
DIRECTORS
The
board of directors of the Corporation shall be elected or appointed
in such manner as shall be provided in the bylaws of the
Corporation (as amended from time to time, the “
Bylaws
”). Except as
otherwise fixed or provided for pursuant to the provisions of the
Articles of Incorporation, including any certificate of designation
relating to any series of Preferred Stock, the number of directors
may be changed from time to time in the manner provided in the
Bylaws.
ARTICLE VI
INAPPLICABILITY OF
CERTAIN NEVADA STATUTES
Section
1.
Inapplicability of
Combinations with Interested Stockholders Statutes
. At such
time, if any, as the Corporation becomes a “resident domestic
corporation” (as that term is defined in NRS 78.427), the
Corporation shall not be subject to, or governed by, any of the
provisions in NRS 78.411 to 78.444, inclusive, as amended from time
to time, or any successor statutes.
Section
2.
Inapplicability of
Acquisition of Controlling Interest Statutes
. In accordance
with the provisions of NRS 78.378, the provisions of NRS 78.378 to
78.3793, inclusive, as amended from time to time, or any successor
statutes, relating to acquisitions of controlling interests in the
Corporation, shall not apply to the Corporation or to any
acquisition of any shares of the Corporation’s capital
stock.
ARTICLE VII
INDEMNIFICATION;
EXCULPATION
Section
3.
Payment of
Expenses
. To the fullest extent permitted under the NRS
(including, without limitation, to the fullest extent permitted
under NRS 78.7502 and 78.751(3)) and other applicable law, the
Corporation shall indemnify directors and officers of the
Corporation in their respective capacities as such and in any and
all other capacities in which any of them serves at the request of
the Corporation. In addition to any other rights of indemnification
permitted by the laws of the State of Nevada or as may be provided
for by the Corporation in the Bylaws or by agreement, the expenses
of directors and officers incurred in defending a civil or criminal
action, suit or proceeding, involving alleged acts or omissions of
such director or officer in his or her capacity as a director or
officer of the Corporation, must be paid, by the Corporation or
through insurance purchased and maintained by the Corporation or
through other financial arrangements made by the Corporation, as
they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking
by
or on behalf of the
director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he or she is
not entitled to be indemnified by the Corporation.
Section
4.
Limitation on
Liability
. The liability of directors and officers of the
Corporation shall be eliminated or limited to the fullest extent
permitted by the NRS. If the NRS are amended to further eliminate
or limit or authorize corporate action to further eliminate or
limit the liability of directors or officers, the liability of
directors and officers of the Corporation shall be eliminated or
limited to the fullest extent permitted by the NRS, as so amended
from time to time.
Section
5.
Repeal and
Conflicts
. Any repeal or modification of
Section 1
or
Section 2
of this
Article VI
approved by the
stockholders of the Corporation shall be prospective only, and
shall not adversely affect any limitation on the liability of a
director or officer of the Corporation existing as of the time of
such repeal or modification. In the event of any conflict between
Section 1
or
Section 2
of this
Article VI
and any
other provision of the Articles of Incorporation, the terms and
provisions of
Section
1
and/or
Section
2
of this
Article
VI
shall control.
ARTICLE VIII
MISCELLANEOUS
Section
1.
Mandatory Forum
. To
the fullest extent permitted by law, and unless the Corporation
consents in writing to the selection of an alternative forum, the
Eighth Judicial District Court of Clark County, Nevada, shall be
the sole and exclusive forum for any or all actions, suits or
proceedings, whether civil, administrative or investigative or that
asserts any claim or counterclaim (each, an “
Action
”): (a) brought in
the name or right of the Corporation or on its behalf; (b)
asserting a claim for breach of any fiduciary duty owed by any
director, officer, employee or agent of the Corporation to the
Corporation or the Corporation’s stockholders; (c) arising or
asserting a claim arising pursuant to any provision of NRS Chapters
78 or 92A or any provision of the Articles of Incorporation or
Bylaws; (d) to interpret, apply, enforce or determine the validity
of the Articles of Incorporation or Bylaws; or (e) asserting a
claim governed by the internal affairs doctrine. In the event that
the Eighth Judicial District Court of Clark County, Nevada does not
have jurisdiction over any such Action, then any other state
district court located in the State of Nevada shall be the sole and
exclusive forum for such Action. In the event that no state
district court in the State of Nevada has jurisdiction over any
such Action, then a federal court located within the State of
Nevada shall be the sole and exclusive forum for such
Action.
Section
2.
Severability
. If
any provision or provisions of the Articles of Incorporation is
held to be invalid, illegal or unenforceable as applied to any
circumstance for any reason whatsoever: (a) the validity, legality
and enforceability of such provision(s) in any other circumstance
and of the remaining provisions of the Articles of
Incorporation(including, without limitation, each portion of any
paragraph of the Articles of Incorporation containing any such
provision held to be invalid, illegal or unenforceable that is not
itself held to be invalid, illegal or unenforceable) shall not in
any waybe affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of the Articles of Incorporation
(including, without limitation, each such portion of any paragraph
of the Articles of Incorporation containing any such provision
heldto be invalid, illegal or unenforceable) shall be construed (i)
so as to permit the Corporation to protect its directors, officers,
employees and agents from personal liability in respect of their
good faith service or (ii) for the benefit of the Corporation to
the fullest extent permitted by law.
Section
3.
Deemed Notice and
Consent
. To the fullest extent permitted by law, each and
every natural person, corporation, general or limited partnership,
limited liability company, joint venture, trust, association or any
other entity purchasing or otherwise acquiring any interest (of any
nature whatsoever) in any shares of the capital stock of the
Corporation shall be deemed, by reason of and from and after the
time of such purchase or other acquisition, to have notice of and
to have consented to all of the provisions of (a) the Articles of
Incorporation (including, without limitation,
Section
1
of this Article and this
Section
3
), (b) the Bylaws and (c) any amendment to the Articles
of Incorporation or the Bylaws enacted or adopted in accordance
with the Articles of Incorporation, the Bylaws and applicable
law.
Section
4.
Amendments to
Bylaws
. The authority to adopt, amend or repeal the Bylaws
or any provision thereof is hereby reserved exclusively to the
board of directors of the Corporation, and the stockholders of the
Corporation shall have no authority or right to adopt, amend or
repeal the Bylaws.
*
*
*
*
IN
WITNESS WHEREOF, I have executed this Certificate of Amended and
Restated Articles of Incorporation of Innovus Pharmaceuticals, Inc.
as of October 10, 2016.
INNOVUS PHARMACEUTICALS, INC.
AMENDED AND RESTATED 2016 EQUITY INCENTIVE PLAN
EFFECTIVE AS OF OCTOBER 10, 2016
SECTION 1. INTRODUCTION.
The
Company’s Board of Directors adopted this Innovus
Pharmaceuticals, Inc. Amended and Restated 2016 Equity Incentive
Plan ( the “Plan”) effective on the Effective
Date.
The
purpose of the Plan is to promote the long-term success of the
Company and the creation of stockholder value by offering Selected
Employees an opportunity to acquire a proprietary interest in the
success of the Company, or to increase such interest, and to
encourage such Selected Employees to continue to provide services
to the Company and to attract new individuals with outstanding
qualifications.
The
Plan seeks to achieve this purpose by providing for Awards in the
form of Options (which may constitute Incentive Stock Options or
Nonstatutory Stock Options), Stock Appreciation Rights, Restricted
Stock Grants, Stock Units, Other Equity Awards and/or Cash Awards.
However, unless and until this Plan is approved by Company
stockholders, no ISOs may be exercised under the Plan.
Capitalized
terms shall have the meaning provided in Section 2 unless otherwise
provided in this Plan or any applicable Award
Agreement.
SECTION 2. DEFINITIONS.
If
a Participant’s employment agreement or Award Agreement (or
other written agreement executed by and between Participant and the
Company) expressly includes defined terms that expressly are
different from and/or conflict with the defined terms contained in
this Plan then the defined terms contained in the employment
agreement or Award Agreement (or other written agreement executed
by and between Participant and the Company) shall govern and shall
supersede the definitions provided in this
Plan.
(a)
“Affiliate” means any entity other than a Subsidiary,
if the Company and/or one or more Subsidiaries own not less than
50% of such entity. For purposes of determining an
individual’s “Service,” this definition shall
include any entity other than a Subsidiary, if the Company, a
Parent and/or one or more Subsidiaries own not less than 50% of
such entity.
(b) “Award”
means any award of an Option, SAR, Restricted Stock Grant, Stock
Unit, Other Equity Award or Cash Award under the Plan.
(c) “Award
Agreement” means an agreement between the Company and a
Selected Employee evidencing the award of an Option, SAR,
Restricted Stock Grant, Stock Unit, Other Equity Award or Cash
Award as applicable.
(d) “Board”
means the Board of Directors of the Company, as constituted from
time to time.
(e) “California
Participant” means a Participant whose Award, when granted,
was issued in reliance either on section 25111, 25112 or 25113 of
the California Corporations Code. Solely to the extent required to
comply with the requirements of the California Corporate Securities
Law of 1968 at the time of grant and thereafter, Awards to
California Participants shall also be subject to the additional
terms specified in Appendix A. The Committee, in its discretion,
may also elect to include some or all of the Appendix A terms in
Awards to Participants who are not California Participants.
Appendix A is a part of this Plan.
(f) “Cash
Award” means a cash incentive opportunity awarded under this
Plan, to a Covered Employee that is (i) payable only in cash, (ii)
not an Option, SAR, Restricted Stock Grant, Stock Unit or Other
Equity Award, (iii) paid based on achievement of Performance
Goal(s) and (iv) intended to qualify as performance-based
compensation under Code Section 162(m).
(g) “Cashless
Exercise” means, to the extent that an Award Agreement so
provides and as permitted by applicable law and in accordance with
any procedures established by the Committee, an arrangement whereby
payment of some or all of the aggregate Exercise Price may be made
all or in part by delivery of an irrevocable direction to a
securities broker to sell Shares and to deliver all or part of the
sale proceeds to the Company. Cashless Exercise may also be
utilized to satisfy an Option’s tax withholding obligations
as provided in Section 16(b).
(h) “Cause”
means, with respect to a Participant, the occurrence of any of the
following: (i) a conviction of a Participant for a felony crime or
the failure of a Participant to contest prosecution for a felony
crime, or (ii) a Participant’s misconduct, fraud, disloyalty
or dishonesty (as such terms may be defined by the Committee in its
sole discretion), or (iii) any unauthorized use or disclosure of
confidential information or trade secrets by a Participant, or (iv)
a Participant’s negligence, malfeasance, breach of fiduciary
duties, neglect of duties, or (v) any material violation by a
Participant of a written Company or Subsidiary or Affiliate policy
or any material breach by a Participant of a written agreement with
the Company or Subsidiary or Affiliate, or (vi) any other act or
omission by a Participant that, in the opinion of the Committee,
could reasonably be expected to adversely affect the
Company’s or a Subsidiary’s or an Affiliate’s
business, financial condition, prospects and/or reputation. In each
of the foregoing subclauses (i) through (vi), whether or not a
“Cause” event has occurred will be determined by the
Committee in its sole discretion or, in the case of Participants
who are directors or Officers or Section 16 Persons, the Board,
each of whose determination shall be final, conclusive and binding.
A Participant’s Service shall be deemed to have terminated
for Cause if, after the Participant’s Service has terminated,
facts and circumstances are discovered that would have justified a
termination for Cause, including, without limitation, violation of
material Company policies or breach of noncompetition,
confidentiality or other restrictive covenants that may apply to
the Participant.
(i) “Change
in Control” means the consummation of any one or more of
the following:
(i)
Any “person” (as such term is used in Section 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities of the Company under an employee benefit plan of
the Company, becomes the “beneficial owner” (as defined
in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent
(50%) or more of (A) the outstanding shares of common stock of the
Company or (B) the combined voting power of the Company’s
then-outstanding securities;
(ii)
The Company is party to a merger or consolidation, or series of
related transactions, which results in the voting securities of the
Company outstanding immediately prior thereto failing to continue
to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty
percent (50%) of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation;
(iii)
The sale or disposition of all or substantially all of the
Company’s assets (or consummation of any transaction, or
series of related transactions, having similar
effect);
(iv)
The dissolution or liquidation of the Company; or
(v)
Any transaction or series of related transactions that has the
substantial effect of any one or more of the
foregoing.
A
transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company’s incorporation
or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s
securities immediately before such transactions. In addition, an
IPO shall not constitute a Change in Control.
(j) “Code”
means the Internal Revenue Code of 1986, as amended, and the
regulations and interpretations promulgated
thereunder.
(k) “Committee”
means a committee described in Section 3.
(l) “Common
Stock” means the Company’s common stock, $0.001 par
value per Share, and any other securities into which such shares
are changed, for which such shares are exchanged or which may be
issued in respect thereof.
(m) “Company”
means Innovus Pharmaceuticals, Inc., a Nevada
corporation.
(n) “Consultant”
means an individual or entity which performs bona fide services to
the Company, a Parent, a Subsidiary or an Affiliate, other than as
an Employee or Non-Employee Director.
(o) “Covered
Employees” means those individuals whose compensation is (or
may be) subject to the deduction limitations of Code Section
162(m).
(p) “Disability”
means the following:
(i)
For all ISOs, the permanent and total disability of a Participant
within the meaning of Section 22(e)(3) of the Code;
(ii)
For all Awards which are considered nonqualified deferred
compensation under Code Section 409A and for which payment can be
made on account of the Participant’s disability, the
disability of a Participant within the meaning of Section 409A of
the Code; or
(iii)
For all other Awards, the Participant’s medically
determinable physical or mental incapacitation such that for a
continuous period of not less than twelve (12) months, a person is
unable to engage in any substantial gainful activity or which can
be expected to result in death.
Any question as to the existence of that person’s physical or
mental incapacitation as to which the person or person’s
representative and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to
the person and the Company. If the person and the Company cannot
agree as to a qualified independent physician, each shall appoint
such a physician and those two (2) physicians shall select a third
(3rd) who shall make such determination in writing. The
determination of Disability made in writing to the Company and the
person shall be final and conclusive for all purposes of the
Awards.
(q) “Effective
Date” means October 10, 2016
(r) “Employee”
means any individual who is a common-law employee of the Company,
or of a Parent, or of a Subsidiary or of an Affiliate. An employee
who is also serving as a member of the Board is an Employee for
purposes of this Plan.
(s) “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
(t) “Exercise
Price” means, in the case of an Option, the amount for which
a Share may be purchased upon exercise of such Option, as specified
in the applicable Award Agreement. “Exercise Price,” in
the case of a SAR, means an amount, as specified in the applicable
Award Agreement, which is subtracted from the Fair Market Value in
determining the amount payable to a Participant upon exercise of
such SAR.
(u) “Fair
Market Value” means the market price of a Share, determined
by the Committee as follows:
(i)
If the Shares were traded on a stock exchange (such as the NYSE,
NYSE MKT, NASDAQ Global Select Market, NASDAQ Global Market or
NASDAQ Capital Market) at the time of determination, then the Fair
Market Value shall be equal to the regular session closing price
for such stock as reported by such exchange (or the exchange or
market with the greatest volume of trading in the Shares) on the
date of determination, or if there were no sales on such date, on
the last date preceding such date on which a closing price was
reported;
(ii)
If the Shares were traded on the OTC Markets (such as the OTCQX,
OTCQB, OTCPK or the OTC Bulletin Board) at the time of
determination, then the Fair Market Value shall be equal to the
last-sale price reported by the OTC Markets for such date, or if
there were no sales on such date, on the last date preceding such
date on which a sale was reported; and
(iii)
If neither of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith
using a reasonable application of a reasonable valuation method as
the Committee deems appropriate.
Whenever
possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported by the applicable exchange or
the OTC Markets, as applicable, or a nationally recognized
publisher of stock prices or quotations (including an electronic
on-line publication). Such determination shall be conclusive and
binding on all persons.
(v) “Fiscal
Year” means the Company’s fiscal year.
(w)
“GAAP” means United States generally accepted
accounting principles as established by the Financial Accounting
Standards Board.
(x) “Incentive
Stock Option” or “ISO” means an incentive stock
option described in Code Section 422.
(y) “IPO”
means an initial public offering by the Company of its equity
securities pursuant to an effective registration statement filed
with the SEC.
(z)
“ISO Limit” means the maximum aggregate number of
Shares that are permitted to be issued pursuant to the exercise of
ISOs granted under the Plan as described in Section
5(a).
(aa) “Net
Exercise” means, to the extent that an Award Agreement so
provides and as permitted by applicable law, an arrangement
pursuant to which the number of Shares issued to the Optionee in
connection with the Optionee’s exercise of the Option will be
reduced by the Company’s retention of a portion of such
Shares. Upon such a net exercise of an Option, the Optionee will
receive a net number of Shares that is equal to (i) the number of
Shares as to which the Option is being exercised minus (ii) the
quotient (rounded down to the nearest whole number) of the
aggregate Exercise Price of the Shares being exercised divided by
the Fair Market Value of a Share on the Option exercise date. The
number of Shares covered by clause (ii) will be retained by the
Company and not delivered to the Optionee. No fractional Shares
will be created as a result of a Net Exercise and the Optionee must
contemporaneously pay for any portion of the aggregate Exercise
Price that is not covered by the Shares retained by the Company
under clause (ii). The number of Shares delivered to the Optionee
may be further reduced if Net Exercise is utilized under Section
16(b) to satisfy applicable tax withholding
obligations.
(bb)
“Non-Employee Director” means a member of the Board who
is not an Employee.
(cc) “Nonstatutory
Stock Option” or “NSO” means a stock option that
is not an ISO.
(dd)
“NYSE” means the New York Stock Exchange.
(ee)
“Officer” means an individual who is an officer of the
Company within the meaning of Rule 16a-1(f) of the Exchange
Act.
(ff)
“Option” means an ISO or NSO granted under the Plan
entitling the Optionee to purchase a specified number of Shares, at
such times and applying a specified Exercise Price, as provided in
the applicable Award Agreement.
(gg) “Optionee”
means an individual, estate or other entity that holds an
Option.
(hh) “Other
Equity Award” means an award (other than an Option, SAR,
Stock Unit, Restricted Stock Grant or Cash Award) which derives its
value from the value of Shares and/or from increases in the value
of Shares.
(ii)
“Outside Director” means a Non-Employee Director who is
considered an “outside director” for purposes of
Section 162(m) of the Code.
(jj)
“Parent” means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if
each of the corporations other than the Company owns stock
possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in
such chain.
A
corporation that attains the status of a Parent on a date after the
Effective Date shall be considered a Parent commencing as of such
date.
(kk) “Participant”
means an individual or estate or other entity that holds an
Award.
(ll)
“Performance Criteria” means the criteria (and
adjustments) that the Committee selects for an Award for purposes
of establishing the Performance Goal or Performance Goals for a
Performance Period, determined as follows:
(A) The Performance Criteria that shall be used to establish
Performance Goals are limited to the following: (i) annual revenue,
(ii) earnings before interest, taxes, depreciation and
amortization, or EBITDA, (iii) earnings per share, (iv) stock
price, (v) operating cash flow, (vi) net income, (vii) profit
margins, operating margins, gross margins or cash margins, (viii)
revenue growth, (ix) pre- or after-tax income (before or after
allocations of corporate overhead and bonuses), (x) return on
equity, (xi) total shareholder return, (xii) return on assets or
net assets, (xiii) appreciation in and/or maintenance of the price
of the Common Stock, (xiv) market share, (xv) gross profits, (xvi)
economic value-added models or equivalent metrics, (xvii)
comparisons with various stock market indices, (xviii) reductions
in costs, (xix) cash flow or cash flow per share, (xx) return on
capital (including return on total capital or return on invested
capital), (xxi) cash flow return on investment, (xxii) improvement
in or attainment of expense levels or working capital levels,
(xxiii) year-end cash, (xxiv) debt reductions, (xxv) stockholder
equity, (xxvi) regulatory or litigation achievements, (xxvii)
implementation, completion or attainment of measurable objectives
with respect to business development, new products or services,
budgets, regulatory or business risks, acquisitions, divestitures
or recruiting and maintaining personnel, (xxviii) earnings, (xxix)
expenses, (xxx) cost of goods sold, (xxxi) working capital, (xxxii)
price/earnings ratio, (xxxiii) debt or debt-to-equity, (xxxiv)
accounts receivable, (xxxv) writeoffs, (xxxvi) assets, (xxxvii)
liquidity, (xxxviii) operations, (xxxix) research or related
milestones, (xl) intellectual property (e.g., patents), (xli)
product development, (xlii) information technology, (xliii)
financings, (xliv) product quality control, (xlv) management,
(xlvi) human resources, (xlvii) corporate governance,(xlviii)
compliance program, (xlix) internal controls, (xlxi) policies and
procedures, (xlxii) accounting and reporting, (xlxiii) strategic
alliances, (xlxiv) licensing and partnering, and (xlxv) site, plant
or building development, or (xlxvi) any combination of the
foregoing, any of which may be measured either in absolute terms or
as compared to any incremental increase or decrease or as compared
to results of a peer group or index. Such Performance Goals also
may be based solely by reference to the Company’s performance
or the performance of a Parent, Subsidiary, Affiliate, division,
business segment or business unit of the Company, or based upon the
relative performance of other companies or upon comparisons of any
of the indicators of performance relative to other companies.
Financial performance targets are approved by the Company’s
Chief Executive Officer and the Committee at or near the beginning
of each year; and
(B) The Committee may, in its sole discretion, provide that one or
more objectively determinable adjustments shall be made to one or
more of the Performance Goals. Such adjustments may include one or
more of the following: (i) items related to a change in or
provisions under tax law, accounting principles or other such laws
or provisions affecting reported results; (ii) items relating to
financing activities; (iii) expenses for restructuring or
productivity initiatives; (iv) other non-operating items; (v) items
related to reorganizations or restructuring programs or
divestitures or acquisitions; (vi) items attributable to the
business operations of any entity acquired by the Company during
the Performance Period; (vii) items related to asset write-downs or
the disposal of a business or segment of a business; (viii) items
related to discontinued operations that do not qualify as a segment
of a business under GAAP; (ix) items attributable to any stock
dividend, stock split, combination or exchange of shares occurring
during the Performance Period; (x) any other items of significant
income or expense which are determined to be appropriate
adjustments; (xi) items relating to unusual or extraordinary
corporate transactions, events or developments, (xii) items related
to amortization of acquired intangible assets; (xiii) items that
are outside the scope of the Company’s core, on-going
business activities; (xiv) items relating to any other unusual or
nonrecurring events or changes in applicable laws, accounting
principles or business conditions and/or items of gain, loss or
expense determined to be extraordinary or unusual in nature or
infrequent in occurrence; or (xv) litigation or claim judgments or
settlements. For all Awards intended to qualify as
performance-based compensation, such determinations shall be made
within the time prescribed by, and otherwise in compliance with,
Section 162(m) of the Code.
(mm) “Performance
Goals” means for a Performance Period, one or more goals
established in writing by the Committee for the Performance Period
based upon one or more Performance Criteria. Depending on the
Performance Criteria used to establish such Performance Goals, the
Performance Goals may be expressed in terms of overall Company
performance or the performance of a Parent, Subsidiary, Affiliate,
division, business unit, or an individual. The achievement of each
Performance Goal shall be determined in accordance with GAAP to the
extent applicable.
(nn)
“Performance Period” means one or more periods of time,
which may be of varying and overlapping durations, as the Committee
may select, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a
Participant’s right to, and the payment of, an
Award.
(oo) “Plan”
means this Innovus Pharmaceuticals, Inc. 2016 Equity Incentive Plan
as it may be amended from time to time.
(pp)
“Re-Price” means that the Company has lowered or
reduced the Exercise Price of outstanding Options and/or
outstanding SARs and/or outstanding Other Equity Awards for any
Participant(s) in a manner described by SEC Regulation S-K Item
402(d)(2)(viii) (or as described in any successor provision(s) or
definition(s)). For avoidance of doubt, Re-Price also includes any
exchange of Options or SARs for other Awards or cash.
(qq) “Restricted
Stock Grant” means Shares awarded under the Plan as provided
in the applicable Award Agreement.
(rr)
“Rule 16b-3” means Rule 16b-3 promulgated under the
Exchange Act or any successor to Rule 16b-3, as in effect from time
to time.
(ss) “SEC”
means the Securities and Exchange Commission.
(tt)
“Section 16 Persons” means those Officers, directors or
other persons who are subject to Section 16 of the Exchange
Act.
(uu) “Securities
Act” means the Securities Act of 1933, as
amended.
(vv)
“Selected
Employee” means an Employee, Consultant, or Non-Employee
Director who has been selected by the Committee to receive an Award
under the Plan.
(ww)
“Separation From Service” has the meaning provided to
such term under Code Section 409A and the regulations promulgated
thereunder.
(xx) “Service”
means uninterrupted service as an Employee, Non-Employee Director
or Consultant. Service will be deemed terminated as soon as the
entity to which Service is being provided is no longer either (i)
the Company, (ii) a Parent, (iii) a Subsidiary or (iv) an
Affiliate. A Participant’s Service does not terminate if he
or she is a common-law employee and goes on a bona fide leave of
absence that was approved by the Company in writing and the terms
of the leave provide for continued service crediting, or when
continued service crediting is required by applicable law. However,
for purposes of determining whether an Employee’s outstanding
ISOs are eligible to continue to qualify as ISOs (and not become
NSOs), an Employee’s Service will be treated as terminating
three (3) months after such Employee went on leave, unless such
Employee’s right to return to active work is guaranteed by
law or by a contract. Service terminates in any event when the
approved leave ends, unless such Employee immediately returns to
active work. The Committee determines which leaves count toward
Service, and when Service commences and terminates for all purposes
under the Plan. For avoidance of doubt, a Participant’s
Service shall not be deemed terminated if the Committee determines
that (i) a transition of employment to service with a partnership,
joint venture or corporation not meeting the requirements of a
Subsidiary or Parent or Affiliate in which the Company or a
Subsidiary or Parent or Affiliate is a party is not considered a
termination of Service, (ii) the Participant transfers between
service as an Employee and service as a Consultant or other
personal service provider (or vice versa), or (iii) the Participant
transfers between service as an Employee and that of a Non-Employee
Director (or vice versa). The Committee may determine whether any
Company transaction, such as a sale or spin-off of a division or
subsidiary that employs a Participant, shall be deemed to result in
termination of Service for purposes of any affected Awards, and the
Committee’s decision shall be final, conclusive and
binding.
(yy) “Share”
means one share of Common Stock.
(zz)
“Share Limit” means the maximum aggregate number of
Shares that are permitted to be issued under the Plan as described
in Section 5(a) plus any increases authorized by Section
5(a)(i).
(aaa) “Specified
Employee” means a Participant who is considered a
“specified employee” within the meaning of Code Section
409A.
(bbb) “Stock
Appreciation Right” or “SAR” means a stock
appreciation right awarded under the Plan which provides the holder
with a right to potentially receive, in cash and/or Shares, value
with respect to a specific number of Shares, as provided in the
applicable Award Agreement.
(ccc) “Stock
Unit” means a bookkeeping entry representing the equivalent
of one Share, as awarded under the Plan, as provided in the
applicable Award Agreement.
(ddd)
“Subsidiary” means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Subsidiary on a date after
the Effective Date shall be considered a Subsidiary commencing as
of such date.
(eee)
“Substitute Awards” means Awards granted or Shares
issued by the Company in assumption of, or in substitution or
exchange for, awards previously granted, or the right or obligation
to make future awards, in each case by a company acquired by the
Company or any Parent or any Subsidiary or any Affiliate or with
which the Company or any Parent or any Subsidiary or any Affiliate
combines.
(fff) “Termination
Date” means the date on which a Participant’s Service
terminates.
(ggg) “10-Percent
Shareholder” means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of
outstanding stock of the Company, its Parent or any of its
Subsidiaries. In determining stock ownership, the attribution rules
of Section 424(d) of the Code shall be applied.
SECTION 3. ADMINISTRATION.
(a)
Committee
Composition
. A Committee (or
Committees) appointed by the Board (or its Compensation Committee)
shall administer the Plan. Unless the Board provides otherwise, the
Board’s Compensation Committee (or a comparable committee of
the Board, or if the Board has no committees, then the Board) shall
be the Committee. The Board may also at any time terminate the
functions of the Committee and reassume all powers and authority
previously delegated to the Committee.
To
the extent required to enable Awards to be exempt from liability
under Section 16(b) of the Exchange Act or to qualify as
performance-based compensation under Code Section 162(m), the
Committee shall have membership composition which enables (i)
Awards to Section 16 Persons to qualify as exempt from liability
under Section 16(b) of the Exchange Act and (ii) Awards to Covered
Employees to qualify as performance-based compensation as provided
under Code Section 162(m).
The
Board or the Committee may also appoint one or more separate
committees of the Board, each composed of directors of the Company
who need not qualify under Rule 16b-3 or Code Section 162(m),
that may administer the Plan with respect to Selected Employees who
are not Section 16 Persons or Covered Employees, respectively, may
grant Awards under the Plan to such Selected Employees and may
determine all terms of such Awards. To the extent permitted by
applicable law, the Board may also appoint a committee, composed of
one or more officers of the Company, that may authorize Awards to
Employees (who are not Section 16 Persons or Covered Employees)
within parameters specified by the Board and consistent with any
limitations imposed by applicable law.
Notwithstanding
the foregoing, the Board shall constitute the Committee and shall
administer the Plan with respect to all Awards granted to
Non-Employee Directors.
(b)
Authority
of the Committee
. Subject to
the provisions of the Plan, the Committee shall have full authority
and discretion to take any actions it deems necessary or advisable
for the administration of the Plan. Such actions shall include
without limitation:
(i)
determining Selected Employees who are to receive Awards under the
Plan;
(ii)
determining the type, number, vesting requirements, Performance
Goals (or other objective/subjective goals (if any)) and their
degree of satisfaction, and other features and conditions of such
Awards and amending such Awards;
(iii)
correcting any defect, supplying any omission, or reconciling or
clarifying any inconsistency in the Plan or any Award
Agreement;
(iv)
accelerating the vesting or extending the post-termination exercise
term, or waiving restrictions, of Awards at any time and under such
terms and conditions as it deems appropriate;
(v)
permitting or denying, in its discretion, a Participant’s
request to transfer an Award;
(vi)
permitting or requiring, in its discretion, a Participant to use
Cashless Exercise, Net Exercise and/or Share withholding with
respect to the payment of any Exercise Price and/or applicable tax
withholding;
(vii)
Re-Pricing outstanding Awards;
(viii)
interpreting the Plan and any Award Agreements;
(ix)
making all other decisions relating to the operation of the Plan;
and
(x)
granting Awards to Selected Employees who are foreign nationals on
such terms and conditions different from those specified in the
Plan, which may be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and adopting such
modifications, procedures, and/or subplans (with any such subplans
attached as appendices to the Plan) and the like as may be
necessary or desirable to comply with provisionsof the laws or
regulations of other countries or jurisdictions to ensure the
viability of the benefits from Awards granted to Participants
employed in such countries or jurisdictions, or to meet the
requirements that permit the Plan to operate in a qualified or tax
efficient manner, and/or comply with applicable foreign laws or
regulations.
The
Committee may adopt such rules or guidelines, as it deems
appropriate to implement the Plan. The Committee’s
determinations under the Plan shall be final, conclusive and
binding on all persons. The Committee’s decisions and
determinations need not be uniform and may be made selectively
among Participants in the Committee’s sole discretion. The
Committee’s decisions and determinations will be afforded the
maximum deference provided by applicable law.
(c)
Indemnification
.
To the maximum extent permitted by applicable law, each member of
the Committee, or of the Board, or any persons (including without
limitation Employees and Officers) who are delegated by the Board
or Committee to perform administrative functions in connection with
the Plan, shall be indemnified and held harmless by the Company
against and from (i) any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him or her in connection
with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under the
Plan or any Award Agreement, and (ii) from any and all amounts paid
by him or her in settlement thereof, with the Company’s
approval, or paid by him or her in satisfaction of any judgment in
any such claim, action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be
entitled under the Company’s Articles of Incorporation or
Bylaws, by contract, as a matter of law, or otherwise, or under any
power that the Company may have to indemnify them or hold them
harmless.
SECTION 4. GENERAL.
(a)
General
Eligibility
. Only Employees,
Consultants, and Non-Employee Directors shall be eligible for
designation as Selected Employees by the
Committee.
(b)
Incentive
Stock Options
. Only Selected
Employees who are common-law employees of the Company, a Parent or
a Subsidiary shall be eligible for the grant of ISOs. In addition,
a Selected Employee who is a 10-Percent Shareholder shall not be
eligible for the grant of an ISO unless the requirements set forth
in Section 422(c)(5) of the Code are satisfied. If and to the
extent that any Shares are issued under a portion of any Option
that exceeds the $100,000 limitation of Section 422 of the Code,
such Shares shall not be treated as issued under an ISO
notwithstanding any designation otherwise. Certain decisions,
amendments, interpretations and actions by the Company or Committee
and certain actions by a Participant may cause an Option to cease
to qualify as an ISO pursuant to the Code and by accepting an
Option Award, the Participant agrees in advance to such
disqualifying action(s).
(c)
Buyout
of Awards
. The Committee may at
any time (i) offer to buy out for a payment in cash or cash
equivalents (including without limitation Shares valued at Fair
Market Value that may or may not be issued from this Plan) an Award
previously granted or (ii) authorize a Participant to elect to cash
out an Award previously granted, in either case at such time and
based upon such terms and conditions as the Committee shall
establish.
(d)
Restrictions
on Shares
. Any Shares issued
pursuant to an Award shall be subject to such Company policies,
rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine. Such restrictions
shall apply in addition to any restrictions that may apply to
holders of Shares generally and shall also comply to the extent
necessary with applicable law. In no event shall the Company be
required to issue fractional Shares under this
Plan.
(e)
No
Rights as a Stockholder
. A
Participant, or a transferee of a Participant, shall have no rights
as a stockholder (including without limitation voting rights or
dividend or distribution rights) with respect to any Common Stock
covered by an Award until such person becomes entitled to receive
such Common Stock, has satisfied any applicable withholding or tax
obligations relating to the Award and the Common Stock has been
issued to the Participant. No adjustment shall be made for cash or
stock dividends or other rights for which the record date is prior
to the date when such Common Stock is issued, except as expressly
provided in Section 13.
(f)
Termination
of Service
. Unless the
applicable Award Agreement or employment agreement provides
otherwise (and in such case, the Award or employment agreement
shall govern as to the consequences of a termination of Service for
such Awards), the following rules shall govern the vesting,
exercisability and term of outstanding Awards held by a Participant
in the event of termination of such Participant’s Service (in
all cases subject to the term of the Option or SAR or Other Equity
Award as applicable):
(i)
if the Service of a Participant is terminated for Cause, then all
of his/her then-outstanding Options, SARs, and unvested portions of
all other Awards shall terminate and be forfeited immediately
without consideration as of the Termination Date (except for
repayment of any amounts the Participant had paid to the Company to
acquire unvested Shares underlying the forfeited
Awards);
(ii)
if the Service of Participant is terminated due to
Participant’s death or Disability, then the vested portions
of his/her then-outstanding Options/SARs/Other Equity Awards may be
exercised by such Participant or his or her personal representative
within twelve months after the Termination Date and all unvested
portions of all then-outstanding Awards shall be forfeited without
consideration as of the Termination Date (except for repayment of
any amounts the Participant had paid to the Company to acquire
unvested Shares underlying the forfeited Awards); and
(iii)
if the Service of Participant is terminated for any reason other
than for Cause or death or Disability, then the vested portion of
his/her then-outstanding Options/SARs/Other Equity Awards may be
exercised by such Participant or his or her personal representative
within three months after the Termination Date and all unvested
portions of all then-outstanding Awards shall be forfeited without
consideration as of the Termination Date (except for repayment of
any amounts the Participant had paid to the Company to acquire
unvested Shares underlying the forfeited Awards).
(g)
Code
Section 409A
. Notwithstanding
anything in the Plan to the contrary, the Plan and Awards granted
hereunder are intended to be exempt from or comply with the
requirements of Code Section 409A and shall be interpreted in a
manner consistent with such intention. In the event that any
provision of the Plan or an Award Agreement is determined by the
Committee to not comply with the applicable requirements of Code
Section 409A or the applicable regulations and other guidance
issued thereunder, the Committee shall have the authority to take
such actions and to make such changes to the Plan or an Award
Agreement as the Committee deems necessary to comply with such
requirements. Any payment made pursuant to any Award shall be
considered a separate payment and not one of a series of payments
for purposes of Code Section 409A. Notwithstanding the foregoing or
anything elsewhere in the Plan or an Award Agreement to the
contrary, if upon a Participant’s Separation From Service
he/she is then a Specified Employee, then solely to the extent
necessary to comply with Code Section 409A and avoid the imposition
of taxes under Code Section 409A, the Company shall defer payment
of “nonqualified deferred compensation” subject to Code
Section 409A payable as a result of and within six (6) months
following such Separation From Service under this Plan until the
earlier of (i) the first business day of the seventh month
following the Participant’s Separation From Service, or (ii)
ten (10) days after the Company receives written confirmation of
the Participant’s death. Any such delayed payments shall be
made without interest. While it is intended that all payments and
benefits provided under the Plan or an Award will be exempt from or
comply with Code Section 409A, the Company makes no representation
or covenant to ensure that the payments under the Plan or anAward
are exempt from or compliant with Code Section 409A. In no event
whatsoever shall the Company be liable if a payment or benefit
under the Plan or an Award is challenged by any taxing authority or
for any additional tax, interest or penalties that may be imposed
on a Participant by Code Section 409A or any damages for failing to
comply with Code Section 409A. The Participant will be entirely
responsible for any and all taxes on any benefits payable to such
Participant as a result of the Plan or an Award. If the applicable
Award Agreement or Participant’s employment agreement
provides for Code Section 409A related provisions other than what
is specified above in this Section 4(g), then such provisions in
the Award or employment agreement shall govern.
(h)
Suspension
or Termination of Awards
. To
the extent provided in an Award Agreement, if at any time
(including after a notice of exercise has been delivered) the
Committee (or the Board), reasonably believes that a Participant
has committed an act of Cause (which includes a failure to act),
the Committee (or Board) may suspend the Participant’s right
to exercise any Award (or vesting or settlement of any Award)
pending a determination of whether there was in fact an act of
Cause. If the Committee (or the Board) determines a Participant has
committed an act of Cause, neither the Participant nor his or her
estate shall be entitled to exercise any outstanding Award
whatsoever and all of Participant’s outstanding Awards shall
then terminate without consideration. Any determination by the
Committee (or the Board) with respect to the foregoing shall be
final, conclusive and binding on all interested
parties.
(i)
Electronic
Communications
. Subject to
compliance with applicable law and/or regulations, an Award
Agreement or other documentation or notices relating to the Plan
and/or Awards may be communicated to Participants (and executed by
Participants) by electronic media.
(j)
Unfunded
Plan
. The Plan shall be
unfunded. Although bookkeeping accounts may be established with
respect to Participants who are granted Awards under this Plan, any
such accounts will be used merely as a bookkeeping convenience. The
Company shall not be required to segregate any assets which may at
any time be represented by Awards, nor shall this Plan be construed
as providing for such segregation, nor shall the Company or the
Committee be deemed to be a trustee of stock or cash to be awarded
under the Plan.
(k)
Liability
of Company
. The Company (or
members of the Board or Committee) shall not be liable to a
Participant or other persons as to: (a) the non-issuance or sale of
Shares as to which the Company has been unable to obtain from any
regulatory body having jurisdiction the authority deemed by the
Company’s counsel to be necessary to the lawful issuance and
sale of any Shares hereunder; and (b) any unexpected or adverse tax
consequence or any tax consequence expected, but not realized, by
any Participant or other person due to the grant, receipt, exercise
or settlement of any Award granted hereunder.
(l)
Reformation
.
In the event any provision of this Plan shall be held illegal or
invalid for any reason, such provisions will be reformed by the
Board if possible and to the extent needed in order to be held
legal and valid. If it is not possible to reform the illegal or
invalid provisions then the illegality or invalidity shall not
affect the remaining parts of this Plan, and this Plan shall be
construed and enforced as if the illegal or invalid provision had
not been included.
(m)
Payment
of Non-Employee Director Cash Fees with Equity
Awards
. If the Board
affirmatively decides to authorize such a process, each
Non-Employee Director may elect to receive a Restricted Stock Grant
(or Stock Units) issued under the Plan in lieu of payment of all or
a portion of his or her annual cash retainer and/or any other cash
fees including without limitation meeting fees, committee service
fees and participation fees. Any such elections made by a
Non-Employee Director shall be effected no later than the time
permitted by applicable law and in accordance with the
Company’s insider trading policies and/or other policies. The
aggregate grant date fair market value of any Restricted Stock
Grants or Stock Units issued pursuant to this Section 4(m) is
intended to be equivalent to the value of the foregone cash fees.
Any cash fees not elected to be received as a Restricted Stock
Grant or Stock Units shall be payable in cash in accordance with
the Company’s standard payment procedures. The Board in its
discretion shall determine the terms, conditions and procedures for
implementing this Section 4(m) and may also modify or terminate its
operation at any time.
(n)
Successor
Provision
. Any reference to a
statute, rule or regulation, or to a section of a statute, rule or
regulation, is a reference to that statute, rule, regulation, or
section as amended from time to time, both before and after the
Effective Date and including any successor
provisions.
(o)
Governing
Law
. This Plan and (unless
otherwise provided in the Award Agreement) all Awards shall be
construed in accordance with and governed by the laws of the State
of Nevada, but without regard to its conflict of law provisions.
The Committee may provide that any dispute as to any Award shall be
presented and determined in such forum as the Committee may
specify, including through binding arbitration. Unless otherwise
provided in the Award Agreement, recipients of an Award under the
Plan are deemed to submit to the exclusive jurisdiction and venue
of the federal or state courts of California to resolve any and all
issues that may arise out of or relate to the Plan or any related
Award Agreement.
(p)
Assignment
or Transfer of Awards
. Except
as otherwise provided under the applicable Award Agreement and then
only to the extent permitted by applicable law, no Award shall be
transferable by the Participant other than by will or by the laws
of descent and distribution. No Award or interest therein may be
transferred, assigned, pledged or hypothecated by the Participant
during his or her lifetime, whether by operation of law or
otherwise, nor may an Award be anticipated, assigned, attached,
garnished, optioned, transferred or made subject to any
creditor’s process, whether voluntarily, involuntarily or by
operation of law, nor may an Award be made subject to execution,
attachment or similar process. Any act in violation of this Section
4(p) shall be null and void.
SECTION 5. SHARES SUBJECT TO PLAN AND SHARE LIMITS.
(a)
Basic
Limitations
. The Common Stock
issuable under the Plan shall be authorized but unissued Shares or
treasury Shares or reacquired shares, bought on the market or
otherwise. The maximum number of Shares that are issued under this
Plan cannot exceed the Share Limit as may be adjusted under Section
13. For purposes of the Plan and subject to adjustment as provided
in Section 13, the Share Limit is 20,000,000
Shares.
(i)
The number of shares of Common Stock authorized for issuance and
available for future grants under the Plan will be increased each
January 1 after the effective date of the Plan by a number of
shares of Common Stock equal to the lesser of: (a) 4% of the number
of shares of Common Stock issued and outstanding on a fully-diluted
basis as of the close of business on the immediately preceding
December 31, or (b) a number of shares of Common Stock set by our
Board.
(b)
Share
Accounting
. This Section 5(b)
describes the Share accounting process under the Plan for Awards
which are not entirely settled with the maximum number of Shares
originally subject to the Award and describes how many of such
Shares do not count toward the Share Limit and therefore become
available again for future issuance under the Plan. If Awards are
forfeited or are terminated for any reason (including the
Company’s repurchase of unvested Shares from either an Option
that was early exercised or from a Restricted Stock Grant), then
the forfeited/terminated/repurchased Shares underlying such Awards
shall not be counted toward the Share Limit. If exercised SARs or
Stock Units are settled in Shares, then only the number of Shares
actually issued in settlement of such SARs or Stock Units shall be
counted toward the Share Limit. If a Participant pays the Exercise
Price by Net Exercise or by surrendering previously owned Shares
(or by stock attestation) and/or, as permitted or required by the
Committee, pays any withholding tax obligation with respect to an
Award by Net Exercise or by electing to have Shares withheld or
surrendering previously owned Shares (or by stock attestation), the
surrendered Shares and the Shares withheld to pay taxes shall not
be counted toward theShare Limit. Any Substitute Awards including
without limitation any Shares that are delivered and any Awards
that are granted by, or become obligations of, the Company, as a
result of the assumption by the Company of, or in substitution for,
outstanding awards previously granted by another entity (as
provided in Sections 6(e), 8(f), 9(e) or 10(e)) shall not be
counted toward the Share Limit or ISO Limit.
(c)
Substitute
Awards
. Substitute Awards shall
not count toward the Share Limit, nor shall Shares subject to a
Substitute Award again be available for Awards under the Plan as
provided in Section 5(b) above. Additionally, in the event that a
company acquired by the Company or any Parent or any Subsidiary or
any Affiliate or with which the Company or any Parent or any
Subsidiary or any Affiliate combines has shares available under a
pre-existing plan approved by stockholders and not adopted in
contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-existing plan
(as adjusted, to the extent appropriate, using the exchange ratio
or other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration payable
to the holders of common stock of the entities party to such
acquisition or combination) may be used for Awards under the Plan
and shall not count toward the Share Limit; provided that Awards
using such available shares shall not be made after the date awards
or grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be made
to individuals who were not Employees or Board members prior to
such acquisition or combination.
(d)
Dividend
Equivalents
. Any dividend
equivalents distributed under the Plan shall not be counted against
the Share Limit. Dividend equivalents will not be paid (or accrue)
on unexercised Options or unexercised SARs.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a)
Award
Agreement
. Each Award of an
Option under the Plan shall be evidenced by an Award Agreement
between the Optionee and the Company. Such Option shall be subject
to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions that are not inconsistent
with the Plan (including without limitation any Performance Goals).
The provisions of the various Award Agreements entered into under
the Plan need not be identical. The Award Agreement shall also
specify whether the Option is an ISO and if not specified then the
Option shall be an NSO.
(b)
Number
of Shares
. An Award Agreement
shall specify the number of Shares that are subject to the Option
and shall provide for adjustment of such number in accordance with
Section 13.
(c)
Exercise
Price
. An Option’s
Exercise Price shall be established by the Committee and set forth
in an Award Agreement. Except with respect to outstanding stock
options being assumed or Options being granted in exchange for
cancellation of options granted by another issuer as provided under
Section 6(e), the Exercise Price of an Option shall not be less
than 100% of the Fair Market Value (110% for 10-Percent
Shareholders in the case of ISOs) of a Share on the date of grant
of the Option.
(d)
Exercisability
and Term
. Subject to Section
3(b)(v), an Option may be exercised during the lifetime of the
Participant only by the Participant or by the guardian or legal
representative of the Participant. An Award Agreement shall specify
the date when all or any installment of the Option is to become
vested and/or exercisable. The Award Agreement shall also specify
the term of the Option; provided that the term of an Option shall
in no event exceed ten years from its date of grant (and may be for
a shorter period of time than ten years). No Option can be
exercised after the expiration date specified in the applicable
Award Agreement. An Award Agreement may provide for accelerated
vesting in the event of the Participant’s death, or
Disability or other events. Notwithstanding anything to the
contrary, an ISO that is granted to a 10-Percent Shareholder shall
have a maximum term of five years. Notwithstanding any other
provision of the Plan, no Option can be exercised after the
expiration date provided in the applicable Award Agreement. An
Award Agreement may permit an Optionee to exercise an Option before
it is vested (an “early exercise”), subject to the
Company’s right of repurchase at the original Exercise Price
of any Shares acquired under the unvested portion of the Option
which right of repurchase shall lapse at the same rate the Option
would have vested had there been no early exercise. An Award
Agreement may also provide that the Company may determine to issue
an equivalent value of cash in lieu of issuing some or all of the
Shares that are being purchased upon an Option’s exercise. In
no event shall the Company be required to issue fractional Shares
upon the exercise of an Option and the Committee may specify a
minimum number of Shares that must be purchased in any one Option
exercise.
(e)
Modifications
or Assumption of Options
.
Within the limitations of the Plan, the Committee may modify,
extend or assume outstanding Options or may accept the cancellation
of outstanding stock options (whether granted by the Company or by
another issuer) in return for the grant of new Options for the same
or a different number of Shares and at the same or a different
Exercise Price. For avoidance of doubt, the Committee may Re-Price
outstanding Options. No modification of an Option shall,
without the consent of the Optionee, impair his or her rights or
increase his or her obligations under such
Option.
SECTION 7. PAYMENT FOR OPTION SHARES.
(a)
General
Rule
. The entire Exercise Price
of Shares issued upon exercise of Options shall be payable in cash
(or check) at the time when such Shares are purchased by the
Optionee, except as follows and if so provided for in an applicable
Award Agreement:
(i) In
the case of an ISO granted under the Plan, payment shall be made
only pursuant to the express provisions of the applicable Award
Agreement. The Award Agreement may specify that payment may be made
in any form(s) described in this Section 7; and
(ii) In
the case of an NSO granted under the Plan, the Committee may, in
its discretion at any time, accept payment in any form(s) described
in this Section 7.
(b)
Surrender
of Stock
. To the extent that
the Committee makes this Section 7(b) applicable to an Option in an
Award Agreement, payment for all or a part of the Exercise Price
may be made with Shares which have already been owned by the
Optionee for such duration as shall be specified by the Committee.
Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the
Plan.
(c)
Cashless
Exercise
. To the extent that
the Committee makes this Section 7(c) applicable to an Option in an
Award Agreement, payment for all or a part of the Exercise Price
may be made through Cashless Exercise.
(d)
Net
Exercise
. To the extent that
the Committee makes this Section 7(d) applicable to an Option in an
Award Agreement, payment for all or a part of the Exercise Price
may be made through Net Exercise.
(e)
Other
Forms of Payment
. To the extent
that the Committee makes this Section 7(e) applicable to an Option
in an Award Agreement, payment may be made in any other form that
is consistent with applicable laws, regulations and rules and
approved by the Committee.
SECTION 8. TERMS AND CONDITIONS OF STOCK APPRECIATION
RIGHTS.
(a)
Award
Agreement
. Each Award of a SAR
under the Plan shall be evidenced by a Award Agreement between the
Participant and the Company. Such SAR shall be subject to all
applicable terms of the Plan and may be subject to any other terms
that are not inconsistent with the Plan (including without
limitation any Performance Goals). An Award Agreement may provide
for a maximum limit on the amount of any payout notwithstanding the
Fair Market Value on the date of exercise of the SAR. The
provisions of the various Award Agreements entered into under the
Plan need not be identical. SARs may be granted in consideration of
a reduction in the Participant’s other
compensation.
(b)
Number
of Shares
. An Award Agreement
shall specify the number of Shares to which the SAR pertains and is
subject to adjustment of such number in accordance with Section
13.
(c)
Exercise
Price
. An Award Agreement shall
specify the Exercise Price. Except with respect to outstanding
stock appreciation rights being assumed or SARs being granted in
exchange for cancellation of stock appreciation rights granted by
another issuer as provided under Section 8(f), the Exercise Price
of a SAR shall not be less than 100% of the Fair Market Value on
the date of grant of the SAR.
(d)
Exercisability
and Term
. Subject to Section
3(b)(v), a SAR may be exercised during the lifetime of the
Participant only by the Participant or by the guardian or legal
representative of the Participant. An Award Agreement shall specify
the date when all or any installment of the SAR is to become
exercisable. The Award Agreement shall also specify the term of the
SAR which shall not exceed ten years from the date of grant of the
SAR (and may be for a shorter period of time than ten years). No
SAR can be exercised after the expiration date specified in the
applicable Award Agreement. An Award Agreement may provide for
accelerated exercisability in the event of the Participant’s
death, or Disability or other events and may provide for expiration
prior to the end of its term in the event of the termination of the
Participant’s Service. A SAR granted under the Plan may
provide that it will be exercisable only in the event of a Change
in Control.
(e)
Exercise
of SARs
. If, on the date when a
SAR expires, the Exercise Price under such SAR is less than the
Fair Market Value on such date but any portion of such SAR has not
been exercised or surrendered, then such SAR may automatically be
deemed to be exercised as of such date with respect to such portion
to the extent so provided in the applicable Award Agreement. Upon
exercise of a SAR, the Participant (or any person having the right
to exercise the SAR after Participant’s death) shall receive
from the Company (i) Shares, (ii) cash or (iii) any combination of
Shares and cash, as the Committee shall determine. The amount of
cash and/or the Fair Market Value of Shares received upon exercise
of SARs shall, in the aggregate, be equal to the amount by which
the Fair Market Value (on the date of surrender) of the Shares
subject to the SARs exceeds the Exercise Price of the
Shares.
(f)
Modification
or Assumption of SARs
. Within
the limitations of the Plan, the Committee may modify, extend or
assume outstanding SARs or may accept the cancellation of
outstanding SARs (including stock appreciation rights granted by
another issuer) in return for the grant of new SARs for the same or
a different number of Shares and at the same or a different
Exercise Price. For avoidance of doubt, the Committee may Re-Price
outstanding SARs. No modification of a SAR shall, without the
consent of the Participant, impair his or her rights or increase
his or her obligations under such SAR.
SECTION 9. TERMS AND CONDITIONS FOR RESTRICTED STOCK
GRANTS.
(a)
Award
Agreement
. Each Restricted
Stock Grant awarded under the Plan shall be evidenced by an Award
Agreement between the Participant and the Company. Each Restricted
Stock Grant shall be subject to all applicable terms and conditions
of the Plan and may be subject to any other terms and conditions
that are not inconsistent with the Plan (including without
limitation any Performance Goals). The provisions of the Award
Agreements entered into under the Plan need not be
identical.
(b)
Number
of Shares and Payment
. An Award
Agreement shall specify the number of Shares to which the
Restricted Stock Grant pertains and is subject to adjustment of
such number in accordance with Section 13. Restricted Stock Grants
may be issued with or without cash consideration under the
Plan.
(c)
Vesting
Conditions
. Each Restricted
Stock Grant may or may not be subject to vesting. Vesting shall
occur, in full or in installments, upon satisfaction of the
conditions specified in the Award Agreement. An Award Agreement may
provide for accelerated vesting in the event of the
Participant’s death, or Disability or other
events.
(d)
Voting
and Dividend Rights
. The holder
of a Restricted Stock Grant (irrespective of whether the Shares
subject to the Restricted Stock Grant are vested or unvested)
awarded under the Plan shall have the same voting, dividend and
other rights as the Company’s other stockholders. However,
any dividends received on Shares that are unvested (whether such
dividends are in the form of cash or Shares) shall be subject to
the same vesting conditions and restrictions as the Restricted
Stock Grant with respect to which the dividends were paid. Such
additional Shares issued as dividends that are subject to the
Restricted Stock Grant shall not count toward the Share
Limit.
(e)
Modification
or Assumption of Restricted Stock Grants
. Within the limitations of the Plan, the
Committee may modify or assume outstanding Restricted Stock Grants
or may accept the cancellation of outstanding Restricted Stock
Grants (including stock granted by another issuer) in return for
the grant of new Restricted Stock Grants for the same or a
different number of Shares. No modification of a Restricted Stock
Grant shall, without the consent of the Participant, impair his or
her rights or increase his or her obligations under such Restricted
Stock Grant.
SECTION 10. TERMS AND CONDITIONS OF STOCK UNITS.
(a)
Award
Agreement
. Each grant of Stock
Units under the Plan shall be evidenced by an Award Agreement
between the Participant and the Company. Such Stock Units shall be
subject to all applicable terms of the Plan and may be subject to
any other terms that are not inconsistent with the Plan (including
without limitation any Performance Goals). The provisions of the
various Award Agreements entered into under the Plan need not be
identical. Stock Units may be granted in consideration of a
reduction in the Participant’s other
compensation.
(b)
Number
of Shares and Payment
. An Award
Agreement shall specify the number of Shares to which the Stock
Unit Award pertains and is subject to adjustment of such number in
accordance with Section 13. To the extent that an Award is granted
in the form of Stock Units, no cash consideration shall be required
of the Award recipients.
(c)
Vesting
Conditions
. Each Award of Stock
Units may or may not be subject to vesting. Vesting shall occur, in
full or in installments, upon satisfaction of the conditions
specified in the Award Agreement. An Award Agreement may provide
for accelerated vesting in the event of the Participant’s
death, or Disability or other events.
(d)
Voting
and Dividend Rights
. The
holders of Stock Units shall have no voting rights. Prior to
settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to
dividend equivalents. Such right entitles the holder to be credited
with an amount equal to all cash or Common Stock dividends paid on
one Share while the Stock Unit is outstanding. Dividend equivalents
may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form
of Shares, or in a combination of both. Prior to vesting of the
Stock Units, any dividend equivalents accrued on such unvested
Stock Units shall be subject to the same vesting conditions and
restrictions as the Stock Units to which they
attach.
(e)
Modification
or Assumption of Stock Units
.
Within the limitations of the Plan, the Committee may modify or
assume outstanding Stock Units or may accept the cancellation of
outstanding Stock Units (including stock units granted by another
issuer) in return for the grant of new Stock Units for the same or
a different number of Shares. No modification of a Stock Unit
shall, without the consent of the Participant, impair his or her
rights or increase his or her obligations under such Stock
Unit.
(f)
Form
and Time of Settlement of Stock Units
. Settlement of vested Stock Units may be made in
the form of (a) cash, (b) Shares or (c) any combination of both, as
determined by the Committee. The actual number of Stock Units
eligible for settlement may be larger or smaller than the number
included in the original Award. Methods of converting Stock Units
into cash may include (without limitation) a method based on the
average Fair Market Value of Shares over a series of trading days.
Except as otherwise provided in an Award Agreement or a timely
completed deferral election, vested Stock Units shall be settled
within thirty days after vesting. The Award Agreement may provide
that distribution may occur or commence when all vesting conditions
applicable to the Stock Units have been satisfied or have lapsed,
or it may be deferred, in accordance with applicable law, to a
later specified date. The amount of a deferred distribution may be
increased by an interest factor or by dividend equivalents. Until
an Award of Stock Units is settled, the number of such Stock Units
shall be subject to adjustment pursuant to Section
13.
(g)
Creditors’
Rights
. A holder of Stock Units
shall have no rights other than those of a general creditor of the
Company. Stock Units represent an unfunded and unsecured obligation
of the Company, subject to the terms and conditions of the
applicable Award Agreement.
SECTION 11. OTHER AWARDS
The Committee may in its discretion issue Other Equity Awards to
Selected Employees and/or Cash Awards to Covered Employees. The
terms and conditions of any such Awards shall be evidenced by an
Award Agreement between the Participant and the Company. Settlement
of Other Equity Awards may be in the form of Shares and/or cash as
determined by the Committee.
SECTION 12. CODE SECTION 162(M).
(a)
Applicability
.
The provisions of Sections 12(b) and 12(c) shall apply to an Award
if and only if all of the following items (i) through (iv) in this
Section 12(a) are true as of the date of grant of such
Award:
(i)
the Company is a “publicly held corporation” within the
meaning of Code Section 162(m);
(ii)
the deduction limitations of Code Section 162(m) are applicable to
Awards granted to Covered Employees under this Plan;
(iii)
this Plan has previously been approved by Company stockholders;
and
(iv)
the Award is intended to qualify as “performance-based
compensation” under Code Section 162(m).
(b)
Administration
.
Awards issued in accordance with this Section 12 shall be granted
by and administered by a Committee whose composition satisfies the
“outside director” requirements under Code Section
162(m) with respect to performance-based compensation. If
Performance Goals are included in Awards in order to enable such
Awards to qualify as performance-based compensation under Code
Section 162(m), then such Awards will be subject to the achievement
of such Performance Goals that will be established and administered
pursuant to the requirements of Code Section 162(m) and as
described in this Section 12(b). To the extent required by Code
Section 162(m), the Committee shall certify in writing the degree
to which the Performance Goals have been satisfied before any
Shares underlying an Award or any Award payments are released to a
Covered Employee with respect to a Performance Period. Without
limitation, the approved minutes of a Committee meeting shall
constitute such written certification.
Notwithstanding satisfaction of any completion of any Performance
Goal, to the extent specified at the time of grant of an Award, the
number of Shares, Options, SARs, Restricted Stock Units, or Other
Equity Awards or the value of a Cash Award or any other benefits
granted, issued, retainable and/or vested under an Award on account
of satisfaction of such Performance Goals may be reduced by the
Committee on the basis of such further considerations as the
Committee in its sole discretion shall determine. For avoidance of
doubt, Awards with Performance Goals or performance objectives (if
any) that are granted to Selected Employees who are not Covered
Employees or any Awards to Covered Employees which are not intended
to qualify as performance-based compensation under Code Section
162(m) need not comply with the requirements of Code Section 162(m)
or this Section 12.
(c)
Limits
.
Awards intended to qualify as performance-based compensation under
Code Section 162(m) will be limited to the following
amounts.
(i)
Limits on Options and
SARs
. No Selected Employee
shall receive Options and/or SARs to purchase Shares during any
Fiscal Year that in the aggregate cover in excess of 3,000,000
Shares.
(ii)
Limits on Restricted
Stock Grants and Stock Units
.
No Selected Employee shall receive Restricted Stock Grants and/or
Stock Units during any Fiscal Year that in the aggregate cover in
excess of 3,000,000 Shares.
(iii)
Limits on Other Equity
Awards
. No Selected Employee
shall receive Other Equity Awards during any Fiscal Year that in
the aggregate cover in excess of 3,000,000
Shares.
(iv)
Limit on Total Amount
of All Awards Other than Cash Awards
. No Selected Employee shall receive Awards
(excluding Cash Awards) during any Fiscal Year in excess of the
aggregate amount of 3,000,000 Shares, whether such Awards are in
the form of Options, SARs, Restricted Stock Grants, Stock Units
and/or Other Equity Awards.
(v)
Increased
Limits
. The numerical limits
expressed in the foregoing subparts (i) through (iv) shall in each
case be increased to 4,000,000 Shares with respect to Awards (other
than Cash Awards) granted to a Selected Employee during the Fiscal
Year of the Selected Employee’s commencement of employment
with the Company or during the first Fiscal Year that the Selected
Employee becomes a Covered Employee.
(vi)
Limit on Cash
Awards
. The maximum aggregate
value of Cash Awards that may be received by any one Covered
Employee with respect to any Fiscal Year is
$5,000,000.
SECTION 13. ADJUSTMENTS.
(a)
Adjustments
.
In the event of a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a
dividend payable in a form other than Shares in an amount that has
a material effect on the value of Shares, a combination or
consolidation of the outstanding Shares (by reclassification or
otherwise) into a lesser number of Shares, a stock split, a reverse
stock split, a reclassification or other distribution of theShares
without the receipt of consideration by the Company, of or on the
Common Stock, a recapitalization, a combination, a spin-off or a
similar occurrence, the Committee shall make equitable and
proportionate adjustments, taking into consideration the accounting
and tax consequences, to:
(1) the
Share Limit and ISO Limit and the various Share numbers referenced
in Section 5(a) and the Code Section 162(m) Share limits specified
in Section 12(c);
(2) the
number and kind of securities available for Awards (and which can
be issued as ISOs) under Section 5;
(3) the
number and kind of securities covered by each outstanding
Award;
(4) the
Exercise Price under each outstanding Option and SAR;
and
(5) the
number and kind of outstanding securities issued under the
Plan.
(b)
Participant
Rights
. Except as provided in
this Section 13, a Participant shall have no rights by reason of
any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any
stock dividend or any other increase or decrease in the number of
shares of stock of any class. If by reason of an adjustment
pursuant to this Section 13, a Participant’s Award covers
additional or different shares of stock or securities, then such
additional or different shares and the Award in respect thereof
shall be subject to all of the terms, conditions and restrictions
which were applicable to the Award and the Shares subject to the
Award prior to such adjustment.
(c)
Fractional
Shares
. Any adjustment of
Shares pursuant to this Section 13 shall be rounded down to the
nearest whole number of Shares. Under no circumstances shall the
Company be required to authorize or issue fractional shares. To the
extent permitted by applicable law, no consideration shall be
provided as a result of any fractional shares not being issued or
authorized.
SECTION 14. EFFECT OF A CHANGE IN CONTROL.
(a)
Merger
or Reorganization
. In the event
that there is a Change in Control and/or the Company is a party to
a merger or acquisition or reorganization or similar transaction,
outstanding Awards shall be subject to the merger agreement or
other applicable transaction agreement. Such agreement may provide,
without limitation, that subject to the consummation of the
applicable transaction, for the assumption (or substitution) of
outstanding Awards by the surviving corporation or its parent, for
their continuation by the Company (if the Company is a surviving
corporation), for accelerated vesting or for their cancellation
with or without consideration, in all cases without the consent of
the Participant and outstanding Awards do not have to all be
uniformly treated the same way.
(b)
Acceleration
of Vesting
. Except as otherwise
provided in the applicable Award Agreement (and in such case the
applicable Award Agreement shall govern), in the event that a
Change in Control occurs and there is no assumption, substitution
or continuation of Awards pursuant to Section 14(a), the Committee
in its discretion may provide that some or all Awards shall vest
and become exercisable as of immediately before such Change in
Control. For avoidance of doubt, “substitution”
includes, without limitation, an Award being replaced by a cash
award that provides an equivalent intrinsic value (wherein
intrinsic value equals the difference between the market value of a
share and any exercise price).
SECTION 15. LIMITATIONS ON RIGHTS.
(a)
Retention
Rights
. Neither the Plan nor
any Award granted under the Plan shall be deemed to give any
individual a right to remain in Service as an Employee, Consultant,
or Non-Employee Director or to receive any other Awards under the
Plan. The Company and its Parents and Subsidiaries and Affiliates
reserve the right to terminate the Service of any person at any
time, and for any reason, subject to applicable laws, the
Company’s Articles of Incorporation and Bylaws and a written
employment agreement (if any).
(b)
Regulatory
Requirements
. Any other
provision of the Plan notwithstanding, the obligation of the
Company to issue Shares or other securities under the Plan shall be
subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company
reserves the right to restrict, in whole or in part, the delivery
of Shares or other securities pursuant to any Award prior to the
satisfaction of all legal requirements relating to the issuance of
such Shares or other securities, to their registration,
qualification or listing or to an exemption from registration,
qualification or listing.
(c)
Dissolution
.
To the extent not previously exercised or settled, Options, SARs,
unvested Stock Units and unvested Restricted Stock Grants shall
terminate immediately prior to the dissolution or liquidation of
the Company and shall be forfeited to the Company (except for
repayment of any amounts a Participant had paid to the Company to
acquire unvested Shares underlying the forfeited
Awards).
SECTION 16. TAXES.
(a)
General
.
A Participant shall make arrangements satisfactory to the Company
for the satisfaction of any withholding tax obligations (including
without limitation federal, state, local and foreign taxes) that
arise in connection with his or her Award. The Company shall not be
required to issue any Shares or make any cash payment under the
Plan until such obligations are satisfied and the Company shall, to
the maximum extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the
Participant.
(b)
Share
Withholding
. The Committee in
its discretion may permit or require a Participant to satisfy all
or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any Shares that
otherwise would be issued to him or her or by surrendering all or a
portion of any Shares that he or she previously acquired (or by
stock attestation). Such Shares shall be valued based on the value
of the actual trade or, if there is none, the Fair Market Value as
of the previous day. Any payment of taxes byassigning Shares to the
Company may be subject to restrictions, including, but not limited
to, any restrictions required by rules of the SEC. The Committee
may also, in its discretion, permit or require a Participant to
satisfy withholding tax obligationsrelated to an Award through a
sale of Shares underlying the Award or, in the case of Options,
through Net Exercise or Cashless Exercise. The number of Shares
that are withheld from an Award pursuant to this section may also
be limited by the Committee, tothe extent necessary, to avoid
liability-classification of the Award (or other adverse accounting
treatment) under applicable financial accounting rules including
without limitation by requiring that no amount may be withheld
which is in excess of minimum statutory withholding rates. The
Committee, in its discretion, may permit or require other forms of
payment of applicable tax withholding.
SECTION 17. DURATION AND AMENDMENTS.
(a)
Term
of the Plan
. The Plan is
effective on the Effective Date and may be terminated by the Board
on any date pursuant to Section 17(b). This Plan will not in any
way affect outstanding awards that were issued under any other
Company equity compensation plans. No Awards may be granted under
the Plan after the earlier of the Board’s termination of the
Plan under Section 17(b) or the day before the tenth anniversary of
the Effective Date.
(b)
Right
to Amend or Terminate the Plan
.
The Board may amend or terminate the Plan at any time and for any
reason. An amendment of the Plan shall be subject to the approval
of the Company’s stockholders only to the extent required by
applicable laws, regulations or rules. In addition, no such
amendment or termination shall be made which would impair the
rights of any Participant, without such Participant’s written
consent, under any then-outstanding Award, provided that no such
Participant consent shall be required with respect to any amendment
or alteration if the Committee determines in its sole discretion
that such amendment or alteration either (i) is required or
advisable in order for the Company, the Plan or the Award to
satisfy or conform to any law or regulation or to meet the
requirements of any accounting standard, or (ii) is not reasonably
likely to significantly diminish the benefits provided under such
Award, or that any such diminishment has been adequately
compensated. In the event of any conflict in terms between the Plan
and any Award Agreement, the terms of the Plan shall prevail and
govern.
SECTION 18. EXECUTION.
To
record the adoption of this Plan by the Board, the Company has
caused its duly authorized Officer to execute this Plan on behalf
of the Company.
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INNOVUS PHARMACEUTICALS, INC.
/s/ Bassam Damaj
By:
Bassam Damaj
Title:
Chief Executive Officer
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APPENDIX A
Additional Terms of Awards to California Participants
Solely
to the extent necessary to comply with the California
Corporate Securities Law of 1968 as amended, the following
additional terms listed under items 1 through 6 below shall apply
to any Award that is granted to a California Participant
("California Award"):
1. With
respect to a California Award issued to any California Participant
who is not an officer, director, Outside Director or Consultant,
such California Award shall become exercisable, or any repurchase
right in favor of the Company shall lapse, at the rate of at least
20% per year over five years from the date of grant subject to
continuous Service status.
2. The
following rules shall apply to any California Award in the event of
termination of the California Participant’s
Service:
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(a)
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If such
termination was for reasons other than death or Total and Permanent
Disability or cause, the California Participant shall have at least
30 days after the date of such termination to exercise any of
his/her vested outstanding Options or SARs (but in no event later
than the expiration of the term of such Option or SAR established
by the Committee as of the grant date).
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(b)
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If such
termination was due to death or Total and Permanent Disability, the
California Participant shall have at least six months after the
date of such termination to exercise any of his/her vested
outstanding Options or SARs (but in no event later than the
expiration of the term of such Option or SAR established by the
Committee as of the grant date).
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(c)
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Post-termination,
the Company’s right to repurchase from the California
Participant any vested Shares that the California Participant has
acquired from a California Award shall include the following terms:
(A) the Company’s right to repurchase must be exercised
within the later of six months after (i) termination of the
California Participant’s Service or (ii) the date that such
Shares were purchased pursuant to an Option or SAR exercise, (B)
the repurchase price shall not be less than the Fair Market Value
of the Shares as of the date of termination, and
(C) consideration for the repurchase shall consist of cash or
cancellation of purchase money indebtedness, and (D) such
repurchase right shall lapse when no longer required under
California state securities laws.
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(d)
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Post-termination,
the Company’s right to repurchase from the California
Participant any unvested Shares that the California Participant has
acquired from a California Award shall include the following terms:
(A) the Company’s right to repurchase must be exercised
within the later of six months after: (i) termination of the
California Participant’s Service or (ii) the date that such
Shares were purchased pursuant to an Option or SAR exercise, (B)
the repurchase price shall not be less than the original purchase
price of the Shares, (C) consideration for the repurchase
shall consist of cash or cancellation of purchase money
indebtedness and (D) such repurchase right shall lapse at the rate
of at least 20% of the total Shares subject to the Award over the
five year period following the date of grant subject to the
California Participant's continuous Service
status.
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3. In
the event of a stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification or other
distribution of the Company’s securities without the receipt
of consideration by the Company, then there shall be a
proportionate adjustment of (i) the number of Shares purchasable
under each outstanding Option or SAR, (ii) the Exercise Price of
each outstanding Option and SAR and (iii) the number of outstanding
Shares issued under the Plan.
4. Shares
acquired under a California Award shall carry equal voting rights
as similar equity securities on all matters where such vote is
permitted by applicable law.
5. The
Company shall furnish summary financial information of the
Company’s financial condition and results of operations,
consistent with the requirements of applicable California
regulations, at least annually to each California Participant
during the period such California Participant has one or more
California Awards outstanding, and in the case of a California
Participant who acquired Shares from a California Award, during the
period such California Participant owns such Shares. The Company
shall not be required to provide such information to those
California Participants whose duties in connection with the Company
assure their access to equivalent information. The information
provided does not need to be audited financial
information.
6. Except
if the requisite super-majority approval of at least two-thirds of
outstanding Company securities entitled to vote as provided in
section 260.140.45(a) of Title 10 of the California Code of
Regulations is obtained, at no time shall the total number of
securities issuable under this Plan exceed 30% of the Company's
then outstanding securities (measured on an as if converted basis
with respect to securities convertible into Shares) as calculated
under section 260.140.45 of Title 10 of the California Code of
Regulations.
In addition to the above items in this Appendix A, with respect to
any California Participant who at one time was holding one or more
California Awards but no longer has any such outstanding California
Awards, such California Participant shall be required to promptly
provide the Company with written notice as soon as suchCalifornia
Participant no longer is holding any Shares that were issued under
a California Award. For avoidance of doubt, the obligation to
provide this notice to the Company shall apply even if the
California Participant is no longer providing Service and/or is no
longer holding outstanding California Awards (but is holding Shares
that were issued under a California Award). The requirements of
this paragraph shall no longer be applicable once the Company's
obligations under item 5 in this Appendix A are no longer
applicable.