RBBN Ribbon Communications Inc

PROPOSAL 2 — APPROVAL OF AN AMENDMENT AND RESTATEMENT OF
SONUS NETWORKS' STOCK INCENTIVE PLAN

               Our Board believes that the future success of Sonus depends, in large part, on our ability to maintain a competitive position in attracting, retaining and motivating key employees with relevant experience and superior ability. On April 25, 2017, our Board adopted, subject to stockholder approval, an amendment and restatement of our Amended and Restated Stock Incentive Plan (the "Amended Plan").

Summary of Amendments

              The proposed amendments would, among other things:

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Increase in Aggregate Share Limit.   Our Amended Plan currently limits the aggregate number of shares of our common stock that may be issued pursuant to all awards granted under the Amended Plan to 16,476,713 shares. Our Amended Plan, as amended and restated, will increase this limit by an additional 900,000 shares so that the new aggregate share limit for the Amended Plan will be 17,376,713 shares.



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Dividends Relating to Restricted Stock, Restricted Stock Units and Other Stock Unit Awards.   Our Amended Plan currently provides that dividends on unvested restricted stock and dividend equivalents granted with respect to unvested restricted stock units will be accumulated or reinvested and paid only upon the vesting of the underlying award and that dividend equivalents with respect to other stock unit awards are subject to the same vesting and forfeiture provisions as the underlying award. We revised the language in the Amended Plan to make it more explicit by providing that any dividends on unvested restricted stock or with respect to shares of common stock granted under an other stock unit award will be paid to a participant only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares and that any dividend equivalents with respect to restricted stock units and other stock unit awards will

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be subject to the same vesting conditions and restrictions on transfer and forfeitability applicable to the underlying award with respect to which paid. No interest will be paid on any such dividends or dividend equivalents.

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Clawback.   In 2014, our Compensation Committee adopted a formal clawback policy with respect to our executive incentive compensation, which will apply in the event we are required to prepare an accounting restatement after the adoption of the policy due to any material noncompliance with any financial reporting requirement under the U.S. federal securities laws. The amendment and restatement of our Amended Plan explicitly requires a participant who accepts an award under the Amended Plan on or after the time this proposal is approved by stockholders to be bound by any clawback policy that we have in effect or may adopt in the future.



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Change in Share-Counting Procedures.   The Amended Plan, as amended and restated, eliminates the current requirement that each share of stock subject to an award of restricted stock, restricted stock units, performance awards or other stock unit awards, which we refer to collectively as full value awards, be counted against the share reserve as 1.50 shares for every 1 share subject to such award. This change would apply to all full value awards from and after the time this proposal is approved by stockholders. Shares of common stock subject to awards that were granted under any prior ratio that applied at the time such awards were granted will continue to return to the Amended Plan upon forfeiture of such awards at the previous ratio of 1.50, 1.57 or 1.61, as applicable.

              Attached as Appendix B to this Proxy Statement is a copy of the Amended Plan, marked to show changes proposed to be made. This description of the effect of the proposed amendment and restatement of the Amended Plan is a summary and is qualified by the full text of the Amended Plan, as amended and restated, included in Appendix B .

Reasons to Adopt the Proposed Amendment and Restatement of the Amended Plan

              Shares currently available under the Amended Plan are insufficient to meet our current needs based on our historical grant rate and our anticipated hiring and retention needs.     We believe that our future success depends, in large part, upon our ability to maintain a competitive position in attracting, motivating and retaining employees and consultants who are expected to make important contributions to the Company and by providing such employees and consultants with equity ownership opportunities and performance-based incentives that are intended to align their interests with those of our stockholders. If we are not able to provide long-term equity value to our employees and consultants, we will risk losing a capable and proven workforce. Based on our history of grants over the prior several years, the shares currently available under the Amended Plan would be sufficient to meet our needs only though the 2018 Annual Meeting.

              Stock-based incentive compensation encourages and rewards performance while aligning our employees', consultants', officers' and directors' interests with those of our stockholders.     We continue to believe that alignment of the interests of our stockholders and our employees, consultants, officers and directors is best advanced through the issuance of equity incentives as a portion of their total compensation. Stock-based incentive compensation encourages and rewards performance by increasing the value of their compensation if our stock performance improves. This results in employees, consultants, officers and directors being motivated to increase our share price. In this way, we reinforce the link between our stockholders and our employees', consultants', officers' and directors' focus on personal responsibility, creativity and stockholder returns.

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              Stock-based incentive compensation supports long-term tenure.     We believe that delivering a portion of total compensation in the form of equity compensation helps to encourage a long-term view. Imposing vesting requirements also encourages long-term retention, which is beneficial to our growth and success. We need the continued ability to use equity compensation to motivate existing high-performing employees, hire additional qualified employees and align the interests of our employees, consultants, officers and directors with those of our stockholders.

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Stock Available for Awards

              The Amended Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), non-statutory stock options, SARs, restricted stock, restricted stock units ("RSUs") and other stock unit awards and performance awards as described below (collectively referred to as "awards"). The Amended Plan currently provides that 16,476,713 shares of common stock of the Company (subject to adjustment in the event of stock splits and other similar events) are authorized for the grant of awards.

              There were 775,460 shares available for future issuance under the Amended Plan as of March 31, 2017.

              Our Board has approved, and recommends that stockholders approve, an increase of 900,000 in the maximum number of shares of our common stock available for awards under the Amended Plan and the other amendments set forth above. Our Board believes that such amendments, if approved, would assist in recruiting, motivating and retaining our employees, officers, directors, consultants and advisors.

              As of March 31, 2017:

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Options underlying 5,527,688 shares of our common stock with a weighted average exercise price of $15.70 were outstanding under the Amended Plan, with the outstanding options having a weighted average remaining term of 5.09 years;



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2,750,570 shares underlying unvested shares of common stock granted under the Amended Plan were outstanding, comprised of:



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2,376,867 unvested shares of restricted stock;



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88,284 unvested restricted stock units with time-vesting; and



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285,419 unvested performance-based stock units with future market conditions; and



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775,460 shares were available for grant under the Amended Plan.

              For information about activity under our equity incentive plans, see Note 15 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016.

              The 900,000 additional shares that we are requesting to add to the Amended Plan were recommended by our Compensation Committee based upon careful consideration of the equity compensation needs of the Company, including assessing the number of shares likely to be needed for future grants through the 2018 Annual Meeting. As described below, our Compensation Committee also considered the cost of the Amended Plan to our stockholders, as well as the potential dilution to our stockholders that would result from their approval of this proposal.

              In developing the number of authorized shares to be added and analyzing the impact of issuing additional equity on our stockholders, we considered our "burn rate" and "overhang." Burn rate provides a measure of the potential dilutive impact on our annual equity award program. Based on shares of our common stock outstanding as of April 12, 2017, our record date, the proposal to authorize 900,000 additional shares would result in additional dilution of approximately 1.74% to our

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current stockholders. We feel that targeting this additional dilution is reasonable and appropriate in light of our burn rate and other factors, as described below.

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Our historical burn rate is within market practice for a technology company, and is not high compared to our peers. The Company's three-year average annual burn rate as of December 31, 2016 was 5.01%. The burn rates for the years ended December 31, 2016, 2015 and 2014 were 4.08%, 5.11%, and 5.84%, respectively. We calculate our burn rate by dividing the total number of shares underlying options and other awards granted in the year by weighted-average common shares outstanding for that year. We granted 0.2 million, 0.3 million, and 2.3 million options to purchase common stock during the years ended December 31, 2016, 2015 and 2014, respectively. We granted an aggregate of 1.9 million, 2.2 million and 0.6 million share awards (restricted stock, RSUs and performance-based stock unit awards) during the years ended December 31, 2016, 2015, and 2014, respectively.



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Overhang is a measure of potential dilution and is defined as the sum of (1) the total number of shares underlying all equity awards outstanding, excluding restricted stock awards, and (2) the total number of shares available for future award grants, divided by: the sum of (a) the total number of shares underlying all equity awards outstanding, excluding restricted stock awards, (b) the total number of shares available for future award grants; and (c) the total number of common stock outstanding. Our overhang at April 12, 2017 was 11.41%. If the additional 900,000 shares proposed to be authorized for grant under the Amended Plan were included in the calculation, our overhang would have been 12.75% at April 12, 2017.



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From 2012 through 2015, our annual burn rate was inflated as a result of elections made by (i) our executive officers in 2013 and 2014 to receive their annual bonuses in the form of common stock in lieu of cash, (ii) our CEO for the years 2012, 2013 and 2014 to receive his annual base salary in the form of common stock in lieu of cash and (iii) certain directors in 2014 and 2015 to receive all or a portion of their annual fees in the form of common stock in lieu of cash. Although we recognized that these elections would have a negative impact on our burn rate, we felt it was important given the pivotal transition that the Company was making and better aligned our management team with the interests of our stockholders. In 2016, there were no stock-for-cash elections made by either our executive officers or any of our directors. The following tables demonstrate the impact of these stock-for-cash elections on our burn rate.

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              Our Board believes that approving the amendment and restatement of the Amended Plan is appropriate and in the best interests of stockholders given (i) our historical rate of issuing equity awards, (ii) our current expectations of the number of shares likely to be needed for future grants, (iii) the importance of equity as a proportion of total compensation and (iv) the need to effectively incent and motivate our employees and other service providers to drive stockholder value creation.

Summary of the Amended Plan (as proposed to be amended and restated)

              The following summary of the Amended Plan is qualified in its entirety by reference to the full text of the Amended Plan, a copy of which is included as Appendix B hereto. References to our Board in this summary include the Compensation Committee or any similar committee appointed by our Board to administer the Amended Plan.

               Shares Available for Issuance under the Amended Plan

              Awards may be made under the Amended Plan for the number of shares described above under the heading "Stock Available for Awards." Certain sub-limitations apply to the shares available for issuance under the Amended Plan. The maximum number of shares of common stock with respect to which awards may be granted to any participant under the Amended Plan is 1,000,000 shares per calendar year. The maximum number of shares with respect to which awards may be granted to non-employee directors shall not exceed 100,000 shares of common stock in any calendar year. The number of shares issuable under the Amended Plan is subject to adjustment for changes in capitalization, including stock splits and other similar events. No more than 17,376,713 shares of common stock may be issued as incentive stock options under the Amended Plan.

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              If an award expires, terminates, is cancelled or otherwise results in shares not being issued, the unused shares covered by such award will generally become available for future grant under the Amended Plan. However, any shares tendered to pay the exercise price of an award or to satisfy a tax withholding obligation will not become available for future grant under the Amended Plan. Furthermore, any shares repurchased by us on the open market using the proceeds from the exercise of an award will not increase the number of shares available for the future grant of awards. In addition, the full number of shares subject to any stock-settled SARs will count against the shares available for issuance under the Amended Plan, regardless of the number of shares actually issued to settle such SAR upon exercise.

              Shares of common stock subject to full value awards count against the shares of common stock available for issuance under the Amended Plan as one share for every one share subject to such award; however, the shares subject to awards that were outstanding (i) as of our 2017 Annual Meeting (but not as of June 9, 2016, June 11, 2015, or December 2, 2014) and that expire, terminate, are cancelled or otherwise result in shares not being issued and become available for future grant under the Amended Plan would return to the Amended Plan at a ratio of 1.50 for every share subject to such award, (ii) as of June 9, 2016 (but not as of June 11, 2015 or December 2, 2014) and that expire, terminate, are cancelled or otherwise result in shares not being issued and become available for future grant under the Amended Plan would return to the Amended Plan at a ratio of 1.61 for every share subject to such award, (iii) as of June 11, 2015 (but not as of December 2, 2014) and that expire, terminate, are cancelled or otherwise result in shares not being issued and become available for future grant under the Amended Plan would return to the Amended Plan at a ratio of 1.57 for every share subject to such award, and (iv) as of December 2, 2014 and that expire, terminate, are cancelled or otherwise result in shares not being issued and become available for future grant under the Amended Plan would return to the Amended Plan at a ratio of 1.50 for every share subject to such award. This amendment and restatement of the Amended Plan removes the fungible share counting with respect to awards granted after shareholder approval of the amended and restated Amended Plan at the 2017 Annual Meeting.

              In connection with a merger or consolidation of an entity with us or our acquisition of property or stock of an entity, our Board may grant awards under the Amended Plan in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof on such terms as our Board determines appropriate in the circumstances, notwithstanding any limitation on awards contained in the Amended Plan. No such substitute awards will count against the overall share limits or sub-limitations described above, except as required by Section 422 and related provisions of the Code.

               Administration of the Amended Plan

              The Amended Plan is administered by our Board, which has the authority to adopt, amend and repeal the administrative rules, guidelines and practices relating to the Amended Plan and to interpret the provisions of the Amended Plan. Pursuant to the terms of the Amended Plan and to the extent permitted by applicable law, our Board may delegate authority under the Amended Plan to one or more committees or subcommittees of our Board. Our Board has authorized the Compensation Committee to administer the Amended Plan.

              Subject to any applicable limitations contained in the Amended Plan, our Board, the Compensation Committee, or any other committee to whom our Board delegates authority, as the case may be, selects the recipients of awards and determines the terms of the awards.

              Subject to any requirements of applicable law, our Board may delegate to one or more of our officers the power to grant awards to our employees or non-executive officers and to exercise such

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other powers under the Amended Plan as our Board may determine, provided that our Board shall fix the terms of the awards to be granted by such officers, the maximum number of shares subject to awards that the officers may grant, and the time period in which such awards may be granted. No officer shall be authorized to grant awards to any of our executive officers.

              Our Board is required to make equitable adjustments in connection with the Amended Plan and any outstanding awards to reflect stock splits, stock dividends, recapitalizations, combination of shares, reclassification of shares, spin-offs and other similar changes in capitalization, and any other dividend or distribution other than an ordinary cash dividend. The Amended Plan also contains provisions addressing the consequences of any Reorganization Event, which is defined as: (i) any merger or consolidation of Sonus with or into another entity as a result of which all of our common stock is converted into or exchanged for the right to receive cash, securities or other property, or is cancelled; (ii) any exchange of all of our common stock for cash, securities or other property pursuant to a share exchange transaction; or (iii) any liquidation or dissolution of our Company.

              In connection with a Reorganization Event, our Board may take any one or more of the following actions as to all or any (or any portion of) outstanding awards, other than awards of restricted stock and RSUs, on such terms as our Board determines:

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provide that awards will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof);



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upon written notice, provide that all unexercised awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised within a specified period following the date of such notice;



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provide that outstanding awards will become exercisable, realizable or deliverable, or restrictions applicable to an award will lapse, in whole or in part prior to or upon such Reorganization Event;



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in the event of a Reorganization Event under the terms of which holders of our common stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the "Acquisition Price"), make or provide for a cash payment to an award holder equal to the excess, if any, of (A) the Acquisition Price times the number of shares of common stock subject to the holder's awards (to the extent the exercise price does not exceed the Acquisition Price) over (B) the aggregate exercise price of all such outstanding awards and any applicable tax withholdings, in exchange for the termination of such awards;



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provide that, in connection with a liquidation or dissolution of our company, awards will convert into the right to receive liquidation proceeds (if applicable, net of the exercise price thereof and any applicable tax withholdings); and



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any combination of the foregoing.

In taking any of the actions permitted directly above, the Board is not obligated by the Amended Plan to treat identically all awards, all awards held by a holder of such awards or all awards of the same type.

              With respect to awards of restricted stock and RSUs, upon the occurrence of a Reorganization Event other than a liquidation or dissolution of our Company, the repurchase and other rights of the Company under each such award will inure to the benefit of our successor, and will, unless the Board

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determines otherwise, apply to the cash, securities or other property into which our common stock is converted or exchanged in the same manner and to the same extent as they applied to the common stock subject to such award. Upon the occurrence of our liquidation or dissolution, except to the extent specifically provided to the contrary in the award agreement governing the award or any other agreement between the award holder and the Company, all restrictions and conditions on such awards will automatically be deemed terminated or satisfied.

              Our Board may at any time provide that any award will become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be, including, without limitation, (A) upon the death or disability of the holder of such award or (B) in connection with an Acquisition of the Company (as defined in the Amended Plan).

              Except as otherwise provided in the Amended Plan with respect to repricing outstanding stock options or SARs, our Board may amend, modify or terminate any outstanding award, including but not limited to, substituting another award of the same or a different type, changing the date of exercise or realization, and converting an incentive stock option to a non-statutory stock option, provided that the participant's consent to any such action will be required unless our Board determines that the action, taking into account any related action, would not materially and adversely affect the participant or the change is otherwise permitted under the terms of the Amended Plan in connection with a change in capitalization or reorganization event.

               Descriptions of Awards

              The Amended Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Code, non-statutory stock options, SARs, restricted stock, RSUs and other stock unit awards and performance awards as described below.

              Incentive Stock Options and Non-statutory Stock Options.     Optionees receive the right to purchase a specified number of shares of common stock at a specified option price and subject to such other terms and conditions as are specified in connection with the option grant. Options must be granted at an exercise price that is not less than the fair market value of our common stock at the close of trading on the date of grant. Under present law, incentive stock options and options intended to qualify as performance-based compensation under Section 162(m) of the Code may not be granted at an exercise price less than 100% of the fair market value of the common stock on the date of grant (or less than 110% of the fair market value in the case of incentive stock options granted to optionees holding more than 10% of our voting power). Options may not be granted for a term in excess of 10 years. The Amended Plan permits the following forms of payment for the exercise price of options: payment by cash; check; via "cashless exercise" through a broker; subject to certain conditions and if permitted by our Board, surrender to Sonus of shares of our common stock held by the optionee; any other lawful means as provided for in the applicable option agreement or approved by the Board; and any combination of these forms of payment. Stock options granted under the Amended Plan may not provide for the payment or accrual of dividend equivalents or contain any provision entitling the grantee to the automatic grant of additional stock options in connection with the exercise of the original stock option.

              Stock Appreciation Rights.     A SAR is an award entitling the holder, upon exercise, to receive an amount in common stock or cash or a combination thereof determined by reference to appreciation, from and after the date of grant, in the fair market value of a share of common stock over the exercise price, which may not be less than the fair market value of the common stock on the date the SAR is granted. SARs may be granted independently or in tandem with an option granted under the Amended Plan. No SAR will be granted with a term in excess of 10 years. SARs granted under the Amended Plan may not provide for the payment or accrual of dividend equivalents or contain any provision

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entitling the grantee to the automatic grant of additional SARs in connection with the exercise of the original SAR.

              Restricted Stock Awards.     Restricted stock awards entitle recipients to acquire shares of common stock, subject to our right to repurchase all or part of such shares at their issue price or other stated or formula price or to require forfeiture if issued at no cost if the conditions specified in the applicable award are not satisfied prior to the end of the applicable restriction period established by the Board for such award. Our Board will determine the terms and conditions of the applicable award, including the conditions for vesting and repurchase and the issue price, if any. Any dividends, whether paid in cash, stock or property, declared and paid by us with respect to shares of restricted stock will be paid to a participant only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. No interest will be paid on unvested dividends.

              Restricted Stock Unit Awards.     RSU awards entitle the recipient to receive shares of common stock or cash to be delivered at the time such award vests pursuant to the terms and conditions established by our Board. The award agreement for RSUs may provide the participant with a right to receive dividend equivalents, which may be paid currently or credited to an account for the participant, may be settled in cash and/or shares of common stock and will be subject to the same restrictions on transfer and forfeitability as the underlying RSUs. No interest will be paid on dividend equivalents.

              Other Stock Unit Awards.     Under the Amended Plan, our Board has the right to grant other awards of shares of common stock and other awards that are valued in whole or in part by reference to, or otherwise based on, shares of common stock or other property, and the grant of awards entitling recipients to receive shares of common stock to be delivered in the future (collectively, "Other Stock Unit Awards"). Other Stock Unit Awards will have such terms and conditions as our Board may determine. An Other Stock Unit Award may provide the participant with a right to receive dividend equivalents, which may be paid currently or credited to an account for the participant, may be settled in cash and/or shares of common stock and will be subject to the same restrictions on transfer and forfeitability as the underlying Other Stock Unit Award. No interest will be paid on dividend equivalents.

              Performance Awards.     Restricted stock and RSU awards and Other Stock Unit Awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code will be made subject to the achievement of performance goals. We refer to these awards as "performance awards." With respect to performance awards intended to qualify as "performance-based compensation" under Section 162(m) of the Code, such awards shall be made only by a committee comprised of two or more "outside directors" within the meaning of Section 162(m) of the Code (the "Committee"). Such Committee shall specify that the degree of granting, vesting and/or payout will be subject to the achievement of one or more objective performance measures established by the Committee as described below.

              The performance criteria for each such award will be based on the relative or absolute attainment of specified levels of one or more of the following measures: (a) net income; (b) earnings before or after discontinued operations, interest, taxes, depreciation and/or amortization; (c) operating profit before or after discontinued operations and/or taxes; (d) sales; (e) sales growth; (f) earnings growth; (g) cash flow or cash position; (h) gross margins; (i) stock price; (j) market share; (k) return on sales, assets, equity or investment; (l) improvement of financial ratings; (m) achievement of balance sheet or income statement objectives; or (n) total stockholder return; and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. Such Committee may specify that such performance measures will be adjusted to exclude any one or more of: (i) extraordinary, nonrecurring or unusual items; (ii) gains or losses on the dispositions

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of discontinued operations; (iii) the cumulative effects of changes in accounting principles; (iv) writedown of any asset; and (v) charges for restructuring and rationalization programs.

              Such performance measures: (x) may vary by participant and may be different for different awards; (y) may be particular to a participant or the department, branch, line of business, subsidiary or other unit in which the participant works and may cover such period as may be specified by the Committee; and (z) will be set by the Committee within the time period prescribed by, and will otherwise comply with the requirements of, Section 162(m) of the Code. The Committee may adjust downwards, but not upwards, the cash or number of shares payable pursuant to such awards and may not waive the achievement of the applicable performance measures except in the case of the death or disability of the participant or a change in control of Sonus.

              Awards that are not intended to qualify as "performance-based compensation" under Section 162(m) of the Code may be based on these performance measures or such other performance measures as our Board may determine.

               Restrictions on Repricings

              Unless approved by our stockholders: (i) no outstanding option or SAR granted under the Amended Plan may be amended to provide an exercise price that is lower than its then-current exercise price (other than adjustments for changes in capitalization); (ii) no outstanding option or SAR grant may be cancelled and substituted with a new award under the Amended Plan covering the same or a different number of shares of common stock and having an exercise price lower than the then-current exercise price of the cancelled option or SAR; and (iii) no outstanding option or SAR granted under the Amended Plan may be purchased by the Company for cash.

               Transferability of Awards

              Awards, other than vested awards of restricted stock and RSUs, may not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution or, other than in the case of an incentive stock option, pursuant to a qualified domestic relations order. During the life of the holder of an award, awards, other than vested awards of restricted stock and RSUs, are exercisable only by such holder. Our Board may permit the gratuitous transfer of an award by the holder of an award to or for the benefit of any immediate family member, family trust or other entity established for the benefit of such holder or an immediate family member of such holder if, with respect to such transferee, Sonus would be eligible to use a Form S-8 for the registration of the sale of the common stock subject to such award under the Securities Act of 1933, as amended.

               Eligibility to Receive Awards

              Our employees, officers, directors, consultants and advisors and those of our subsidiaries are eligible to be granted awards under the Amended Plan. Under present law, however, incentive stock options may only be granted to employees of Sonus and its subsidiaries.

              As of March 31, 2017, approximately 1,388 persons were eligible to receive awards under the Amended Plan, including our executive officers and non-employee directors. On April 12, 2017, the last reported sale price of common stock on the Nasdaq Global Select Market was $6.67.

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               Plan Benefits

              The benefits that will be received by participants, including the named executive officers, under the Amended Plan depend on a variety of factors, including the fair market value of the Company's common stock at various future dates and the Board's discretion in granting awards. Therefore, it is not possible to determine the benefits that will be received by named executive officers or other employees if the Amended Plan is approved by our stockholders.

              Since the Amended Plan was first adopted through December 31, 2016, we have granted the following number of options and restricted stock awards (including performance-based stock unit awards) of our common stock under the Amended Plan to the individuals and groups listed below. ¹

¹ Please see the " Compensation Discussion and Analysis " section of this Proxy Statement for information related to awards made under the Amended Plan since December 31, 2016 to our named executive officers.

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               Clawback Policy

              All awards granted under the Amended Plan are subject to clawback pursuant to the Company's Clawback Policy and any other clawback policy that the Company may adopt in the future.

               Minimum Vesting Periods

              No award issued under the Amended Plan since the 2015 annual meeting may vest earlier than the first anniversary of its date of grant; provided, however, that this minimum vesting requirement does not apply to an aggregate of up to 5% of the maximum number of shares of our common stock authorized for issuance under the Amended Plan.

               Provisions for Foreign Participants

              Our Board may modify awards granted to participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Amended Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

               Effective Date and Term of Amended Plan; Amendment or Termination

              The Amended Plan will be amended and restated effective upon stockholder approval at our 2017 annual meeting. No new award may be granted under the Amended Plan after June 9, 2026, but awards previously granted may extend beyond that date. Our Board may at any time amend, suspend or terminate the Amended Plan; provided that, to the extent determined by our Board, no amendment requiring stockholder approval under any applicable legal, regulatory or listing requirement will become effective until such stockholder approval is obtained.

Federal Income Tax Consequences

              The following summarizes the United States federal income tax consequences that generally will arise with respect to awards granted under the Amended Plan. This summary is based on the federal tax laws in effect as of the date of this Proxy Statement. In addition, this summary assumes that all awards are exempt from, or comply with, the rules under Section 409A of the Code regarding nonqualified deferred compensation. Changes to these laws or assumptions could alter the tax consequences described below.

              Incentive Stock Options.     A participant will not have income upon the grant of an incentive stock option. Also, except as described below, a participant will not have income upon exercise of an incentive stock option if the participant has been employed by us or our corporate parent or a 50% or more-owned corporate subsidiary at all times beginning with the option grant date and ending three months before the date the participant exercises the option. If the participant has not been so employed during that time, then the participant will be taxed as described below under the section entitled "Non-statutory Stock Options." The exercise of an incentive stock option may subject the participant to the alternative minimum tax.

              A participant will have income upon the sale of the stock acquired under an incentive stock option at a profit (if sales proceeds exceed the exercise price). The type of income will depend on when the participant sells the stock. If a participant sells the stock more than two years after the option was granted and more than one year after the option was exercised, then all of the profit will be long-term capital gain. If a participant sells the stock prior to satisfying these waiting periods, then the

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participant will have engaged in a disqualifying disposition and a portion of the profit will be ordinary income and a portion may be capital gain. This capital gain will be long-term if the participant has held the stock for more than one year and otherwise will be short-term. If a participant sells the stock at a loss (sales proceeds are less than the exercise price), then the loss will be a capital loss. This capital loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.

              Non-statutory Stock Options.     A participant will not have income upon the grant of a non-statutory stock option. A participant will have ordinary income upon the exercise of a non-statutory stock option equal to the value of the stock on the day the participant exercised the option less the exercise price. Upon sale of the stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the option was exercised. This capital gain or loss will be long-term if the participant has held the stock for more than one year and otherwise will be short-term.

              Stock Appreciation Rights.     A participant will not have income upon the grant of a SAR. A participant will recognize ordinary income upon the exercise of a SAR equal to the amount of the cash and the fair market value of any stock received. Upon the sale of the stock, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the day the SAR was exercised. This capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.

              Restricted Stock Awards.     A participant will not have income upon the grant of restricted stock unless the participant voluntarily makes an election under Section 83(b) of the Code within 30 days of the date of grant. If a timely Section 83(b) election is made, then a participant will have ordinary income equal to the value of the stock on the date of grant less the purchase price. When the stock is sold, the participant will have capital gain or loss equal to the difference between the sales proceeds and the value of the stock on the date of grant, if a timely Section 83(b) election has been made.

              If the participant does not make a Section 83(b) election, then when the stock vests ( i.e.,  the transfer restrictions and forfeiture provisions lapse) the participant will have ordinary income equal to the value of the stock on the vesting date less the purchase price. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the vesting date, if no Section 83(b) election has been made. Any capital gain or loss will be long-term if the participant held the stock for more than one year following (i) the day after the grant date if a timely Section 83(b) election has been made or (ii) the day after the vesting date if no Section 83(b) election has been made, and otherwise will be short-term.

              Restricted Stock Units.     A participant will not have income upon the grant of an RSU. A participant is not permitted to make a Section 83(b) election with respect to an RSU award. When the RSU vests, the participant will have income on the vesting date in an amount equal to the amount of cash received or the fair market value of the stock on the vesting date less the purchase price, if any. When the stock is sold, the participant will have capital gain or loss equal to the sales proceeds less the value of the stock on the vesting date. Any capital gain or loss will be long-term if the participant held the stock for more than one year and otherwise will be short-term.

              Other Stock Unit Awards.     The tax consequences associated with any other stock unit award granted under the Amended Plan will vary depending on the specific terms of such award. Among the relevant factors are whether or not the award has a readily ascertainable fair market value, whether or not the award is subject to forfeiture provisions or restrictions on transfer, the nature of the property to

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be received by the participant under the award and the participant's holding period and tax basis for the award or underlying common stock.

              Tax Consequences to the Company.     There will be no tax consequences to us except that we will be entitled to a deduction when a participant has ordinary income. Any such deduction may be subject to the limitations of Sections 162(m) of the Code.

Board of Directors' Recommendation