Filed by the
Registrant ☒ Filed by a Party other than the
Registrant ☐
Other Matters
As of the date of this Proxy Statement, the board of directors does not intend to present any matters other than those described herein at the Special Meeting
and is unaware of any matters to be presented by other parties. If other matters are properly brought before the Special Meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the board of directors
or, in the absence of such a recommendation, in the discretion of the proxy holder.
30
APPENDIX A
K
AL
V
ISTA
P
HARMACEUTICALS
, I
NC
.
2017 E
QUITY
I
NCENTIVE
P
LAN
1.
PURPOSE
. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, and any Parents, Subsidiaries and Affiliates that exist now or in the future, by offering them an opportunity to participate in the Companys future performance through the grant of
Awards. Capitalized terms not defined elsewhere in the text are defined in Section 28.
2.
SHARES SUBJECT TO THE PLAN
.
2.1.
Number of Shares Available
. Subject to Sections 2.6 and 21 and any other applicable provisions hereof, the total number of
Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is One Million (1,000,000) Shares, plus (a) any reserved shares not issued or subject to outstanding grants
under the Companys 2015 Incentive Plan (the
Prior Plan
) on the Effective Date (as defined below) plus (b) shares that are subject to stock options or other awards granted under the Prior Plan that cease to be
subject to such stock options or other awards by forfeiture or otherwise after the Effective Date, (c) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective
Date, forfeited, (d) shares issued under the Prior Plan that are repurchased by the Company at the original issue price and (e) shares that are subject to stock options or other awards under the Prior Plan that are used to pay the exercise
price of an option or withheld to satisfy the tax withholding obligations related to any award.
2.2.
Lapsed, Returned
Awards
. Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance
upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are
repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program. To the extent an
Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Shares used to pay the exercise price of an Award or withheld to satisfy the tax
withholding obligations related to an Award will become available for future grant or sale under the Plan. For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2
shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof.
2.3.
Minimum Share Reserve
. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be
required to satisfy the requirements of all outstanding Awards granted under this Plan.
2.4.
Automatic Share Reserve
Increase
. The number of Shares available for grant and issuance under the Plan shall be increased on January 1 of each of the first ten (10) calendar years during the term of the Plan, by the lesser of (a) four percent
(4%) of the number of shares of common stock issued and outstanding on each December 31 immediately prior to the date of increase and (b) such number of Shares determined by the Board.
2.5.
Limitations
. No more than three million (3,000,000) Shares shall be issued pursuant to the exercise of ISOs.
2.6.
Adjustment of Shares
. If the number of outstanding Shares is changed by a stock dividend, extraordinary dividends or
distributions (whether in cash, shares or other property, other than a regular cash
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dividend) recapitalization, stock split, reverse stock split, subdivision, combination, consolidation, reclassification, spin-off or similar change in the capital structure of the Company,
without consideration, then (a) the number and class of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, including shares reserved under sub-clauses (a)-(e) of Section 2.1, (b) the
Exercise Prices of and number and class of Shares subject to outstanding Options and SARs, (c) the number and class of Shares subject to other outstanding Awards, (d) the maximum number and class of Shares that may be issued as ISOs set
forth in Section 2.5, (e) the maximum number and class of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3 and (f) the number and class of Shares that may be granted
as Awards to Non-Employee Directors as set forth in Section 12, shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that
fractions of a Share will not be issued.
If, by reason of an adjustment pursuant to this Section 2.6, a Participants Award Agreement or other
agreement related to any Award or the Shares subject to such Award covers additional or different shares of stock or securities, then such additional or different shares, and the Award Agreement or such other agreement in respect thereof, shall be
subject to all of the terms, conditions and restrictions which were applicable to the Award or the Shares subject to such Award prior to such adjustment.
3.
ELIGIBILITY
. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee
Directors;
provided
such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. No Participant will be eligible to receive an Award
or Awards for more than Two Million (2,000,000) Shares in any calendar year under this Plan except that new Employees of the Company or of a Parent, Subsidiary or Affiliate are eligible to be granted up to a maximum of an Award or Awards for
Four Million (4,000,000) Shares in the calendar year in which they commence their employment.
4.
ADMINISTRATION
.
4.1.
Committee Composition; Authority
. This Plan will be administered by the Committee or by the Board acting as the Committee.
Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an
Award to Non-Employee Directors. The Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and
any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to this
Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms and conditions of any Award granted hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria) or settled, any vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any
other tax liability legally due and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;
(e) determine the number of Shares or other consideration subject to Awards;
(f) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value
in connection with circumstances that impact the Fair Market Value, if necessary;
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(g) determine whether Awards will be granted singly, in combination with, in tandem with, in
replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent, Subsidiary or Affiliate;
(h) grant waivers of Plan or Award conditions;
(i) determine the vesting, exercisability and payment of Awards;
(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;
(k) determine whether an Award has been earned;
(l) determine the terms and conditions of any, and to institute any Exchange Program;
(m) reduce or waive any criteria with respect to Performance Factors;
(n) adopt rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the
Plan to accommodate requirements of local law and procedures outside of the United States;
(o) to exercise negative discretion on
Performance Awards, reducing or eliminating the amount to be paid to Participants;
(p) make all other determinations necessary or
advisable for the administration of this Plan; and
(q) delegate any of the foregoing to (i) one or more executive officers pursuant
to a specific delegation as permitted by applicable law, including Section 157(c) of the Delaware General Corporation Law, and (ii) a committee as permitted by applicable law, including Section 141 of the Delaware General Corporation
Law.
4.2.
Committee Interpretation and Discretion
. Any determination made by the Committee with respect to any Award
shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having
an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee
shall be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such
resolution shall be final and binding on the Company and the Participant.
4.3.
Section 162(m) of the Code and
Section 16 of the Exchange Act
. When necessary or desirable for an Award to qualify as performance-based compensation under Section 162(m) of the Code, the Committee administering the Plan in accordance with the
requirements of Rule16b-3 and Section 162(m) of the Code shall consist of at least two individuals, each of whom qualifies as (a) a Non-Employee Director under Rule 16b-3, and (b) an outside director pursuant to Code
Section 162(m) and the regulations issued thereunder. At least two (or a majority if more than two then serve on the Committee) such outside directors shall approve the grant of such Award and timely determine (as applicable) the
Performance Period and any Performance Factors upon which vesting, payment or settlement of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior to settlement, vesting or payment of any such Award at
least two (or a majority if more than two then serve on the Committee) such outside directors then serving on the Committee shall determine and certify in writing the extent to which such Performance Factors have been timely achieved and
the extent to which the Shares subject to such Award have thereby been earned. Awards granted to Participants who are
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subject to Section 16 of the Exchange Act must be approved by two or more non-employee directors (as defined in the regulations promulgated under Section 16 of the Exchange
Act). With respect to Participants whose compensation is subject to Section 162(m) of the Code and for which the deduction thereunder is being sought, and provided that such adjustments are consistent with the regulations and guidance
promulgated under Section 162(m) of the Code, the Committee may adjust the Performance Factors to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of
extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (b) an
event either not directly related to the operations of the Company or not within the reasonable control of the Companys management, or (c) a change in accounting standards required by generally accepted accounting principles.
4.4.
Documentation
. The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted
by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.
4.5.
Foreign Award Recipients
. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws and
practices in other countries in which the Company, its Subsidiaries and Affiliates operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, shall have the power and authority to: (a) determine
which Subsidiaries and Affiliates shall be covered by the Plan; (b) determine which individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to individuals
outside the United States or foreign nationals to comply with applicable foreign laws, policies, customs and practices; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines
such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in
Section 2.1 hereof; and (e) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals.
Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United
States governing statute or law.
5.
OPTIONS
. An Option is the right but not the obligation to purchase a Share, subject to certain
conditions, if applicable. The Committee may grant Options to eligible Employees, Consultants and Directors and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (
ISOs
) or
Nonqualified Stock Options (
NSOs
), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the
Option, subject to the following terms of this section.
5.1.
Option Grant
. Each Option granted under this Plan will
identify the Option as an ISO or an NSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participants individual Award Agreement. If the
Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Option; and (b) select from among the Performance Factors
to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.
5.2.
Date of Grant
. The date of grant of an Option will be the date on which the Committee makes the determination to grant such
Option, or a specified future date.
5.3.
Exercise Period
. Options may be exercisable within the times or upon the
conditions as set forth in the Award Agreement governing such Option;
provided
,
however
, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and
provided further
that no ISO granted to a
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person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any
Parent or Subsidiary (
Ten Percent Stockholder
) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time
or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.
5.4.
Exercise Price
. The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (a) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair
Market Value of the Shares on the date of grant and (b) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant.
Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company.
5.5.
Method of Exercise
. Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (a) notice of
exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option (and/or via electronic execution through the authorized third party administrator), and (b) full payment for the Shares with
respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued
upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any manner will decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
5.6.
Termination of Service
. If the Participants Service terminates for any reason except for Cause or the
Participants death or Disability, then the Participant may exercise such Participants Options only to the extent that such Options would have been exercisable by the Participant on the date Participants Service terminates no later
than three (3) months after the date Participants Service terminates (or such shorter time period not less than thirty (30) days or longer time period as may be determined by the Committee, with any exercise beyond three
(3) months after the date Participants Service terminates deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options.
(a)
Death
. If the Participants Service terminates because of the Participants death (or the Participant dies within three
(3) months after Participants Service terminates other than for Cause or because of the Participants Disability), then the Participants Options may be exercised only to the extent that such Options would have been exercisable
by the Participant on the date Participants Service terminates and must be exercised by the Participants legal representative, or authorized assignee, no later than twelve (12) months after the date Participants Service
terminates (or such shorter time period not less than six (6) months or longer time period as may be determined by the Committee), but in any event no later than the expiration date of the Options.
(b)
Disability
. If the Participants Service terminates because of the Participants Disability, then the Participants
Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participants Service terminates and must be exercised by the Participant (or the Participants legal representative
or authorized assignee) no later than twelve (12) months after the date Participants Service terminates (or such shorter time period not less than six (6) months or longer time period as may be determined by the Committee, with any
exercise beyond (a) three (3) months after the date Participants Service terminates when the termination of Service is for a Disability that is not a permanent and total
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disability as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the date Participants Service terminates when the termination of Service is for a
Disability that is a permanent and total disability as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NSO), but in any event no later than the expiration date of the Options.
(c)
Cause
. If the Participants Service terminates for Cause, then Participants Options shall expire on such
Participants date of termination of Service, or at such later time and on such conditions as are determined by the Committee, but in any event no later than the expiration date of the Options. Unless otherwise provided in an employment
agreement or an Award Agreement, Cause shall have the meaning set forth in the Plan.
5.7.
Limitations on Exercise
. The
Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then
exercisable.
5.8.
Limitations on ISOs
. With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market
Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such
Options will be treated as NSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such
Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit
will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.
5.9.
Modification, Extension or Renewal
. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a
Participant, impair any of such Participants rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject
to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options of such Participants;
provided
,
however
, that the Exercise Price may not be reduced below
the Fair Market Value on the date the action is taken to reduce the Exercise Price.
5.10.
No Disqualification
.
Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under
Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.
6.
RESTRICTED STOCK AWARDS
. A Restricted Stock Award is an offer by the Company to sell to an eligible Employee, Consultant, or Director Shares that are subject to restrictions (
Restricted Stock
). The Committee will
determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to
the Plan.
6.1.
Restricted Stock Purchase Agreement
. All purchases under a Restricted Stock Award will be
evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within
thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee
determines otherwise.
6.2.
Purchase Price
. The Purchase Price for a Restricted Stock Award will be determined by the
Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted. Payment of the
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Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement and in accordance with any procedures established by the Company.
6.3.
Terms of Restricted Stock Awards
. Restricted Stock Awards will be subject to such restrictions as the Committee may impose
or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the
Participants Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.
6.4.
Termination of Service
. Except as may be set forth in the Participants Award Agreement, vesting ceases on such date
Participants Service terminates (unless determined otherwise by the Committee).
7.
STOCK BONUS AWARDS
. A Stock Bonus Award is an
award to an eligible Employee, Consultant, or Director of Shares for Services to be rendered or for past Services already rendered to the Company or any Parent, Subsidiary or Affiliate. All Stock Bonus Awards shall be made pursuant to an Award
Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award.
7.1.
Terms of
Stock Bonus Awards
. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of
service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participants Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the
Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the
number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance
goals and other criteria.
7.2.
Form of Payment to Participant
. Payment, to the extent applicable, may be made in the form
of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.
7.3.
Termination of Service
. Except as may be set forth in the Participants Award Agreement, vesting ceases on such date
Participants Service terminates (unless determined otherwise by the Committee).
8.
STOCK APPRECIATION RIGHTS
. A Stock Appreciation
Right (
SAR
) is an award to an eligible Employee, Consultant, or Director that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair
Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award
Agreement). All SARs shall be made pursuant to an Award Agreement.
8.1.
Terms of SARs
. The Committee will determine the
terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of
the SAR; and (d) the effect of the Participants termination of Service on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be
awarded upon
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satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participants individual Award Agreement. If the SAR is being earned upon the
satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the
performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.
8.2.
Exercise Period and Expiration Date
. A SAR will be exercisable within the times or upon the occurrence of events determined
by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted.
The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance
Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participants Award Agreement, vesting ceases on the date Participants Service terminates
(unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.
8.3.
Form of Settlement
. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount
determined by multiplying (a) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (b) the number of Shares with respect to which the SAR is exercised. At the discretion of the
Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis as the Committee determines,
provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code, to the extent applicable.
8.4.
Termination of Service
. Except as may be set forth in the Participants Award Agreement, vesting ceases on such date
Participants Service terminates (unless determined otherwise by the Committee).
9.
RESTRICTED STOCK UNITS
. A Restricted Stock Unit
(
RSU
) is an award to an eligible Employee, Consultant, or Director covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). All RSUs shall be made
pursuant to an Award Agreement.
9.1.
Terms of RSUs
. The Committee will determine the terms of an RSU including, without
limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; and (d) the effect of the Participants termination
of Service on each RSU; provided that no RSU shall have a term longer than ten (10) years. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in
the Participants Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from
among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs
that are subject to different Performance Periods and different performance goals and other criteria.
9.2.
Form and Timing of
Settlement
. Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a
combination of both. The Committee may also permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code.
9.3.
Termination of Service
. Except as may be set forth in the Participants Award Agreement, vesting ceases on such
date Participants Service terminates (unless determined otherwise by the Committee).
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10.
PERFORMANCE AWARDS
. A Performance Award is an award to an eligible Employee, Consultant, or
Director of a cash bonus or an award of Performance Shares or Performance Units denominated in Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). Grants of Performance Awards shall be made
pursuant to an Award Agreement.
10.1.
Types of Performance Awards
. Performance Awards shall include Performance Shares,
Performance Units, and cash-based Awards as set forth in Sections 10.1(a), 10.1(b), and 10.1(c) below.
(a)
Performance Shares
. The
Committee may grant Awards of Performance Shares, designate the Participants to whom Performance Shares are to be awarded and determine the number of Performance Shares and the terms and conditions of each such Award. Performance Shares shall
consist of a unit valued by reference to a designated number of Shares, the value of which may be paid to the Participant by delivery of Shares or, if set forth in the instrument evidencing the Award, of such property as the Committee shall
determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. The amount to
be paid under an Award of Performance Shares may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.
(b)
Performance Units
. The Committee may grant Awards of Performance Units, designate the Participants to whom Performance Units are to
be awarded and determine the number of Performance Units and the terms and conditions of each such Award. Performance Units shall consist of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to
the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and
other terms and conditions specified by the Committee.
(c)
Cash Performance Awards
. The Committee may also grant cash-based
Performance Awards to Participants under the terms of this Plan. Such awards will be based on the attainment of performance goals using the Performance Factors within this Plan that are established by the Committee for the relevant performance
period.
10.2.
Terms of Performance Awards
. The Committee will determine, and each Award Agreement shall set forth, the
terms of each Performance Award including, without limitation: (a) the amount of any cash bonus, (b) the number of Shares deemed subject to an award of Performance Shares, (c) the Performance Factors and Performance Period that shall
determine the time and extent to which each award of Performance Shares shall be settled, (d) the consideration to be distributed on settlement and (e) the effect of the Participants termination of Service on each Performance Award.
In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period, (y) select from among the Performance Factors to be used and
(z) determine the number of Shares deemed subject to the award of Performance Shares. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. Prior to settlement the Committee shall
determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different
performance goals and other criteria. No Participant will be eligible to receive more than Five Million Dollars ($5,000,000) in Performance Awards in any calendar year under this Plan.
10.3.
Termination of Service
. Except as may be set forth in the Participants Award Agreement, vesting ceases on the date
Participants Service terminates (unless determined otherwise by the Committee).
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11.
PAYMENT FOR SHARE PURCHASES
. Payment from a Participant for Shares purchased pursuant to this
Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of Shares held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Award will be exercised or settled;
(c) by waiver of compensation due or accrued to the Participant
for services rendered or to be rendered to the Company or a Parent, Subsidiary or Affiliate;
(d) by consideration received by the Company
pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan;
(e) by
any combination of the foregoing; or
(f) by any other method of payment as is permitted by applicable law.
12.
GRANTS TO NON-EMPLOYEE DIRECTORS
. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs.
Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board. The aggregate number of Shares subject to Awards granted to a
Non-Employee Director pursuant to this Section 12 in any calendar year shall not exceed such number of Shares with an aggregate grant date value of Seven Hundred Fifty Thousand Dollars ($750,000.00).
12.1.
Eligibility
. Awards pursuant to this Section 12 shall be granted only to Non-Employee Directors. A Non-Employee
Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12.
12.2.
Vesting, Exercisability and Settlement
. Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee
Directors shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.
12.3.
Election to receive Awards in Lieu of Cash
. A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, as determined by the
Committee. Such Awards shall be issued under the Plan. An election under this Section 12.3 shall be filed with the Company on the form prescribed by the Company.
13.
WITHHOLDING TAXES
.
13.1.
Withholding Generally
. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan or a tax event
occurs, the Company may require the Participant to remit to the Company, or to the Parent, Subsidiary or Affiliate, as applicable, employing the Participant, an amount sufficient to satisfy applicable U.S. federal, state, local and
international withholding tax requirements or any other tax or social insurance liability (the
Tax-Related Items
) legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any
Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable Tax-Related Items legally due from the Participant. Unless otherwise determined
by the Committee, the Fair Market Value of the Shares will be determined as of the date that the taxes are required to be withheld and such Shares will be valued based on the value of the actual trade or, if there is none, the Fair Market Value of
the Shares as of the previous trading day.
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13.2.
Stock Withholding
. The Committee, or its delegate(s), as permitted by
applicable law, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations of local law, may require or permit a Participant to satisfy such Tax Related Items legally due from the Participant, in
whole or in part by (without limitation) (a) paying cash, (b) having the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the Tax-Related Items to be withheld, (c) delivering to the Company
already-owned shares of common stock having a Fair Market Value equal to the Tax-Related Items to be withheld or (d) withholding from the proceeds of the sale of otherwise deliverable Shares acquired pursuant to an Award either through a
voluntary sale or through a mandatory sale arranged by the Company. The Company may withhold or account for these Tax-Related Items by considering applicable statutory withholding rates, including up to the maximum statutory tax rate for the
applicable tax jurisdiction, to the extent consistent with applicable laws.
14.
TRANSFERABILITY
.
14.1.
Transfer Generally
. Unless determined otherwise by the Committee or pursuant to Section 14.2, an Award may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution. If the Committee makes an Award transferable, including, without limitation, by instrument to an inter
vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or by domestic relations order to a Permitted Transferee, such Award will contain such additional terms and
conditions as the Committee deems appropriate. All Awards shall be exercisable: (a) during the Participants lifetime only by (i) the Participant, or (ii) the Participants guardian or legal representative; (b) after
the Participants death, by the legal representative of the Participants heirs or legatees; and (c) in the case of all awards except ISOs, by a Permitted Transferee.
14.2.
Award Transfer Program
. Notwithstanding any contrary provision of the Plan, the Committee shall have all discretion and
authority to determine and implement the terms and conditions of any Award Transfer Program instituted pursuant to this Section 14.2 and shall have the authority to amend the terms of any Award participating, or otherwise eligible to
participate in, the Award Transfer Program, including (but not limited to) the authority to (a) amend (including to extend) the expiration date, post-termination exercise period and/or forfeiture conditions of any such Award, (b) amend or
remove any provisions of the Award relating to the Award holders continued Service to the Company or its Parent, any Subsidiary or any Affiliate, (c) amend the permissible payment methods with respect to the exercise or purchase of any
such Award, (d) amend the adjustments to be implemented in the event of changes in the capitalization and other similar events with respect to such Award, and (e) make such other changes to the terms of such Award as the Committee deems
necessary or appropriate in its sole discretion.
15.
PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES
.
15.1.
Voting and Dividends
. No Participant will have any of the rights of a stockholder with respect to any Shares until the
Shares are issued to the Participant, except for any Dividend Equivalent Rights permitted by an applicable Award Agreement. Any Dividend Equivalent Rights shall be subject to the same vesting or performance conditions as the underlying Award. After
Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect
to such Shares;
provided
, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any
other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock;
provided
,
further
, that the Participant will have no right to retain such stock dividends or stock
distributions with respect to Shares that are repurchased at the Participants Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2. The Committee, in its discretion, may provide in the Award Agreement evidencing
any Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Shares underlying an Award during the period beginning on the date the Award is granted and ending, with respect to each
Share subject to the Award, on the earlier of the date on which the Award is
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exercised or settled or the date on which it is forfeited. Such Dividend Equivalent Rights, if any, shall be credited to the Participant in the form of additional whole Shares as of the date of
payment of such cash dividends on Shares Notwithstanding the foregoing, dividends and Dividend Equivalent Rights may accrue with respect to unvested Awards, but will not be paid or issued until such Award is fully vested and the Shares are issued to
Participant and such Shares are no longer subject to any vesting requirements or repurchase rights on behalf of the Company.
15.2.
Restrictions on Shares
. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a
Right of Repurchase
) a portion of any or all Unvested Shares held by a
Participant following such Participants termination of Service at any time within ninety (90) days (or such longer or shorter time determined by the Committee) after the later of the date Participants Service terminates and the date
the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participants Purchase Price or Exercise Price, as the case may be.
16.
CERTIFICATES
. All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any
stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject.
17.
ESCROW; PLEDGE OF SHARES
. To enforce any restrictions on a Participants Shares, the Committee may require the Participant to deposit
all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such
restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration
for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participants obligation to the Company under the promissory
note;
provided
,
however
, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the
promissory note notwithstanding any pledge of the Participants Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the
Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.
18.
REPRICING; EXCHANGE AND BUYOUT OF AWARDS
. Without prior stockholder approval the Committee may (a) reprice Options or SARs (and where
such repricing is a reduction in the Exercise Price of outstanding Options or SARs, the consent of the affected Participants is not required provided written notice is provided to them, notwithstanding any adverse tax consequences to them arising
from the repricing), and (b) with the consent of the respective Participants (unless not required pursuant to Section 5.9 of the Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding
Awards.
19.
SECURITIES LAW AND OTHER REGULATORY COMPLIANCE
. An Award will not be effective unless such Award is in compliance with all
applicable U.S. and foreign federal and state securities and exchange control laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or
quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares
under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or
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federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or
to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, exchange control laws, stock exchange or automated quotation system, and the Company will have no liability for any inability
or failure to do so.
20.
NO OBLIGATION TO EMPLOY
. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to
confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent, Subsidiary or Affiliate or limit in any way the right of the Company or any Parent, Subsidiary or Affiliate to
terminate Participants employment or other relationship at any time.
21.
CORPORATE TRANSACTIONS
.
21.1.
Assumption or Replacement of Awards by Successor
. In the event of a Corporate Transaction any or
all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement shall be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide
substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by
the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute
Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other provision in this Plan to the contrary, such Awards will expire on such transaction at such time and on such conditions as the Board will determine,
provided
,
however
, that the Board (or, the Committee, if so designated by the Board) may, in its sole discretion, accelerate the vesting of such Awards in connection with a Corporate Transaction. In addition, in the event such
successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will
be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. Awards need not be treated similarly in a Corporate Transaction.
21.2.
Assumption of Awards by the Company
. The Company, from time to time, also may substitute or assume outstanding awards
granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other companys award; or (b) assuming such award as if
it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged
(
except
that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code
and/or Section 409A of the Code, as applicable). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute
Awards shall not reduce the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in a calendar year.
21.3.
Non-Employee Directors Awards
. Notwithstanding any provision to the contrary herein, in the event of a Corporate
Transaction, the vesting of all Awards granted to Non-Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee
determines.
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22.
ADOPTION AND STOCKHOLDER APPROVAL
. This Plan shall be submitted for the approval of the
Companys stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.
23.
TERM OF PLAN/GOVERNING LAW
. Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will
terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of law rules).
24.
AMENDMENT OR TERMINATION OF PLAN
. The Board may at any time terminate or amend this Plan in any respect, including, without limitation,
amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan;
provided
,
however
, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that
requires such stockholder approval;
provided further
, that a Participants Award shall be governed by the version of this Plan then in effect at the time such Award was granted. Except as otherwise provided for in the Plan with respect
to Section 18, no termination or amendment of the Plan or any outstanding Award may adversely affect any then outstanding Award without the consent of the Participant, unless such termination or amendment is necessary to comply with applicable
law, regulation or rule.
25.
NONEXCLUSIVITY OF THE PLAN
. Neither the adoption of this Plan by the Board, the submission of this Plan to the
stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
26.
INSIDER TRADING POLICY
. Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time
covering transactions in the Companys securities by Employees, officers and/or directors of the Company.
27.
ALL AWARDS SUBJECT TO COMPANY
CLAWBACK OR RECOUPMENT POLICY
. All Awards, subject to applicable law, shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of
Participants employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies available under such policy and
applicable law, may require the cancellation of outstanding Awards and the recoupment of any gains realized with respect to Awards.
28.
DEFINITIONS
. As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:
28.1.
Affiliate
means (i) any entity that, directly or indirectly, is controlled by, controls or is
under common control with, the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee, whether now or hereafter existing.
28.2.
Award
means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock
Appreciation Right, Restricted Stock Unit or award of Performance Shares.
28.3.
Award Agreement
means,
with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, and country-specific appendix thereto for grants to non-U.S. Participants, which shall be in
substantially a form (which need not be the same for each Participant) that the Committee (or in the case of Award agreements that are not used for Insiders, the Committees delegate(s)) has from time to time approved, and will comply with and
be subject to the terms and conditions of this Plan.
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28.4.
Award Transfer Program
means any program instituted by the
Committee which would permit Participants the opportunity to transfer any outstanding Awards to a financial institution or other person or entity approved by the Committee.
28.5.
Board
means the Board of Directors of the Company.
28.6.
Cause
means (a) Participants willful failure substantially to perform his or her duties and
responsibilities to the Company or deliberate violation of a Company policy; (b) Participants commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in
material injury to the Company; (c) unauthorized use or disclosure by Participant of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his
or her relationship with the Company; or (d) Participants willful breach of any of his or her obligations under any written agreement or covenant with the Company. The determination as to whether a Participant is being terminated for
Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Companys ability to terminate a Participants employment or consulting relationship
at any time as provided in Section 20 above, and the term Company will be interpreted to include any Subsidiary or Parent, as appropriate. The foregoing definition of Cause may, in part or in whole, be modified or
replaced in each individual employment agreement, Award Agreement or other applicable agreement with any Participant, provided that such document supersedes the definition provided in this Section 28.6.
28.7.
Code
means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder.
28.8.
Committee
means the Compensation Committee of the Board or those persons to whom
administration of the Plan, or part of the Plan, has been delegated as permitted by law.
28.9.
Common
Stock
means common stock of the Company.
28.10.
Company
means KalVista Pharmaceuticals,
Inc., or any successor corporation.
28.11.
Consultant
means any natural person, including an advisor or
independent contractor, engaged by the Company or a Parent, Subsidiary or Affiliate to render services to such entity.
28.12.
Corporate Transaction
means the occurrence of any of the following events: (a) any Person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Companys then-outstanding voting securities;
provided, however, that for purposes of this subclause (a) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will
not be considered a Corporate Transaction; (b) the consummation of the sale or disposition by the Company of all or substantially all of the Companys assets; (c) the consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or
consolidation;
(d) any other transaction which qualifies as a corporate transaction under Section 424(a) of the Code wherein the
stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of capital stock of the Company) or (e) a change in the
effective control of the Company that occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by members of the Board whose appointment or election is not endorsed by a majority of the members
of the Board prior to the date of the appointment or election. For purpose
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of this subclause (e), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a
Corporate Transaction. For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business
transaction with the Company. Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction,
such amount shall become payable only if the event constituting a Corporate Transaction would also qualify as a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the
Company, each as defined within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder
from time to time.
28.13.
Director
means a member of the Board.
28.14.
Disability
means in the case of incentive stock options, total and permanent disability as defined in
Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12 months.
28.15.
Dividend Equivalent
Right
means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash, stock or other property
dividends in amounts equal equivalent to cash, stock or other property dividends for each Share represented by an Award held by such Participant.
28.16.
Effective Date
means the day immediately prior to the date of the underwritten initial public offering
of the Companys Common Stock pursuant to a registration statement that is declared effective by the SEC.
28.17.
Employee
means any person, including Officers and Directors, providing services as an employee to the Company or any Parent, Subsidiary or Affiliate. Neither service as a Director nor payment of a directors fee by
the Company will be sufficient to constitute employment by the Company.
28.18.
Exchange Act
means the United States Securities Exchange Act of 1934, as amended.
28.19.
Exchange Program
means a
program pursuant to which (a) outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof) or (b) the exercise price of an outstanding Award is increased or
reduced.
28.20.
Exercise Price
means, with respect to an Option, the price at which a holder may
purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof.
28.21.
Fair Market Value
means, as of any date, the value of a share of the Companys Common Stock
determined as follows:
(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing
price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in
The Wall Street
Journal or such other source as the Committee deems reliable;
(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of
the closing bid and asked prices on the date of determination as reported in
The Wall Street Journal
or such other source as the Committee deems reliable; or
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(c) if none of the foregoing is applicable, by the Board or the Committee in good faith.
28.22.
Insider
means an officer or director of the Company or any other person whose transactions in the
Companys Common Stock are subject to Section 16 of the Exchange Act.
28.23.
IRS
means the
United States Internal Revenue Service.
28.24.
Non-Employee Director
means a Director who is not an
Employee of the Company or any Parent, Subsidiary or Affiliate.
28.25.
Option
means an award of an
option to purchase Shares pursuant to Section 5.
28.26.
Parent
means any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company if each of such 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.
28.27.
Participant
means a person who holds an Award under this
Plan.
28.28.
Performance Award
means an award covering cash or Shares granted pursuant to
Section 10 or Section 12 of the Plan.
28.29.
Performance Factors
means any of the factors
selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either
individually, alternatively, or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the performance goals established by the
Committee with respect to applicable Awards have been satisfied:
(a) Profit Before Tax;
(b) Billings;
(c) Revenue;
(d) Net revenue;
(e)
Earnings (which may include earnings before interest and taxes, earnings before taxes, net earnings, stock-based compensation expenses, depreciation and amortization);
(f) Operating income;
(g)
Operating margin;
(h) Operating profit;
(i) Controllable operating profit, or net operating profit;
(j) Net Profit;
(k) Gross
margin;
(l) Operating expenses or operating expenses as a percentage of revenue;
A-17
(m) Net income;
(n) Earnings per share;
(o)
Total stockholder return;
(p) Market share;
(q) Return on assets or net assets;
(r) The Companys stock price;
(s) Growth in stockholder value relative to a pre-determined index;
(t) Return on equity;
(u)
Return on invested capital;
(v) Cash Flow (including free cash flow or operating cash flows);
(w) Cash conversion cycle;
(x)
Economic value added;
(y) Individual confidential business objectives;
(z) Contract awards or backlog;
(aa) Overhead or other expense reduction;
(bb) Credit rating;
(cc)
Strategic plan development and implementation;
(dd) Succession plan development and implementation;
(ee) Improvement in workforce diversity;
(ff) Customer indicators and/or satisfaction;
(gg) New product invention or innovation;
(hh) Attainment of research and development milestones;
(ii) Improvements in productivity;
(jj) Bookings;
(kk) Attainment
of objective operating goals and employee metrics;
(ll) Sales;
A-18
(mm) Expenses;
(nn) Balance of cash, cash equivalents and marketable securities;
(oo) Completion of an identified special project;
(pp) Completion of a joint venture or other corporate transaction;
(qq) Employee satisfaction and/or retention;
(rr) Research and development expenses;
(ss) Working-capital targets and changes in working capital; and
(tt) Any other metric that is capable of measurement as determined by the Committee.
The Committee may, in recognition of unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting
rules, provide for one or more equitable adjustments (based on objective standards) to the Performance Factors to preserve the Committees original intent regarding the Performance Factors at the time of the initial award grant. It is within
the sole discretion of the Committee to make or not make any such equitable adjustments.
28.30.
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 Factors will be measured for the purpose of determining a
Participant right to, and the payment of, a Performance Award.
28.31.
Performance Share
means an
Award granted pursuant to Section 10 or Section 12 of the Plan, the payment of which is contingent upon achieving certain performance goals established by the Committee.
28.32.
Performance Unit
means a right granted to a Participant pursuant to Section 10 or
Section 12, to receive Shares, the payment of which is contingent upon achieving certain performance goals established by the Committee.
28.33.
Permitted Transferee
means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employees household (other than a
tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons
(or the Employee) own more than 50% of the voting interests.
28.34.
Plan
means this KalVista
Pharmaceuticals, Inc. 2017 Equity Incentive Plan.
28.35.
Purchase Price
means the price to be paid for
Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR.
28.36.
Restricted Stock Award
means an award of Shares pursuant to Section 6 or Section 12 of the Plan, or issued pursuant to the early exercise of an Option.
28.37.
Restricted Stock Unit
means an Award granted pursuant to Section 9 or Section 12 of the
Plan.
28.38.
SEC
means the United States Securities and Exchange Commission.
28.39.
Securities Act
means the United States Securities Act of 1933, as amended.
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28.40.
Service
shall mean service as an Employee, Consultant,
Director or Non-Employee Director, to the Company or a Parent, Subsidiary or Affiliate, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. An Employee will not be deemed to have ceased to provide
Service in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence approved by the Company;
provided
, that such leave is for a period of not more than 90 days unless reemployment upon the expiration of
such leave is guaranteed by contract or statute. Notwithstanding anything to the contrary, an Employee will not be deemed to have ceased to provide Service if a formal policy adopted from time to time by the Company and issued and promulgated to
employees in writing provides otherwise. In the case of any Employee on an approved leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make
such provisions respecting suspension or modification of vesting of the Award while on leave from the employ of the Company or a Parent, Subsidiary or Affiliate or during such change in working hours as it may deem appropriate, except that in no
event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. In the event of military or other protected leave, if required by applicable laws, vesting shall continue for the longest period that
vesting continues under any other statutory or Company approved leave of absence and, upon a Participants returning from military leave, he or she shall be given vesting credit with respect to Awards to the same extent as would have applied
had the Participant continued to provide Service to the Company throughout the leave on the same terms as he or she was providing Service immediately prior to such leave. An employee shall have terminated employment as of the date he or she ceases
to provide Service (regardless of whether the termination is in breach of local employment laws or is later found to be invalid) and employment shall not be extended by any notice period or garden leave mandated by local law,
provided
however
, that a change in status from an employee to a consultant or advisor shall not terminate the service providers Service, unless determined by the Committee, in its discretion. The Committee will have sole discretion to determine
whether a Participant has ceased to provide Service and the effective date on which the Participant ceased to provide Service.
28.41.
Shares
means shares of Common Stock and the common stock of any successor entity.
28.42.
Stock Appreciation Right
means an Award granted pursuant to Section 8 or Section 12 of the Plan.
28.43.
Stock Bonus
means an Award granted pursuant to Section 7 or Section 12 of the Plan.
28.44.
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.
28.45.
Treasury Regulations
means regulations promulgated by the United
States Treasury Department.
28.46.
Unvested Shares
means Shares that have not yet vested or are subject
to a right of repurchase in favor of the Company (or any successor thereto).
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APPENDIX B
K
AL
V
ISTA
P
HARMEUCITALS
, I
NC
.
2017 E
MPLOYEE
S
TOCK
P
URCHASE
P
LAN
1. Establishment of Plan
. KalVista Pharmaceuticals, Inc., a Delaware corporation (the
Company
) proposes to
grant options to purchase shares of Common Stock to eligible employees of the Company and its Participating Corporations pursuant to this Plan. The Company intends this Plan to qualify as an employee stock purchase plan under Code
Section 423 (including any amendments to or replacements of such Section), and this Plan shall be so construed. Any term not expressly defined in this Plan but defined for purposes of Code Section 423 shall have the same definition herein.
However, with regard to offers of options for purchase of the Common Stock under the Plan to employees outside the United States working for a Subsidiary or an Affiliate, the Board may offer a subplan or an option that is not intended to meet the
Code Section 423 requirements, provided, if necessary under Code Section 423, that the other terms and conditions of the Plan are met. Subject to Section 14, a total of 100,000 shares of Common Stock is reserved for issuance under
this Plan. In addition, on each January 1 for the first ten (10) calendar years after the first Offering Date, the aggregate number of shares of Common Stock reserved for issuance under the Plan shall be increased automatically by the
number of shares equal to one percent (1%) of the total number of outstanding shares of the Company Common Stock on the immediately preceding December 31 (
rounded down to the nearest whole share
);
provided,
that the Board or
the Committee may in its sole discretion reduce the amount of the increase in any particular year; and,
provided further
, that the aggregate number of shares issued over the term of this Plan shall not exceed 3,000,000 shares of Common Stock.
The number of shares reserved for issuance under this Plan and the maximum number of shares that may be issued under this Plan shall be subject to adjustments effected in accordance with Section 14 of this Plan. Capitalized terms not defined
elsewhere in the text are defined in Section 27.
2. Purpose
. The purpose of this Plan is to provide eligible employees of the
Company and Participating Corporations with a means of acquiring an equity interest in the Company through payroll deductions, to enhance such employees sense of participation in the affairs of the Company and Participating Corporations, and
to provide an incentive for continued employment.
3. Administration
. The Plan will be administered by the Compensation Committee
of the Board or by the Board (either referred to herein as the
Committee
). Subject to the provisions of this Plan and the limitations of Section 423 of the Code or any successor provision in the Code, all questions of
interpretation or application of this Plan shall be determined by the Committee and its decisions shall be final and binding upon all Participants. The Committee will have full and exclusive discretionary authority to construe, interpret and apply
the terms of the Plan, to determine eligibility and decide upon any and all claims filed under the Plan. Every finding, decision and determination made by the Committee will, to the full extent permitted by law, be final and binding upon all
parties. Notwithstanding any provision to the contrary in this Plan, the Committee may adopt rules and/or procedures relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the
United States. The Committee will have the authority to determine the Fair Market Value of the Common Stock (which determination shall be final, binding and conclusive for all purposes) in accordance with Section 8 below and to interpret
Section 8 of the Plan in connection with circumstances that impact the Fair Market Value. Members of the Committee shall receive no compensation for their services in connection with the administration of this Plan, other than standard fees as
established from time to time by the Board for services rendered by Board members serving on the Board or its committees. All expenses incurred in connection with the administration of this Plan shall be paid by the Company. For purposes of this
Plan, the Committee may designate separate offerings under the Plan (the terms of which need not be identical) in which eligible employees of one or more Participating Corporations will participate, even if the dates of the applicable Offering
Periods of each such offering are identical.
4. Eligibility
. Any employee of the Company or the Participating Corporations is
eligible to participate in an Offering Period under this Plan except the following (other than where prohibited by applicable law):
(a)
employees who are not employed by the Company or a Participating Corporation prior to the beginning of such Offering Period or prior to such other time period as specified by the Committee;
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(b) employees who are customarily employed for twenty (20) or less hours per week;
(c) employees who are customarily employed for five (5) months or less in a calendar year;
(d) employees who, together with any other person whose stock would be attributed to such employee pursuant to Section 424(d) of the
Code, own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its Participating Corporations or who, as a result of being
granted an option under this Plan with respect to such Offering Period, would own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or
any of its Participating Corporations;
(e) employees who do not meet any other eligibility requirements that the Committee may choose to
impose (within the limits permitted by the Code); and
(f) individuals who provide services to the Company or any of its Participating
Corporations as independent contractors who are reclassified as common law employees for any reason
except
for
federal income and employment tax purposes.
The foregoing notwithstanding, an individual shall not be eligible if his or her participation in the Plan is prohibited by the law of any country that has
jurisdiction over him or her, if complying with the laws of the applicable country would cause the Plan to violate Section 423 of the Code, or if he or she is subject to a collective bargaining agreement that does not provide for participation
in the Plan.
5. Offering Dates
.
(a) While the Plan is in effect, the Committee shall determine the duration and commencement date of each Offering Period, provided that an
Offering Period shall in no event be longer than twenty-seven (27) months, except as otherwise provided by an applicable subplan. Offering Periods may be consecutive or overlapping. Each Offering Period may consist of one or more Purchase
Periods during which payroll deductions of Participants are accumulated under this Plan. While the Plan is in effect, the Committee shall determine the duration and commencement date of each Offering Period and Purchase Period, provided that a
Purchase Period shall in no event end later than the close of the Offering Period in which it begins. Purchase Periods shall be consecutive.
(b) The time and duration of the Offering Periods and the Purchase Periods shall be determined by the Committee; provided that any Offering
Period shall in no event be longer than twenty-seven (27) months; and provided, further, that a single Offering Period may consist of one or more Purchase Periods.
6. Participation in this Plan
.
(a) An eligible employee determined in accordance with Section 4 may elect to become a Participant in an Offering Period by submitting a
subscription agreement, or electronic representation thereof, to the Company and/or via an authorized third party administrators (the
Third Party Administrator
) standard process, prior to the commencement of the
Offering Period to which such agreement relates in accordance with such rules as the Committee may determine.
(b) Once an employee
becomes a Participant in an Offering Period, then such Participant will automatically participate in each subsequent Offering Period commencing immediately following the last day of such prior Offering Period at the same contribution level unless
the Participant withdraws or is deemed to withdraw from this Plan or terminates further participation in the Offering Period as set forth in Section 11 below or otherwise notifies the Company of a change in the Participants contribution
letter by filing an additional
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subscription agreement or electronic representation thereof with the Company and/or the Third Party Administrator, prior to the next Offering Period. A Participant that is automatically enrolled
in a subsequent Offering Period pursuant to this section is not required to file any additional subscription agreement in order to continue participation in this Plan.
7. Grant of Option on Enrollment
. Becoming a Participant with respect to an Offering Period will constitute the grant (as of the
Offering Date) by the Company to such Participant of an option to purchase on the Purchase Date up to that number of shares of Common Stock determined by a fraction, the numerator of which is the amount of the contribution level for such
Participant multiplied by such Participants Compensation (as defined in Section 9 below) during such Purchase Period and the denominator of which is the lower of (i) eighty-five percent (85%) of the Fair Market Value of a
share of the Common Stock on the Offering Date (but in no event less than the par value of a share of the Companys Common Stock), or (ii) eighty-five percent (85%) of the Fair Market Value of a share of the Common Stock on the
Purchase Date (but in no event less than the par value of a share of the Common Stock); provided, however, that the number of shares of Common Stock subject to any option granted pursuant to this Plan shall not exceed the lesser of (x) the
maximum number of shares set by the Committee pursuant to Section 10(b) below with respect to the applicable Purchase Date, or (y) the maximum number of shares which may be purchased pursuant to Section 10(a) below with respect to the
applicable Purchase Date.
8. Purchase Price
. The Purchase Price in any Offering Period shall be eighty-five percent (85%) of
the lesser of:
(a) The Fair Market Value on the Offering Date; or
(b) The Fair Market Value on the Purchase Date.
9. Payment of Purchase Price; Payroll Deduction Changes; Share Issuances
.
(a) The Purchase Price of the shares is accumulated by regular payroll deductions made during each Offering Period, unless the Committee
determines that contributions may be, or are required to be, made in another form (including payment by check at the end of a Purchase Period or, due to local law requirements, in another form with respect to categories of Participants outside the
United States). The deductions are made as a percentage of the Participants compensation in one percent (1%) increments not less than one percent (1%), nor greater than fifteen percent (15%) or such lower limit set by the Committee.
Compensation
shall mean base salary and regular hourly wages (or in foreign jurisdictions, equivalent cash compensation); however, the Committee may at any time prior to the beginning of an Offering Period determine that
for that and future Offering Periods, Compensation shall mean certain cash compensation reportable on the Participants Form W-2 or corresponding local country tax return, including without limitation base salary or regular hourly wages,
bonuses, incentive compensation, commissions, overtime, shift premiums, plus draws against commissions (or in foreign jurisdictions, equivalent cash compensation). For purposes of determining a Participants Compensation, any election by such
Participant to reduce his or her regular cash remuneration under Sections 125 or 401(k) of the Code (or in foreign jurisdictions, equivalent salary deductions) shall be treated as if the Participant did not make such election. Payroll deductions
shall commence on the first payday following the last Purchase Date (or the first payday following the commencement of the initial Offering Period) and shall continue to the end of the Offering Period unless sooner altered or terminated as provided
in this Plan. Notwithstanding the foregoing, the terms of any subplan may permit matching shares without the payment of any purchase price.
(b) Subject to Section 25 below and to the rules of the Committee, a Participant may decrease the rate of payroll deductions during an
Offering Period by filing with the Company or the Third Party Administrator a new authorization for payroll deductions, with the new rate to become effective as soon as reasonably practicable and continuing for the remainder of the Offering Period
unless changed as described below. A decrease in the rate of payroll deductions may be made once during an Offering Period or more or less frequently under rules
B-3
determined by the Committee. An increase in the rate of payroll deductions may not be made during an Offering Period unless otherwise determined by the Committee. A Participant may increase or
decrease the rate of payroll deductions for any subsequent Offering Period by filing with the Company or a third party designated by the Company a new authorization for payroll deductions prior to the beginning of such Offering Period, or such other
time period as may be specified by the Committee.
(c) Subject to Section 25 below and to the rules of the Committee, a Participant
may reduce his or her payroll deduction percentage to zero during an Offering Period by filing with the Company a request for cessation of payroll deductions, and after such reduction becomes effective no further payroll deductions will be made for
the duration of the Offering Period. Payroll deductions credited to the Participants account prior to the effective date of the request shall be used to purchase shares of Common Stock in accordance with Section (e) below. A reduction of
the payroll deduction percentage to zero shall be treated as such Participants withdrawal from such Offering Period, and the Plan, effective as of the day after the next Purchase Date following the filing date of such request with the Company.
(d) All payroll deductions made for a Participant are credited to his or her account under this Plan and are deposited with the general
funds of the Company, and the Company shall not be obligated to segregate such payroll deductions, except to the extent required to be segregated due to local legal restrictions outside the United States. No interest accrues on the payroll
deductions except to the extent required due to local legal requirements outside the United States. All payroll deductions received or held by the Company may be used by the Company for any corporate purpose, except to the extent necessary to comply
with local legal requirements outside the United States.
(e) On each Purchase Date, so long as this Plan remains in effect and provided
that the Participant has not submitted a signed and completed withdrawal form before that date which notifies the Company and/or the Third Party Administrator that the Participant wishes to withdraw from that Offering Period under this Plan and have
all payroll deductions accumulated in the account maintained on behalf of the Participant as of that date returned to the Participant, the Company shall apply the funds then in the Participants account to the purchase of whole shares of Common
Stock reserved under the option granted to such Participant with respect to the Offering Period to the extent that such option is exercisable on the Purchase Date. The Purchase Price shall be as specified in Section 8 of this Plan. Any amount
remaining in a Participants account on a Purchase Date which is less than the amount necessary to purchase a full share of Common Stock shall be carried forward into the next Purchase Period or Offering Period, as the case may be (except to
the extent required due to local legal requirements outside the United States), or as otherwise determined by the Committee. In the event that this Plan has been oversubscribed, all funds not used to purchase shares on the Purchase Date shall be
returned to the Participant, without interest (except to the extent required due to local legal requirements outside the United States). No Common Stock shall be purchased on a Purchase Date on behalf of any employee whose participation in this Plan
has terminated prior to such Purchase Date (except to the extent required due to local legal requirements outside the United States).
(f)
As promptly as practicable after the Purchase Date, the Company shall issue shares for the Participants benefit representing the shares purchased upon exercise of his or her option.
(g) During a Participants lifetime, his or her option to purchase shares hereunder is exercisable only by him or her. The Participant
will have no interest or voting right in shares covered by his or her option until such option has been exercised.
(h) To the extent
required by applicable federal, state, local or foreign law, a Participant shall make arrangements satisfactory to the Company and the Participating Corporation employing the Participant for the satisfaction of any withholding tax obligations that
arise in connection with the Plan. The Company or any Subsidiary or Affiliate, as applicable, may withhold, by any method permissible under applicable law, the amount necessary for the Company or any Subsidiary or Affiliate, as applicable, to meet
applicable withholding
B-4
obligations, including any withholding required to make available to the Company or any Subsidiary or Affiliate, as applicable, any tax deductions or benefits attributable to the sale or early
disposition of shares of Common Stock by a Participant. The Company shall not be required to issue any shares of Common Stock under the Plan until such obligations are satisfied.
10. Limitations on Shares to be Purchased
.
(a) No Participant shall be entitled to purchase stock under any Offering Period at a rate which, when aggregated with such Participants
rights to purchase stock under all other employee stock purchase plans of a Participating Company intended to meet the requirements of Section 423 of the Code, that are also outstanding in the same calendar year(s) (whether under other Offering
Periods or other employee stock purchase plans of the Company, its Parent and its Subsidiaries), exceeds $25,000 in Fair Market Value, determined as of the Offering Date (or such other limit as may be imposed by the Code) for each calendar year in
which such Offering Period is in effect (hereinafter the
Maximum Share Amount
). The Company may automatically suspend the payroll deductions of any Participant as necessary to enforce such limit provided that when the
Company automatically resumes such payroll deductions, the Company must apply the rate in effect immediately prior to such suspension.
(b) The Committee may, in its sole discretion, set a lower maximum number of shares which may be purchased by any Participant during any
Offering Period than that determined under Section 10(a) above, which shall then be the Maximum Share Amount for subsequent Offering Periods; provided, however, in no event shall a Participant be permitted to purchase more than 2500 Shares
during any one Purchase Period or such greater or lesser number as the Committee may determine, irrespective of the Maximum Share Amount set forth in (a) and (b) hereof. If a new Maximum Share Amount is set, then all Participants will be
notified of such Maximum Share Amount prior to the commencement of the next Offering Period for which it is to be effective. The Maximum Share Amount shall continue to apply with respect to all succeeding Offering Periods unless revised by the
Committee as set forth above.
(c) If the number of shares to be purchased on a Purchase Date by all Participants exceeds the number of
shares then available for issuance under this Plan, then the Company will make a pro rata allocation of the remaining shares in as uniform a manner as shall be reasonably practicable and as the Committee shall determine to be equitable. In such
event, the Company will give written notice of such reduction of the number of shares to be purchased under a Participants option to each Participant affected.
(d) Any payroll deductions accumulated in a Participants account which are not used to purchase stock due to the limitations in this
Section 10, and not covered by Section 9(e), shall be returned to the Participant as soon as administratively practicable after the end of the applicable Purchase Period, without interest (except to the extent required due to local legal
requirements outside the United States).
11. Withdrawal
.
(a) Each Participant may withdraw from an Offering Period under this Plan pursuant to a method specified by the Company. Such withdrawal may
be elected at any time prior to the end of an Offering Period, or such other time period as specified by the Committee.
(b) Upon
withdrawal from this Plan, the accumulated payroll deductions shall be returned to the withdrawn Participant, without interest (except to the extent required due to local legal requirements outside the United States), and his or her interest in this
Plan shall terminate. In the event a Participant voluntarily elects to withdraw from this Plan, he or she may not resume his or her participation in this Plan during the same Offering Period, but he or she may participate in any Offering Period
under this Plan which commences on a date subsequent to such withdrawal by filing a new authorization for payroll deductions in the same manner as set forth in Section 6 above for initial participation in this Plan.
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(c) To the extent applicable, if the Fair Market Value on the first day of the current Offering
Period in which a participant is enrolled is higher than the Fair Market Value on the first day of any subsequent Offering Period, the Company will automatically enroll such participant in the subsequent Offering Period. Any funds accumulated in a
participants account prior to the first day of such subsequent Offering Period will be applied to the purchase of shares on the Purchase Date immediately prior to the first day of such subsequent Offering Period, if any.
12. Termination of Employment
. Termination of a Participants employment for any reason, including retirement, death, disability,
or the failure of a Participant to remain an eligible employee of the Company or of a Participating Corporation, immediately terminates his or her participation in this Plan (except to the extent required due to local legal requirements outside the
United States). In such event, accumulated payroll deductions credited to the Participants account will be returned to him or her or, in the case of his or her death, to his or her legal representative, without interest (except to the extent
required due to local legal requirements outside the United States). For purposes of this Section 12, an employee will not be deemed to have terminated employment or failed to remain in the continuous employ of the Company or of a Participating
Corporation in the case of sick leave, military leave, or any other leave of absence approved by the Company;
provided
that such leave is for a period of not more than ninety (90) days or reemployment upon the expiration of such leave is
guaranteed by contract or statute. The Company will have sole discretion to determine whether a Participant has terminated employment and the effective date on which the Participant terminated employment, regardless of any notice period or garden
leave required under local law.
13. Return of Payroll Deductions
. In the event a Participants interest in this Plan is
terminated by withdrawal, termination of employment or otherwise, or in the event this Plan is terminated by the Board, the Company shall deliver to the Participant all accumulated payroll deductions credited to such Participants account. No
interest shall accrue on the payroll deductions of a Participant in this Plan (except to the extent required due to local legal requirements outside the United States).
14. Capital Changes
. If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock
split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then the Committee shall adjust the number and class of Common Stock that may be delivered under the Plan, the
Purchase Price and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised, and the numerical limits of Sections 1 and 10 shall be proportionately adjusted, subject to any required action by the
Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.
15. Nonassignability
. Neither payroll deductions credited to a Participants account nor any rights with regard to the exercise of
an option or to receive shares under this Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 22 below) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be void and without effect.
16. Use of Participant Funds and
Reports
. The Company may use all payroll deductions received or held by it under the Plan for any corporate purpose, and the Company will not be required to segregate Participant payroll deductions (except to the extent required due to local
legal requirements outside the United States). Until Shares are issued, Participants will only have the rights of an unsecured creditor (except to the extent required due to local legal requirements outside the United States). Each Participant shall
receive, or have access to, promptly after the end of each Purchase Period a report of his or her account setting forth the total payroll deductions accumulated, the number of shares purchased, the Purchase Price thereof and the remaining cash
balance, if any, carried forward or refunded, as determined by the Committee, to the next Purchase Period or Offering Period, as the case may be.
17. Notice of Disposition
. Each U.S. taxpayer Participant shall notify the Company in writing if the Participant disposes of any of the
shares purchased in any Offering Period pursuant to this Plan if such
B-6
disposition occurs within two (2) years from the Offering Date or within one (1) year from the Purchase Date on which such shares were purchased (the
Notice Period
). The Company may, at any time during the Notice Period, place a legend or legends on any certificate representing shares acquired pursuant to this Plan requesting the Companys transfer agent to
notify the Company of any transfer of the shares. The obligation of the Participant to provide such notice shall continue notwithstanding the placement of any such legend on the certificates.
18. No Rights to Continued Employment
. Neither this Plan nor the grant of any option hereunder shall confer any right on any employee
to remain in the employ of the Company or any Participating Corporation, or restrict the right of the Company or any Participating Corporation to terminate such employees employment.
19. Equal Rights And Privileges
. All eligible employees granted an option under this Plan that is intended to meet the Code
Section 423 requirements shall have equal rights and privileges with respect to this Plan or within any separate offering under the Plan so that this Plan qualifies as an employee stock purchase plan within the meaning of
Section 423 or any successor provision of the Code and the related regulations. Any provision of this Plan which is inconsistent with Section 423 or any successor provision of the Code shall, without further act or amendment by the Company
or the Committee, be reformed to comply with the requirements of Section 423. This Section 19 shall take precedence over all other provisions in this Plan.
20. Notices
. All notices or other communications by a Participant to the Company under or in connection with this Plan shall be deemed
to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
21. Term; Stockholder Approval
. This Plan will become effective on the Effective Date. This Plan shall be approved by the stockholders
of the Company, in any manner permitted by applicable corporate law, within twelve (12) months before or after the date this Plan is adopted by the Board. No purchase of shares that are subject to such stockholder approval before becoming
available under this Plan shall occur prior to stockholder approval of such shares and the Committee may delay any Purchase Date and postpone the commencement of any Offering Period subsequent to such Purchase Date as deemed necessary or desirable
to obtain such approval (provided that if a Purchase Date would occur more than twenty-four (24) months after commencement of the Offering Period to which it relates, then such Purchase Date shall not occur and instead such Offering Period
shall terminate without the purchase of such shares and Participants in such Offering Period shall be refunded their contributions without interest). This Plan shall continue until the earlier to occur of (a) termination of this Plan by the
Board (which termination may be effected by the Board at any time pursuant to Section 25 below), (b) issuance of all of the shares of Common Stock reserved for issuance under this Plan, or (c) the tenth anniversary of the first
Purchase Date under the Plan.
22. Designation of Beneficiary.
(a) If provided in the subscription agreement, a Participant may file a written or electronic designation of a beneficiary who is to receive
any shares and cash, if any, from the Participants account under this Plan in the event of such Participants death subsequent to the end of a Purchase Period but prior to delivery to him of such shares and cash. In addition, a
Participant may file a written or electronic designation of a beneficiary who is to receive any cash from the Participants account under this Plan in the event of such Participants death prior to a Purchase Date. Such form shall be valid
only if it was filed with the Company and/or the Third Party Administrator at the prescribed location before the Participants death.
(b) Such designation of beneficiary may be changed by the Participant at any time by written notice filed with the Company at the prescribed
location before the Participants death. In the event of the death of a Participant and in the absence of a beneficiary validly designated under this Plan who is living at the time of such Participants death, the Company shall deliver
such cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the
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Company, in its discretion, may deliver such shares or cash to the spouse or, if no spouse is known to the Company, then to any one or more dependents or relatives of the Participant, or if no
spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.
23. Conditions Upon
Issuance of Shares; Limitation on Sale of Shares
. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions
of law, domestic or foreign, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or automated quotation system upon which the shares may
then be listed, exchange control restrictions and/or securities law restrictions outside the United States, and shall be further subject to the approval of counsel for the Company with respect to such compliance. Shares may be held in trust or
subject to further restrictions as permitted by any subplan.
24. Applicable Law
. The Plan shall be governed by the substantive
laws (excluding the conflict of laws rules) of the State of Delaware.
25. Amendment or Termination
. The Committee, in its sole
discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Committee, in its discretion, may elect to terminate all outstanding Offering Periods either immediately or
upon completion of the purchase of shares of Common Stock on the next Purchase Date (which may be sooner than originally scheduled, if determined by the Committee in its discretion), or may elect to permit Offering Periods to expire in accordance
with their terms (and subject to any adjustment pursuant to Section 14). If an Offering Period is terminated prior to its previously-scheduled expiration, all amounts then credited to Participants accounts for such Offering Period, which
have not been used to purchase shares of Common Stock, shall be returned to those Participants (without interest thereon, except as otherwise required under local laws) as soon as administratively practicable. Further, the Committee will be entitled
to establish rules to change the Purchase Periods and Offering Periods, limit the frequency and/or number of changes in the amount contributed during a Purchase Period or an Offering Period, establish the exchange ratio applicable to amounts
contributed in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the administration of the Plan, establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts contributed from the Participants base salary or regular
hourly wages, and establish such other limitations or procedures as the Committee determines in its sole discretion advisable which are consistent with the Plan. Such actions will not require stockholder approval or the consent of any Participants.
However, no amendment shall be made without approval of the stockholders of the Company (obtained in accordance with Section 21 above) within twelve (12) months of the adoption of such amendment (or earlier if required by Section 21)
if such amendment would: (a) increase the number of shares that may be issued under this Plan; or (b) change the designation of the employees (or class of employees) eligible for participation in this Plan. In addition, in the event the
Committee determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Committee may, in its discretion and, to the extent necessary or desirable, modify, amend or terminate the Plan to reduce or
eliminate such accounting consequences including, but not limited to: (i) amending the definition of compensation, including with respect to an Offering Period underway at the time; (ii) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase Price; (iii) shortening any Offering Period by setting a Purchase Date, including an Offering Period underway at the time of the Committee action; (iv) reducing
the maximum percentage of compensation a participant may elect to set aside as payroll deductions; and (v) reducing the maximum number of shares of Common Stock a Participant may purchase during any Offering Period. Such modifications or
amendments will not require approval of the stockholders of the Company or the consent of any Participants.
26. Corporate
Transactions
. In the event of a Corporate Transaction (as defined below), each outstanding right to purchase Common Stock will be assumed or an equivalent option substituted by the successor
B-8
corporation or a parent or a subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the purchase right, the Offering Period with
respect to which such purchase right relates will be shortened by setting a new Purchase Date (the
New Purchase Date
) and will end on the New Purchase Date. The New Purchase Date shall occur on or prior to the consummation
of the Corporate Transaction, and the Plan shall terminate on the consummation of the Corporate Transaction.
27. Definitions.
(a)
Affiliate
means any entity, other than a Subsidiary or Parent, (i) that, directly or indirectly, is
controlled by, controls or is under common control with, the Company and (ii) in which the Company has a significant equity interest, in either case as determined by the Committee, whether now or hereafter existing.
(b)
Board
means the Board of Directors of the Company.
(c)
Code
means the Internal Revenue Code of 1986, as amended.
(d)
Common Stock
means the common stock of the Company.
(e)
Corporate Transaction
means the occurrence of any of the following events: (i) any person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Companys then outstanding voting securities; or (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Companys assets; or (iii) the
consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving
entity or its parent outstanding immediately after such merger or consolidation.
(f)
Effective Date
means the
date on which the Registration Statement covering the initial public offering of the shares of Common Stock is declared effective by the U.S. Securities and Exchange Commission.
(g)
Exchange Act
means the Securities Exchange Act of 1934, as amended.
(h)
Fair Market Value
means, as of any date, the value of a share of Common Stock determined as follows:
(i) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of
determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in
The Wall Street
Journal or such other source as the Committee deems reliable; or
(ii) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of
the closing bid and asked prices on the date of determination as reported in
The Wall Street Journal
or such other source as the Committee deems reliable; or
(iii) if such Common Stock is publicly traded but is neither quoted on the Nasdaq Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on the date of determination as reported in
The Wall Street Journal
or such other source as the Committee deems reliable; and
(iv) if none of the foregoing is applicable, by the Committee in good faith.
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(i)
Offering Date
means the first business day of each Offering Period.
(j)
Offering Period
means a period with respect to which the right to purchase Common Stock may be granted
under the Plan, as determined by the Committee pursuant to Section 5(a).
(k)
Parent
shall have the same
meaning as parent corporation in Sections 424(e) and 424(f) of the Code.
(l)
Participant
means an
eligible employee who meets the eligibility requirements set forth in Section 4 and who elects to participate in this Plan pursuant to Section 6.
(m)
Participating Corporation
shall mean any Parent, Subsidiary or Affiliate that the Board designates from time to
time as a corporation that shall participate in this Plan.
(n)
Plan
means this KalVista Pharmaceuticals, Inc.
2017 Employee Stock Purchase Plan.
(o)
Purchase Date
means the last U.S. business day of each Purchase Period.
(p)
Purchase Period
means a period during which contributions may be made toward the purchase of Common Stock
under the Plan, as determined by the Committee pursuant to Section 5(b).
(q)
Purchase Price
means the
price at which Participants may purchase a share of Common Stock under the Plan, as determined pursuant to Section 8.
(r)
Securities Act
means the Securities Act of 1933, as amended.
(s)
Subsidiary
shall
have the same meaning as subsidiary corporation in Sections 424(e) and 424(f) of the Code.
B-10
SPECIAL MEETING OF SHAREHOLDERS OF
KALVISTA PHARMACEUTICALS, INC.
March 23, 2017
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PROXY VOTING INSTRUCTIONS
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INTERNET
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Access
www.voteproxy.com
and follow the
on-screen
instructions or scan the QR code with your smartphone. Have your proxy card available when you
access the web page.
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TELEPHONE
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Call toll-free
1-800-PROXIES
(1-800-776-9437)
in the United States or
1-718-921-8500
from foreign
countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call.
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Vote online/phone until 11:59 PM EST the day before the meeting.
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MAIL
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Sign, date and mail your proxy card in the envelope provided as soon as possible.
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IN PERSON
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You may vote your shares in person by attending the Special Meeting.
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GO GREEN
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e-Consent
makes it easy to go paperless. With
e-Consent,
you can quickly access your proxy material, statements and other
eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.
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COMPANY NUMBER
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ACCOUNT NUMBER
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NOTICE OF INTERNET AVAILABILITY OF PROXY
MATERIAL
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The Notice of Meeting, proxy statement and proxy card
are available at www.kalvista.com
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Please detach along perforated line and mail in the envelope provided
IF
you are not voting via telephone or the Internet.
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∎
00033000000000000000 1
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032317
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE
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FOR
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AGAINST
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ABSTAIN
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1. To approve the Companys 2017 Equity Incentive Plan.
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2. To approve the Companys 2017 Employee Stock Purchase Plan.
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In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the Special Meeting. This proxy when properly executed will be voted as directed herein by the undersigned shareholder.
If no direction is made, this proxy will be voted FOR Proposals 1 and 2.
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To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via this method.
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date:
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∎
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Note:
Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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∎
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SPECIAL MEETING OF SHAREHOLDERS OF
KALVISTA PHARMACEUTICALS, INC.
March 23, 2017
GO
GREEN
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e-Consent
makes it easy to go paperless. With
e-Consent,
you
can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.
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NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL
:
The Notice of Meeting, proxy statement and proxy card
are available at www.kalvista.com
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Please sign, date and mail
your proxy card in the
envelope
provided as soon
as possible.
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↓
Please detach along perforated line and mail in the envelope
provided.
↓
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∎
00033000000000000000 1
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032317
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE
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FOR
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AGAINST
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ABSTAIN
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1. To approve the Companys 2017 Equity Incentive Plan.
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2. To approve the Companys 2017 Employee Stock Purchase Plan.
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In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the Special Meeting. This proxy when properly executed will be voted as directed herein by the undersigned shareholder.
If no direction is made, this proxy will be voted FOR Proposals 1 and 2.
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To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via this method.
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☐
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date:
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∎
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Note:
Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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∎
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KALVISTA PHARMACEUTICALS, INC.