☐ Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
You are cordially invited to attend a special meeting (the
“Special Meeting”) of the stockholders of Proteon Therapeutics, Inc. (the “Company,” “Proteon,”
or “we”), which will be held at Morgan, Lewis & Bockius LLP, One Federal Street, Boston, Massachusetts 02110 on
July 31, 2017, at 11 a.m. local time.
On June 22, 2017, we entered into a securities purchase agreement (the “Purchase Agreement”)
with
a syndicate of current and new institutional investors (each individually, an “Investor”
and, collectively, the “Investors”), led by a fund affiliated with Deerfield Management Company, L.P. (“Deerfield”),
pursuant to which we agreed to issue and sell to the Investors an aggregate of 22,000 shares (the “Preferred Shares”)
of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”
and such sale of the Series A Preferred Stock, the “Transaction”), for a purchase price of $1,000 per share, or an
aggregate purchase price of $22.0 million, all upon the terms and conditions set forth in the Purchase Agreement. The Preferred
Shares will be convertible into shares of our common stock, par value $0.001 per share (the “Common Stock”; the shares
of Common Stock issuable upon conversion of the Preferred Shares being referred to as the “Conversion Shares”), in
accordance with the terms of our Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred
Stock (the “Certificate of Designation”). However, any conversion of Series A Preferred Stock by a holder into shares
of Common Stock will be prohibited if, as a result of such conversion, the holder, together with its affiliates and any other person
or entity whose beneficial ownership of Common Stock would be aggregated with such holder’s for purposes of Section 13(d)
of the Securities and Exchange Act of 1934, as amended, would beneficially own more than 9.985% of the total number of shares of
Common Stock issued and outstanding after giving effect to such conversion (the “Blocker”). The Blocker may not be
waived and shall apply to any successor holder of shares of Series A Preferred Stock.
The Transaction is expected to close in the third quarter of 2017,
subject to satisfaction of certain closing conditions set forth in the Purchase Agreement, including approval of the issuance of
the Preferred Shares and the Conversion Shares by the Company’s stockholders to satisfy the requirements of The NASDAQ Stock
Market. We believe that the Transaction will improve our future capital position and provide financing for future growth, and we
anticipate that the Company will use the proceeds from the Transaction to complete the ongoing PATENCY-2 trial and fund continued
market access activities.
Our board of directors has called this special meeting, among other
purposes, to ask our stockholders to consider, vote upon and approve a proposal (the “NASDAQ Proposal”) to approve
the issuance of the Preferred Shares and the Conversion Shares pursuant to the Purchase Agreement and the Certificate of Designation,
as applicable, which would result in the issuance of securities convertible into more than 20% of our Common Stock outstanding
prior to the issuance of the Preferred Shares or the Conversion Shares at a price that may be less than the greater of book or
market value of the Common Stock, which requires stockholder approval under applicable NASDAQ Listing Rules.
In addition to the NASDAQ Proposal, at the Special Meeting we are
asking you to approve an amendment to our 2014 Equity Incentive Plan to make clear that the “evergreen” feature of
our 2014 Equity Incentive Plan takes into account both Common Stock and securities convertible into Common Stock, including the
number of Conversion Shares issuable upon conversion of the Preferred Shares (the “Equity Incentive Plan Proposal”).
The accompanying proxy statement provides you with detailed information
about the Special Meeting and the proposals to be voted on at the Special Meeting. We encourage you to read carefully the entire
proxy statement. You also may obtain additional information about the Company and the Transaction from documents we have filed
with the Securities and Exchange Commission, including the Purchase Agreement, the Certificate of Designation and the Voting Agreements.
Each of the NASDAQ Proposal and the Equity Incentive Plan Proposal
must be approved by a majority of the voting power of our outstanding shares of Common Stock present in person or by proxy at the
Special Meeting. Our board of directors unanimously recommends that stockholders vote in favor of each of the NASDAQ Proposal and
the Equity Incentive Plan Proposal.
Only stockholders of record at the close of
business on July 13, 2017 are entitled to notice of, and to vote at, the Special Meeting, including any adjournment or postponement
thereof with respect to the Equity Incentive Plan Proposal.
The Company has already entered
into Voting Agreements with current stockholders that collectively hold an aggregate of 62.6% of our outstanding shares of Common
Stock to vote in favor of the NASDAQ Proposal.
PROPOSAL NUMBER 2:
APPROVAL OF THE EQUITY INCENTIVE PLAN PROPOSAL
Summary and Effect of Approval of Equity Incentive Plan Proposal
The Board initially adopted our 2014 Equity Incentive Plan (the “Original
Plan”) on August 21, 2014, and the Original Plan became effective on August 21, 2014. The Original Plan was approved by the
stockholders of the Company on October 3, 2014.
As set forth in the Original Plan, the number
of shares authorized under the Original Plan was to be increased each January 1, commencing on January 1, 2015, by an
amount equal to 4% of our outstanding shares of “Stock” as of the end of the immediately preceding fiscal year (the
“Evergreen Feature”). In this context, the definition of “Stock” included outstanding common stock only
and did not include outstanding securities convertible into common stock. As a result, the Evergreen Feature did not consider our
outstanding capital stock on a fully-diluted basis.
The Board reviewed the mechanics of the Original
Plan, including the Evergreen Feature, in connection with the Company’s review of the terms of and execution of the Purchase
Agreement. In light of this review, and as a result of the issuance of the Preferred Shares, which are convertible into Conversion
Shares, the Board believes that it is desirable and in the best interests of its stockholders to amend and restate the terms of
the Original Plan (the “Amended Plan”) to clarify that the number of shares of “Stock” to be taken into
account for purposes of calculating the Evergreen Feature includes the number of shares of Common Stock issuable upon conversion
of any security that the Company may issue that is convertible into or exchangeable for Common Stock, including, but not limited
to, preferred stock or warrants (the “Evergreen Provision Amendment”). Other than changes related to the Evergreen
Provision Amendment, all other terms of the Original Plan remain the same. All equity awards previously granted under the Original
Plan will remain the same under the Plan Amendment.
As a result of the approval of the Equity Incentive
Plan Proposal, on January 1, 2018, the increase to the Evergreen Feature will include 4% of the Conversion Shares issuable upon
conversion of the Preferred Shares to be issued pursuant to the Purchase Agreement, or an additional 884,511 shares.
The Board discussed and approved the steps related
to the Transaction, including the Evergreen Provision Amendment, on June 20, 2017. As a technical matter, the Board believes that
this Evergreen Provision Amendment should be adopted regardless of your approval of the NASDAQ Proposal.
As a result, the Board
unanimously recommends that stockholders vote “FOR” the approval of Amended Plan.
The terms of the Amended Plan are summarized
below. The Amended Plan is appended hereto as Appendix A, and the Amended Plan showing the changes from the Original Plan is appended
hereto as Appendix B. The summary below does not contain all of the information that is important to you. For a more complete understanding
of the matters to be considered at the Special Meeting, you should read carefully this entire proxy statement including the Amended
Plan is appended hereto as Appendix A, and the Amended Plan showing the changes from the Original Plan is appended hereto as Appendix
B.
Purpose and Administration
The Amended Plan is intended to provide incentives that will attract,
retain and motivate highly competent officers, directors, employees, consultants and advisors to promote the success of the Company’s
business and align employees’ interests with stockholders’ interests. The Amended Plan is intended to be an incentive
stock option plan within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “
Code
”),
but not all awards granted pursuant to The Amended Plan are required to be treated as incentive stock options. Options that are
not treated as incentive stock options are referred to generally as nonstatutory options. Incentive stock options and nonstatutory
options are generally referred to as options. Any grant or sale pursuant to The Amended Plan of stock, options, stock appreciation
rights, restricted stock, performance units, restricted stock units or rights to receive cash, stock or any of these other grants
is generally referred to as an award. The Amended Plan is not intended to constitute a plan subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
The Amended Plan is administered by the Committee of the Board, which
members are appointed by the Board and is composed of at least three members, all of whom are independent directors as defined
by the regulations of the SEC and the NASDAQ Stock Market. Members of the Committee serve until the appointment of their successors
or their removal by the Board at any time. The Board may at any time exercise any of the powers and responsibilities assigned to
the Committee under the Amended Plan. Additionally, the Committee may delegate to an executive officer or officers the authority
to grant awards to employees who are not officers or to consultants in accordance with guidelines established by the Committee.
Subject to the provisions of the Amended Plan, the Committee has complete authority to make, or select the manner of making, all
determinations with respect to awards to be granted, including the form of award and the employee, consultant or director to receive
the award, by considering such factors as the Committee shall deem relevant in its discretion. Subject to the provisions of the
Amended Plan, the Committee also has complete authority to interpret The Amended Plan, to prescribe, amend and rescind rules and
regulations relating to the Amended Plan, to determine the terms and provisions of any agreements concerning the terms of an award,
and to make all other determinations necessary or advisable for the administration of The Amended Plan. All determinations of the
Committee regarding the Amended Plan made in good faith shall be final, binding and conclusive.
The Amended Plan, unless earlier terminated by the Board, shall end
immediately prior to the tenth anniversary of August 21, 2014, the effective date of the Original Plan.
Eligibility
Awards under the Amended Plan may be granted to any employees, officers,
directors, consultants and advisors of the Company and any corporation or other entity affiliated with the Company. Only employees
of the Company and its parents or subsidiaries may receive incentive stock options. Subject to the provisions for adjustment set
forth in the Amended Plan, in any calendar year, participants may not receive options or stock appreciation rights covering awards
to more than 1,408,000 shares. The maximum number of shares subject to all awards (including options and stock appreciation rights)
intended to be qualified performance-based awards during a single calendar year may not cover more than 1,408,000 shares. In addition,
no participant may be granted awards intended to be qualified performance-based awards that are denominated in cash under
which more than $30,000,000 may be earned for a twelve month performance period.
Types of Awards
Awards under the Amended Plan may include incentive stock options,
nonstatutory options, stock appreciation rights, restricted stock, restricted stock units, performance units, and stock grants.
Awards under the Amended Plan may be designated as qualified performance-based awards intended to qualify as “performance-based”
compensation under Section 162(m) of the Code.
Shares Subject to the Amended Plan
A total of 704,000 shares of common stock were initially reserved
for issuance under the Amended Plan. These shares were registered on a Registration Statement on Form S-8 (File No. 333-200587).
The, the number of shares authorized under the Amended Plan was to be increased each January 1, commencing on January 1,
2015, by an amount equal to 4% of our outstanding shares of common stock and securities convertible into common stock as of the
end of the immediately preceding fiscal year. Notwithstanding the foregoing, our Board may act prior to January 1 of a given
year to provide that there will be no such January 1 increase in the number of shares of stock authorized under the Amended
Plan for such year or that the increase in the number of shares of stock authorized under the Amended Plan for such year will be
a lesser number than would otherwise occur pursuant to the preceding sentence. Notwithstanding the preceding sentences, in no event
shall the number of shares available for issuance pursuant to incentive options exceed 14,080,000 shares of stock. If any option
or stock appreciation right outstanding under the Amended Plan expires, terminates, or is cancelled without being exercised in
full, or any other award is forfeited, the shares forfeited or not purchased will again be available for awards to be granted.
If any option under the Amended Plan or Prior Plans is exercised by delivering previously owned shares of stock in payment of the
exercise price, only the net number of shares shall be considered to have been issued with respect to the award and the balance
will be available for awards to be granted. Additionally, any shares of stock delivered to or withheld by the Company in satisfaction
of tax withholding obligations with respect to an award under the Amended Plan shall be available for awards granted under the
Amended Plan. Settlement of any award will not count against this limitation except to the extent settled in the form of stock.
Shares of stock issued pursuant to the Amended Plan may be either authorized but unissued shares or treasury shares held by the
Company.
Adjustment for Corporate Actions
If the outstanding shares of stock are increased, decreased, or exchanged
for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities
are distributed with respect to shares of stock as a result of a reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, or other similar distribution with respect to such shares of stock, an appropriate and proportionate
adjustment will be made in (i) the maximum numbers and kinds of shares subject to the Amended Plan, (ii) the numbers and kinds
of shares or other securities subject to the then outstanding awards, (iii) the exercise price for each share or other unit
of any other securities subject to then outstanding options and stock appreciation rights (without change in the aggregate purchase
price as to which such options or rights remain exercisable), and (iv) the repurchase price of each share of restricted stock then
subject to a risk of forfeiture in the form of a Company repurchase right. Any such adjustment in awards will be determined and
made by the Committee in its sole discretion. Outstanding awards and their terms may be adjusted by the Committee in its sole discretion
upon the occurrence of certain other corporate actions.
Grant of Awards
Awards are granted at the times, to the participants, and in the
amounts determined by the Committee and specified in the relevant award agreements. Subject to the terms of the Amended Plan, the
Committee determines the number of shares subject to, the duration and the exercise price (if any) of, and the restrictions and
limitations (if any) applicable to, each award granted. Each award granted shall be subject to all applicable terms and conditions
of the Amended Plan and such other terms and conditions as the Committee may prescribe. No prospective participant in the Amended
Plan will have any rights with respect to an award unless and until he or she has executed an agreement evidencing the award, delivered
a fully executed copy of the agreement to the Company, and otherwise complied with the applicable terms and conditions of the award.
Stock Options
The exercise price of an option must be no less than 100% of the
market value of the stock on the date on which the award was granted or, in the case of an incentive option, no less than 110%
of the market value of the stock on the date on which the award was granted if the optioned is a person who owns or is deemed to
own stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parents or
subsidiaries. An incentive stock option will be considered to be an incentive stock option only to the extent that the number of
shares of stock for which the option first becomes exercisable in a calendar year do not have an aggregate market value (as of
the date of the grant of the option) in excess of the “current limit.” The current limit for any optionee for any calendar
year is $100,000
minus
the aggregate market value at the date of the grant of the number of shares of stock available for
purchase for the first time in the same year under each other incentive stock option previously granted to the optionee under the
Amended Plan, and under each other incentive stock option previously granted to the optionee under any other incentive stock option
plan of the Company and its affiliates. Any shares of stock which would cause this limit to be violated will be deemed to have
been granted under a separate nonstatutory option, otherwise identical in its terms to those of the incentive stock option.
An option may be immediately exercisable or become exercisable in
installments, as the Committee may determine. The Committee may accelerate any option not immediately exercisable in full, in whole
or in part at any time. Acceleration of incentive stock options must not cause the option to fail to comply with the provisions
of Section 422 of the Code unless the optionee consents to the acceleration. No option may be exercised on or after the tenth anniversary
of the date on which the option was granted or, in the case of an incentive stock option, on or after the fifth anniversary of
the date on which the incentive stock option was granted, if the optionee is a person who owns or is deemed to own stock possessing
more than 10% of the total combined voting power of all classes of stock of the Company or its parents or subsidiaries.
An optionee exercises an option under the Amended Plan by giving
written notice to the Company, specifying the number of shares of common stock being exercised. The notice must be accompanied
by payment in the form of (i) cash or check payable to the order of the Company in an amount equal to the exercise price of the
shares to be purchased or, subject to Committee approval, (ii) shares of stock having a market value equal to the exercise price
of the shares to be purchased, (iii) unless prohibited by law, an executed promissory note in the principal amount equal to the
exercise price of the shares to be purchased and otherwise in a form approved by the Committee, or (iv) by surrender of all or
part of the option then exercisable in exchange for shares of stock having an aggregate market value equal to the difference between
the aggregate market value of the surrendered option and the aggregate exercise price under the surrendered portion of the option.
If the Company stock is traded on an established market, payment of any exercise price may also be made through and under the terms
and conditions of any formal cashless exercise program authorized by the Company entailing the sale of the stock subject to an
option in a brokered transaction (other than to the Company) in an open market transaction. Receipt by the Company of such notice
and payment in any authorized or combination of authorized means will constitute the exercise of the option. Within 30 days thereafter
but subject to the remaining provisions of the Amended Plan, the Company will deliver or cause to be delivered to the optionee
or his agent a certificate or certificates or shall cause the stock to be held in book-entry position through the Company’s
transfer agent’s direct registration system, for the number of shares then being purchased. Such shares will be fully paid
and nonassessable.
Additionally each person exercising an incentive stock option shall
be deemed to have covenanted with the Company to report any disposition of such shares issued upon exercise prior to the expiration
of the holding periods specified by Section 422(a)(1) of the Code.
Stock Appreciation Rights
Stock appreciation rights are rights to receive any excess in the
market value of shares of stock over a specified exercise price. These rights may be granted in tandem with an option or standalone.
Stock appreciation rights granted in tandem with an option terminate if the related option is exercised, and the related option
will terminate if the tandem stock appreciation rights are exercised.
Stock appreciation rights shall have an exercise price of not less
than 100% of the market value of the stock on the date of the award. In the case of stock appreciation rights granted in tandem
with options, the exercise price will equal the exercise price of the related option. No stock appreciation right may be exercised
on or after the tenth anniversary of the grant date. Other terms and conditions are substantially similar to those applicable to
a nonstatutory option. If a stock appreciation right is related to an option which can only be exercised during limited periods
following a change of control of the Company, the participant may be entitled to receive an amount based on the highest price paid
or offered for the Company’s stock in connection with the change of control or paid during the 30 day period immediately
preceding the change of control.
Awards of Restricted Stock
Awards of restricted stock are grants or sales of stock subject to
a risk of forfeiture upon the occurrence or non-occurrence of certain specified terms or conditions. The consideration for restricted
stock can be cash or other property or services as the Committee determines. A participant receiving a restricted stock award will
be issued either a legended stock certificate, registered in the participant’s name, or held in book-entry position through
the Company’s transfer agent’s direct registration system and the restrictions will be appropriately noted. Each award
is subject to an award agreement which specifies the terms, conditions and restrictions applicable to such award. The Committee
may require that the stock certificates evidencing shares of restricted stock be held in escrow until the restrictions on the shares
have lapsed.
During the restriction period applicable to shares of restricted
stock, the shares are subject to limitations on transferability and a risk of forfeiture, which may arise on the basis of certain
conditions determined and specified by the Committee. These restrictions and conditions may be related to the performance of services,
Company or affiliate performance or otherwise and will be outlined in the award agreement pertaining to the award of restricted
stock. The restriction period or risk of forfeiture may be waived, terminated or shortened at any time by the Committee. Except
as otherwise provided in the Amended Plan or award agreement, the participant will have all the rights of a stockholder of the
Company with respect to any outstanding shares of restricted stock, including the right to vote and receive dividends, but any
dividends or other distributions payable in shares of stock shall constitute additional restricted stock, subject to the same risk
of forfeiture as the shares of restricted stock. The Committee may permit or require the payment of cash dividends to be deferred
and reinvested in additional restricted stock.
Restricted Stock Units
Restricted stock units are rights to receive shares of stock at the
close of a restriction period, subject to a risk of forfeiture upon the occurrence or non-occurrence of certain specified events
or conditions. These events or conditions are determined and specified by the Committee and may relate to the performance of services,
Company or affiliate performance or otherwise. The restriction period and risk of forfeiture may be waived, terminated or shortened
at any time by the Committee. The payment of earned restricted stock units is made promptly following the close of the applicable
restriction period. In the Committee’s discretion, participants may receive payments equivalent to any dividends declared
in grants of restricted stock units following the close of the restriction period if the underlying stock has been earned. At the
time of the award, the Committee may permit or require the payment of cash dividends to be reinvested in additional restricted
stock units to the extent shares of stock are available under the Amended Plan. The Committee may permit or require the deferral
of receipt of the payment of earned restricted stock units subject to the rules and procedures of such payment deferrals.
Performance Units
Performance units are rights to receive such amount of cash, shares
of stock or other awards, as may be established by the Committee, at the close of a specified performance period contingent on
the achievement of certain written performance goals. These performance goals are measured over a particular period of time specified
by the Committee and may be expressed in terms of overall Company performance or the performance of a division, business unit,
subsidiary, or an individual or other business objectives. The number and value of performance units paid to each participant will
be determined by the extent to which the written performance goals are met within the applicable performance period. At the end
of each applicable performance period, the holder of performance units is entitled to receive payout on the number and value of
performance units he or she has earned.
Payment on performance units is made promptly following the close
of the applicable performance period. In the Committee’s discretion, participants may be entitled to receive dividends declared
with respect to shares of stock earned in connection with performance units, but not yet earned and distributed to participants.
Any dividends or dividend equivalents with respect to performance units shall be accumulated until the applicable award is earned,
and such dividends or dividend equivalents shall not be paid if the performance objectives are not achieved and the performance
unit is not earned. The Committee may permit or require participants to defer receipt of payment of cash or delivery of stock earned
in connection with the achievement of performance goals.
Stock Grants
A stock grant is a grant of shares of stock not subject to restrictions
or forfeiture conditions. Such a grant may be made under the Amended Plan solely in recognition of significant prior or expected
contributions to the success of the Company or its affiliates, as an inducement to employment, in lieu of compensation otherwise
due, or in other limited circumstances the Committee deems appropriate.
Qualified Performance-Based Awards
The Committee has discretion to qualify awards granted pursuant to
the Amended Plan as performance-based compensation under Section 162(m) of the Code. Qualified performance-based awards must comply
with the requirements of Section 162(m) of the Code. Any form of award permitted under the Amended Plan, other than a stock grant,
may be granted as a qualified performance-based award. The exercise price of any option or stock appreciation right intended to
qualify as a qualified performance-based award must be no less than the market value of the stock on the date on which the award
is granted and may become exercisable based on continued service, satisfaction of performance goals or other business objectives
or a combination of both. Other awards, such as restricted stock, restricted stock units or performance units, are subject to satisfaction
of one or more performance goals except as provided in the Amended Plan. The Committee has full discretion to establish the length
of any restriction period or performance period and the nature of the performance goal with respect to qualified performance-based
awards other than options and stock appreciation rights.
Participants are eligible to receive payment under a qualified performance-based
award subject to achievement of a performance goal or goals only if the applicable goals are achieved within the performance period
as determined by the Committee. A qualified performance-based award may be deemed earned as a result of death, disability or in
connection with a change of control (within the meaning of Section 162(m) of the Code) if provided in the Amended Plan or applicable
award agreement. In determining the size of a qualified performance-based award, the amount earned for the performance period may
be reduced or eliminated in the discretion of the Committee. Qualified performance-based awards may not be subject to adjustment
pursuant to The Amended Plan if such adjustment would result in the providing of anything other than “performance-based compensation”
within the meaning of Section 162(m) of the Code. Performance criteria upon which performance goals are established by the Amended
Plan administrator may include but are not limited to: (i) net earnings (either before or after one or more of (A) interest,
(B) taxes, (C) depreciation and (D) amortization); (ii) gross or net sales or revenue; (iii) net income
(either before or after taxes); (iv) adjusted net income; (v) operating earnings or profit; (vi) cash flow (including,
but not limited to, operating cash flow and free cash flow); (vii) return on assets; (viii) return on capital; (ix) return
on stockholders' equity; (x) total stockholder return; (xi) return on sales; (xii) gross or net profit or operating
margin; (xiii) costs; (xiv) expenses; (xv) working capital; (xvi) earnings per share; (xvii) adjusted
earnings per share; (xviii) price per share; (xix) regulatory body approval for commercialization of a product; (xx) implementation,
completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments;
(xxi) market share; (xxii) economic value; (xxiii) revenue; (xxiv) revenue growth; and (xxv) operational
and organizational metrics.
Certain Actions with Respect to Corporate Transactions
In the event of a transaction, including
(i) any merger or consolidation of the Company, (ii) any sale or exchange of all of the common stock of the Company,
(iii) any sale, transfer or other disposition of all or substantially all of the Company’s assets, or (iv) any
liquidation or dissolution of the Company, the Committee may, with respect to all or any outstanding stock options and
stock
appreciation rights
, (1) provide that such awards will be assumed, or substantially equivalent rights shall be provided
in substitution therefore, (2) provide that the participant’s unexercised awards will terminate immediately prior to
the consummation of such transaction unless exercised within a specified period following written notice to the participant, (3) provide
that outstanding awards shall become exercisable in whole or in part prior to or upon the transaction, unless assumed or substituted
in clause (1), (4) provide for cash payments, net of applicable tax withholdings, to be made to the participants, (5) provide
that, in connection
with a liquidation or dissolution of the Company, awards shall convert
into the right to receive liquidation proceeds net of the exercise price of the awards and any applicable tax withholdings, or
(6) any combination of the foregoing.
With
respect to outstanding awards other than stock options or stock appreciation rights, upon the occurrence of a transaction other
than a liquidation or dissolution of the Company which is not part of another form of transaction, the repurchase and other rights
of the Company under each such award will transfer to the Company’s successor. Upon the occurrence of such a liquidation
or dissolution of the Company, all risks of forfeiture and performance goals applicable to such other awards will automatically
be deemed terminated or satisfied, unless specifically provided to the contrary in the award. Any determinations required to carry
out any of the foregoing will be made by the Committee in its sole discretion.
Change of Control
In the event of a change of
control, to the extent that the surviving entity declines to continue, convert, assume or replace outstanding awards, then all
such awards shall become fully vested and exercisable and any restrictions applicable to any such awards shall lapse in connection
with the transaction. Upon or in anticipation of a change of control, the Amended Plan administrator may cause any outstanding
awards to terminate at a specified time in the future and give the participant the right to exercise such awards during a period
of time determined by the Amended Plan administrator. Individual award agreements may provide for additional accelerated vesting
and payment provisions. The treatment of a stock option award is also subject to any other, or additional, terms as provided in
the applicable award agreement. In the case of any other award, the treatment of that award upon a change of
control shall
be subject to the specific terms and conditions set forth in the applicable award agreement, except as provided by law or in the
Amended Plan.
A change of control is defined
as the occurrence of any of the following: (1) a transaction, as described above, unless securities possessing more than 50%
of the total combined voting power of the survivor or acquiror are held by a person or persons who held securities possessing more
than 50% of the total combined voting power of the Company immediately prior to the transaction; (2) any person or group of
persons, excluding the Company and certain other related entities, directly or indirectly acquires beneficial ownership of securities
possessing more than 50% of the total combined voting power of the Company, unless pursuant to a tender or exchange offer that
the
Board
recommends stockholders accept; (3) over a period of no more than 36
consecutive months there is a change in the composition of the
Board
such that a majority
of the
Board
members ceases to be composed of individuals who either (i) have
been
Board
members continuously since the beginning of that period, or (ii) have
been elected or nominated for election as
Board
members during such period by at least
a majority of the remaining Board members who have been Board members continuously since the beginning of that period; or (4) a
majority of the Board votes in favor of a decision that a change of control has occurred.
Settlement of Awards and Tax Withholding
Stock options and restricted stock will be settled in accordance
with their terms. All other awards under the Amended Plan may be settled in cash, common stock or other awards, or a combination
thereof, as determined by the Committee at or after the date of grant and subject to any contrary award agreement.
Upon the issuance of shares issued pursuant to awards, the Company
has the right to require such participants to remit an amount sufficient to satisfy federal, state, local, foreign, employment
or other tax withholding requirements if and to the extent required by law (whether so required to secure for us an otherwise available
tax deduction or otherwise) prior to the delivery of any certificate or certificates representing any such shares or before placing
such shares in book-entry position through the Company’s transfer agent’s direct registration system.
The obligation of the Company to issue shares pursuant to an award,
is subject to compliance with all of the terms of the Amended Plan and the applicable award agreement. If any law or applicable
regulation of the SEC or other body having jurisdiction shall require us or the participant to take any action in connection with
shares being issued, issuance and delivery of the certificate or certificates for such shares or placing such shares in book-entry
position through the Company’s transfer agent’s direct registration system will be postponed until completion of the
necessary action. Such actions may include, but are not limited to, any required or desirable registration of stock, the agreement
to any stockholders’ agreement then in effect, or the making of written representations to the Company by the participant.
Awards to Participants Outside the United States
The Committee may modify the terms of any award under The Amended
Plan granted to a participant who is, at the time of grant or during the term of the award, a resident or primarily employed outside
of the United States in any manner deemed by the Committee to be necessary or appropriate in order for the award to conform to
laws, regulations, procedures and customs of such foreign country, or so that the value and other benefits of the award to the
participant, as affected by foreign tax laws and other restrictions applicable as a result of the participant’s residence
or employment abroad, will be as comparable as practicable to the value of such an award to a participant who is a resident or
primarily employed in the United States. The Committee may establish supplements or sub-plans to, or amendments, restatements,
or alternative versions of The Amended Plan for the purpose of granting and administrating any such modified award.
Market Value
The market value of the stock on any particular date is the value
of the stock as determined by such methods or procedures as may be established by the Committee. Unless otherwise determined by
the Committee, market value of the stock for any particular date will be the closing price for the stock as reported on the NASDAQ
Stock Market, or any other national securities exchange on which the stock is then listed, for that date, or if no closing price
is reported for that date, the closing price of the first prior date for which a closing price is reported.
Limitation of Rights
Participants in the Amended Plan will not be deemed for any purpose
to be a stockholder of the Company with respect to any of the shares of stock subject to an award unless and until a certificate
has been issued for the shares and delivered to the participant or the stock has been issued through the Company’s transfer
agent’s direct registration system. Any stock issued pursuant to awards is subject to all restrictions on transfer imposed
by the Company’s by-laws or certificate of incorporation.
Transferability
Except as otherwise provided in the Amended Plan, awards are not
transferable, and no awards or interests therein may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
other than by will or the laws of descent and distribution. All of a participant’s rights in any award may be exercised during
the life of the participant only by the participant or the participant’s legal representative. However, the Committee may,
at or after the grant of an award of a nonstatutory option or shares of restricted stock, provide that such award may be transferred
by the participant to a “family member” (as defined in the Amended Plan); provided, however, that any such transfer
is without payment of any consideration whatsoever and that no transfer will be valid unless first approved by the Committee, acting
in its sole discretion.
Termination of Association with the Company
Unless the Committee provides otherwise with respect to any award,
if a participant’s employment or other association with the Company and its affiliates ends for any reason, any outstanding
option or stock appreciation right held by the participant shall cease to be exercisable not later than 30 days following the end
of the participant’s employment or association. Other outstanding awards will be forfeited or otherwise subject to return
to or repurchase by the Company as provided in the applicable award agreement. However, cessation of the performance of services
in one capacity shall not result in the termination of an award while the participant continues to perform services in another
capacity. Military, sick leave or other bona fide leave is not deemed a termination of employment provided it does not exceed the
longer of 90 days or the period during which the absent participant’s reemployment rights are guaranteed by statute or contract.
The Committee may provide that awards continue to vest for some or all of any such leave or that vesting be tolled during such
leave, to the extent consistent with applicable law.
Term and Termination of the Amended Plan; Amendment
Awards under the Amended Plan may not be granted later than August
21, 2024. The Board may terminate the Amended Plan at any earlier time or make modifications of the Amended Plan as it deems advisable,
subject to the rights of participants of outstanding awards on the date of amendment or modification. Awards granted at any time
during the term of the Amended Plan will not expire solely because of the termination of the Amended Plan, and no amendment or
modification of the Amended Plan shall affect the terms of any outstanding award unless the Board expressly provides otherwise.
Subject to the following, the Committee may (1) amend the terms of an award granted provided it is amended consistent with the
terms of the Amended Plan, (2) modify, extend or assume awards or accept the cancellation of awards granted by another issuer in
return for new awards, and (3) offer to buy out for cash or cash equivalents an award or authorize a cash-out of an award, at such
time and on such terms as the Committee shall establish. However, termination or amendment of the Amended Plan or terms of any
award previously granted may not adversely affect the rights of the participant of an award without his or her consent except if
the Committee determines, prior to a change of control, that an amendment is (x) advisable or required to satisfy any law or regulation
or accounting standard or to avoid adverse financial accounting consequences or (y) not reasonable likely to diminish the benefits
provided under the award or such diminution has been adequately compensated. Without the approval of the Company’s stockholders,
no amendment may (i) increase the number of shares of common stock which may be issued under the Amended Plan, (ii) change
the description of the persons eligible for awards, or (iii) effect any other change for which stockholder approval is required
by law or the rules of any relevant stock exchange. However, the Committee is expressly permitted to “reprice” options
to reduce their exercise or base price and, in connection with such reprising, to amend any other terms of such options, in each
case without the approval or consent of the Company’s stockholders.
Material U.S. Federal Tax Consequences
Following are the federal tax consequences to U.S. citizens and residents
of awards under the Amended Plan. It is based on the provisions of the Code, and applicable Internal Revenue Service regulations
and rulings. The Code is subject to amendment, and continuing interpretation by the Internal Revenue Service. This summary describes
only the principal tax consequences in the circumstances described and does not take into account special rules that might apply
in limited cases.
You should therefore consult your own independent tax advisor and seek advice based on your particular
circumstances as to the specific consequences under federal tax law, and under other tax laws, such as foreign, state or local
tax laws, which are not addressed here.
Internal Revenue Service regulations provide that, for the purpose
of avoiding certain penalties under the Code, taxpayers may rely only on opinions of counsel that meet specific requirements set
forth in the regulations, including a requirement that such opinions contain extensive factual and legal discussion and analysis.
Any tax advice that may be contained in this document does not constitute an opinion that meets the requirements of the regulations.
Any such tax advice therefore cannot be used, and was not intended or written to be used, for the purpose of avoiding any federal
tax penalties that the Internal Revenue Service may attempt to impose. Because any such tax advice could be viewed as a “marketed
opinion” under the Internal Revenue Service regulations, those regulations require this document to state that any such tax
advice was written to support the “promotion or marketing” of the matters set forth in this document.
For purposes of this summary, we assumed that no award will be considered
“deferred compensation” as that term is defined for purposes of the federal tax rules governing nonqualified deferred
compensation arrangements, Section 409A of the Code, or, if any award were considered to any extent to constitute deferred compensation,
its terms would comply with the requirements of Section 409A of the Code (in general, by limiting any flexibility in the time
of payment). For example, the award of a restricted stock unit, if the underlying stock is not required to be delivered timely
following vesting, could constitute deferred compensation. If an award includes deferred compensation, and its terms do not comply
with the requirements of Section 409A of the Code, then any deferred compensation component of the award will be taxable when it
is earned and vested (even if not then payable) and the participant will be subject to a 20% additional tax.
Nonstatutory Options
Grant
. You will not have to report any taxable income when
you receive a nonstatutory option.
Exercise with Cash
. You will have to report taxable income
if you exercise a nonstatutory option with cash. The amount you must report is the difference between the value of the shares on
the date you exercise the option and the amount you pay for the shares. This income will be taxed to you just as any other income
you receive as compensation for services. This income, together with the amount you pay for the shares, will then be your basis
in the shares for purposes of determining your taxable gain or loss on any later sale of the shares.
Exercise with Stock
. If you exercise your nonstatutory option
by delivering shares that you already own, your exercise will be treated, in part, as a nontaxable exchange of shares. This means,
|
·
|
You will not have to report compensation income on the number of shares you receive whose value equals the value of the shares
you deliver. Your basis in those shares, for determining any taxable gain or loss when you sell those shares, will be the basis
of the shares you deliver. Also, the shares you receive will have a holding period (for determining whether you qualify for long-term
capital gains tax rates) which includes the length of time you held the shares you deliver.
|
|
·
|
You will have to report compensation income on any additional shares you receive in an amount equal to the difference between
the value of those additional shares and the amount of cash, if any, you pay for the shares. This income, together with the amount
you pay for the shares, will then be your basis in the shares for purposes of determining your taxable gain or loss on any later
sale of the shares.
|
Sale of Shares
. You may also have to report taxable gain or
loss when you sell a share you received on exercising a nonstatutory option. The amount of gain or loss you must report will be
measured by the difference between the amount you receive from selling that share and your basis in the share. Any such gain or
loss will be a capital gain or loss. Capital gains qualify to be taxed at long-term capital gains tax rates rather than the rates
which apply to compensation income if you have held the share more than one year.
Incentive Stock Options
Grant
. You will not have to report any taxable income when
you receive an incentive stock option.
Exercise with Cash
. In most cases you will not have to report
any taxable income when you exercise an incentive stock option with cash. However, the federal income tax system includes a separate
tax, the alternative minimum tax, intended to ensure that taxpayers cannot completely eliminate all income taxes through the use
of various special provisions of the Code. For purposes of calculating whether you owe any alternative minimum tax, you will have
to report the difference between the value of the shares on the date you exercise the option and the amount you pay for the shares
as though it were taxable compensation income.
As a result, and depending on your particular circumstances, you may have to
pay an alternative minimum tax when you exercise an incentive stock option even though you have no taxable income for regular income
tax purposes because you do not sell the shares you acquire as a result of the exercise until a subsequent year.
Exercise with Stock
. Subject to the discussion above regarding
the alternative minimum tax, in most cases you also will not have to report any taxable income on exercising an incentive stock
option with shares you already own but, under regulations of the Internal Revenue Service, there may be other consequences unique
to exercising your option with shares, as follows:
|
·
|
For purposes of determining the amount of your gain or loss on any later sale of those shares, the number of shares you receive
on exercise whose value equals the value of the shares you deliver will have a basis equal to the basis of the shares you deliver
and a holding period which includes the length of time you held the shares you deliver. The additional shares you receive will
have basis equal to any cash (that is, in addition to delivering previously owned shares) you pay to exercise your option.
|
|
·
|
However, for purposes of determining whether any later sale of any of the shares you receive is a “disqualifying disposition”
(described in “Sale of Shares” immediately below), all of the shares you receive will be treated as newly acquired.
|
|
·
|
In addition, if you later sell less than all of the shares you receive when you exercise your incentive stock option with shares,
you will be considered to have first sold the shares with the lowest basis.
|
|
·
|
If you acquired the shares which you use to exercise your option by exercising another incentive stock option, and the holding
periods required for long-term capital gains as described below in “Sale of Shares” are not met with respect to the
shares you use, those shares will be treated as sold in a disqualifying disposition for purposes of reporting compensation income
(that is, you will not have any capital gain or loss on exchanging those shares, but may be required to report compensation income
as if you sold the shares). Any compensation income you report as a result of such a disqualifying disposition will be added to
the basis of those shares received in exchange for the shares you deliver.
|
Sale of Shares
. You may have to report taxable gain or loss
when you sell a share you received on exercising an incentive stock option. The amount of gain or loss you must report will be
measured by the difference between the amount you receive from selling that share and your basis in the share. Any such gain or
loss will usually be capital gain or loss. Capital gains qualify to be taxed at long-term capital gains tax rates rather than the
rates which apply to compensation income if you have held the share more than one year. However, if you have a gain when you sell
a share you received on exercising an incentive stock option, some or all of that gain will be taxed as compensation income if
you sell that share
|
·
|
within two years from the date you received your option, or
|
|
·
|
within one year after you exercised your option.
|
A sale of your shares within the above time periods is known as a
disqualifying disposition. In the case of a disqualifying disposition, you will have to report as additional compensation income
the portion of the gain you otherwise would report on selling your share equal to the difference between the value of the share
at the date you exercised your option and the amount you paid for the share on exercise. Note that the amount of your compensation
income will not be limited to your gain on the sale, but instead will include the difference between value and amount paid, if
your sale is the type of transaction where a loss, had you sustained one, would not be recognized for federal income tax purposes,
for example, a sale to certain relatives. Any such compensation income is not subject to income and employment tax withholding,
but will be reported by the Company to the Internal Revenue Service.
Restricted Stock
Grant and Lapse of Restrictions
. When you receive an award
of stock which is subject to a substantial risk of forfeiture you will not have to report any taxable income except as follows:
|
·
|
If you make an “83(b) election” (described below), at the date you receive your restricted stock award you will
have to report compensation income equal to the difference between the value of the shares and the price you pay for the shares,
if any. Value is determined without regard to the risk of forfeiture that applies to your award.
|
|
·
|
If you do not make an “83(b) election” (described below), at the date or dates the substantial risk of forfeiture
which applies to your award expires, you will have to report compensation income equal to the difference between the then value
of the shares and the price you paid for the shares, if any.
|
83(b) Elections
. An 83(b) election is a special tax election
you can make to have any risk of forfeiture that otherwise applies to your restricted stock award disregarded for tax purposes.
An 83(b) election has three effects. First, you will have to report compensation income, if any, at grant of the shares rather
than later as the risk of forfeiture expires. Second, the amount of your compensation income will be based on the value of the
shares when you receive the shares (disregarding the risk of forfeiture) rather than based on the value as the risk of forfeiture
expires. Third, the date you are first treated as holding the shares for purposes of later determining whether you qualify for
the tax rates that apply to long-term capital gains or losses will be the date you receive your award rather than the date or dates
the risk of forfeiture which applies to your award expires. An 83(b) election must be made within 30 days of receiving a restricted
stock award, and generally cannot be revoked once made.
Sale of Shares
. You may have to report taxable gain or loss
when you sell the shares you received as a restricted stock award. The amount of gain or loss you must report will be measured
by the difference between the amount you receive on selling those shares and your basis in the shares. Your basis in the shares
is the amount you paid for the shares, if any,
plus
the amount of compensation income you previously reported in connection
with the restricted stock award. Any such gain or loss will be a capital gain or loss. Any such gain will qualify for long-term
capital gains tax rates rather than the rates which apply to compensation income if you held the awarded shares more than one year
after the date you received the shares, assuming you make an 83(b) election. If you do not make an 83(b) election, then you must
have held the awarded shares more than one year after the date or dates the risk of forfeiture which applies to your award expires
to qualify for long-term capital gains tax rates.
Forfeiture of Shares
. If you should forfeit your restricted
stock award, you will have to report taxable gain or loss based on the difference between the amount you paid for the award and
the amount you receive on forfeiture, if anything. That gain or loss will be an ordinary gain or loss if you did not make a Section
83(b) election, and capital gain or loss if you did make a Section 83(b) election. Note that if you make an 83(b) election and
the shares are subsequently forfeited, only the amount paid for the shares, and not any amount of compensation income you recognized
because of the Section 83(b) election, will be taken into account for purposes of determining your capital gain or loss.
Stock Appreciation Rights; Restricted Stock Units; Performance
Units
You will generally recognize ordinary income on receipt of cash or
other property pursuant to an award of stock appreciation rights, restricted stock units or performance units. The amount you must
report is the difference between the amount of cash or value of shares you receive and the amount, if any, you pay for any such
shares. This income will be taxed to you just as any other income you receive as compensation for services.
Stock Grants
When you receive an award of shares which is not subject to any substantial
risk of forfeiture, you will have to report compensation income equal to the difference between the value of the shares on the
date of grant and the price you pay for the shares, if any. This amount of income, together with the price you pay for the shares,
will then be your basis in the shares for purposes of determining whether you have any taxable gain or loss on a later sale of
the shares.
Section 16 Officers and Directors
For tax purposes, shares acquired upon exercise of an option or as
a restricted stock award or stock grant may be considered subject to a substantial risk of forfeiture if the sale of such shares
at a profit could subject the seller to liability under Section 16(b) of the Exchange Act. The existence of a substantial risk
of forfeiture may change some of the tax consequences described above. In these circumstances, you should consult your independent
tax adviser regarding the tax consequences of an exercise of an option or receipt of an award of restricted stock or stock grant.
Company Deductions; Tax Withholding
Except as has been previously described, whenever you have to report
compensation income in connection with an award described in this prospectus, the Company generally will be entitled to deduct
the same amount in computing its taxable income and the Company must withhold income and employment taxes based on that compensation
income if paid to you as an employee. You are responsible for ensuring that adequate funds are available to the Company for such
withholding.
New Plan Benefits Table
All awards made under the Amended Plan are
discretionary. Therefore, the benefits and amounts that will be received or allocated under the Amended Plan in the future are
not determinable at this time. However, please refer to the “
Executive Compensation
-
Outstanding Equity awards
at Fiscal year End
” table below, which provides information on the grants made to the named executive officers during
the year ended December 31, 2016. In addition, the following table presents information regarding the number and the dollar value
of stock options awarded to the following individuals or groups of individuals during the year ended December 31, 2016:
·
|
|
each of the individuals listed in “Executive Compensation - Summary Compensation
Table”;
|
·
|
|
all current executive officers, as a group;
|
·
|
|
all current directors who are not executive officers, as a group; and
|
·
|
|
all non-executive officer employees, including all current officers who are not executive
officers, as a group.
|
|
|
Grant
Date (1)
|
|
Number of
Securities
Underlying
Options (#)
|
|
Option Awards
($)
|
|
Option Exercise
Price ($)
|
Timothy P. Noyes,
President and Chief Executive Officer
|
|
1/24/2017
|
|
|
122,838
|
|
|
$
|
208,714
|
|
|
$
|
2.05
|
|
Steven K. Burke, M.D.,
Senior Vice President and Chief Medical Officer
|
|
1/24/2017
|
|
|
53,119
|
|
|
$
|
90,254
|
|
|
$
|
2.05
|
|
George A. Eldridge,
Senior Vice President and Chief Financial Officer, Treasurer and Assistant Secretary
|
|
1/24/2017
|
|
|
53,119
|
|
|
$
|
90,254
|
|
|
$
|
2.05
|
|
All executive officers, as a group (6 persons) (2)
|
|
1/24/2017
|
|
|
389,761
|
|
|
$
|
662,239
|
|
|
$
|
2.05
|
|
All non-executive directors, as a group (7 persons)
|
|
6/9/2016
|
|
|
46,662
|
|
|
$
|
195,915
|
|
|
$
|
5.90
|
|
All non-executive officer employees, as a group (12 persons)
|
|
1/24/2017
|
|
|
269,581
|
|
|
$
|
458,043
|
|
|
$
|
2.05
|
|
(1) Equity-based awards for the fiscal year ended December 31, 2016. Options were granted in January 2017 to the executives and employees as part of the compensation review cycle for the last fiscal year.
(2) For purposes of completeness, this group includes all persons determined to be Section 16 officers by the Company, including the three named executive officers included separately on the lines above.
Required Vote
Approval by the Company of the Equity Incentive
Plan Proposal requires the majority of shares of Common Stock present in person or represented by proxy at the Special Meeting
and entitled to vote on the proposal vote for approval. Abstentions and broker non-votes will be counted as entitled to vote and
will, therefore, have the same effect as a vote against Proposal 2.
OUR BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR”
THE EQUITY INCENTIVE PLAN PROPOSAL.
Other Matters
As of the date hereof, the Company does not know of any
other matters that may be presented for action at the Special Meeting other than the NASDAQ Proposal and the Equity Incentive Plan
Proposal.
|
By Order of the Board of Directors
|
|
|
|
|
|
Timothy P. Noyes
|
|
Chief Executive Officer, President and Director
|
|
July 13, 2017
|
Appendix A
Proteon
Therapeutics, Inc.
AMENDED
AND RESTATED 2014 EQUITY INCENTIVE PLAN
Table Of Contents
1. Purpose
|
1
|
2. Definitions
|
1
|
3. Term of the Plan
|
4
|
4. Stock Subject to the Plan
|
5
|
5. Administration
|
6
|
6. Authorization of Grants
|
6
|
7. Specific Terms of Awards
|
7
|
8. Adjustment Provisions
|
14
|
9. Change of Control
|
17
|
10. Settlement of Awards
|
18
|
11. Reservation of Stock
|
20
|
12. Limitation of Rights in Stock; No Special Service Rights
|
20
|
13. Unfunded Status of Plan
|
21
|
14. Nonexclusivity of the Plan
|
21
|
15. No Guarantee of Tax Consequences
|
21
|
16. Termination and Amendment of the Plan
|
22
|
17. Notices and Other Communications
|
23
|
18. Governing Law
|
23
|
Proteon Therapeutics,
Inc.
Amended and Restated
2014 Equity Incentive Plan
1. Purpose
This Plan is intended to provide
incentives that will attract, retain and motivate highly competent officers, directors, employees, consultants and advisors to
promote the success of the Company’s business and align employees’ interests with stockholders’ interests. The
Plan is intended to be an incentive stock option plan within the meaning of Section 422 of the Code, but not all Awards are required
to be Incentive Options.
The Plan was first effective on August 21, 2014
, and is being amended
as of the Restatement Effective Date to clarify that the number of shares of Stock to be taken into account for purposes of the
“evergreen” calculation in Section 4.1(a) of the Plan includes the number of shares of Stock issuable upon conversion
of the Convertible Securities.
2. Definitions
As used in this Plan, the following terms shall have the respective
meanings set out below, unless the context clearly requires otherwise:
2.1.
Accelerate
,
Accelerated
, and
Acceleration
, means: (a) when used with respect to an Option or Stock Appreciation Right, that as
of the time of reference such Option or Stock Appreciation Right will become exercisable with respect to some or all of the shares
of Stock for which it was not then otherwise exercisable by its terms; (b) when used with respect to Restricted Stock or Restricted
Stock Units, that the Risk of Forfeiture otherwise applicable to such Restricted Stock or Restricted Stock Units shall expire with
respect to some or all of such shares of Restricted Stock or such Restricted Stock Units then still otherwise subject to the Risk
of Forfeiture; and (c) when used with respect to Performance Units, that the applicable Performance Goals or other business objectives
shall be deemed to have been met as to some or all of such Performance Units.
2.2.
Affiliate
means
any corporation, partnership, limited liability company, business trust, or other entity controlling, controlled by or under common
control with the Company.
2.3.
Award
means
any grant or sale pursuant to the Plan of Options, Stock Appreciation Rights, Performance Units, Restricted Stock, Restricted Stock
Units, Stock Grants or any of the foregoing intended to constitute Qualified Performance-Based Awards.
2.4.
Award Agreement
means an agreement between the Company and the recipient of an Award, or other notice of grant of an Award, setting forth the terms
and conditions of the Award.
2.5.
Board
means
the Company’s Board of Directors.
2.6.
Change of Control
means the occurrence of any of the following after the date of the approval of the Plan by the Board:
(a) a Transaction (as defined in Section 8.4), unless securities possessing
more than 50% of the total combined voting power of the survivor’s or acquiror’s outstanding securities (or the securities
of any parent thereof) are held by a person or persons who held securities possessing more than 50% of the total combined voting
power of the Company’s outstanding securities immediately prior to that Transaction, or
(b) any person or group of persons (within the meaning of Section 13(d)(3)
of
the Securities Exchange Act of 1934, as amended and in effect from time to time
) that,
directly or indirectly, acquires, including but not limited to by means of a merger or consolidation, beneficial ownership (determined
pursuant to Securities and Exchange Commission Rule 13d-3 promulgated under the said Exchange Act) of securities possessing
more than 50% of the total combined voting power of the Company’s outstanding securities unless pursuant to a tender or exchange
offer made directly to the Company’s stockholders that the Board recommends such stockholders accept, other than (i) the
Company or any of its Affiliates, (ii) an employee benefit plan of the Company or any of its Affiliates, (iii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, or (iv) an underwriter temporarily
holding securities pursuant to an offering of such securities, or
(c) over a period of thirty-six (36) consecutive months or less, there
is a change in the composition of the Board such that a majority of the Board members (rounded up to the next whole number, if
a fraction) ceases, by reason of one or more proxy contests for the election of Board members, to be composed of individuals who
either (i) have been Board members continuously since the beginning of that period, or (ii) have been elected or nominated
for election as Board members during such period by at least a majority of the Board members described in the preceding clause
(i) who were still in office at the time that election or nomination was approved by the Board; or
(d) a majority of the Board votes in favor of a decision that a Change
of Control has occurred, which vote may adopted by the Board with the intention that such vote become effective subject to and
contingent upon the occurrence of certain events, in which case such Change of Control shall not be deemed to have occurred unless
and until such vote becomes effective in accordance with its terms.
2.7.
Code
means the
Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto, and any regulations issued from
time to time thereunder.
2.8.
Committee
means
the Compensation Committee of the Board, which in general is responsible for the administration of the Plan, as provided in Section 5
of this Plan. For any period during which no such committee is in existence “Committee” shall mean the Board and all
authority and responsibility assigned to the Committee under the Plan shall be exercised, if at all, by the Board.
2.9.
Company
means
Proteon Therapeutics, Inc., a corporation organized under the laws of the State of Delaware.
2.10.
Convertible Security
means any security that the Company may issue that is convertible into or exchangeable for Stock, including, but not limited to,
preferred stock or warrants.
2.11.
Effective Date
means August 21, 2014.
2.12. “
Forfeiture
,”
“
forfeit
,” and derivations thereof, when used in respect of Restricted Stock purchased by a Participant, includes
the Company’s repurchase of such Restricted Stock at less than its then Market Value as a means intended to effect a forfeiture
of value.
2.13.
Grant Date
means the date as of which an Option is granted, as determined under Section 7.1(a).
2.14.
Incentive Option
means an Option which by its terms is to be treated as an “incentive stock option” within the meaning of Section 422
of the Code.
2.15.
Market Value
means the value of a share of Stock on a particular date determined by such methods or procedures as may be established by the
Committee. Unless otherwise determined by the Committee, the Market Value of Stock as of any date is the closing price for the
Stock as reported on the New York Stock Exchange (or on any other national securities exchange on which the Stock is then listed)
for that date or, if no closing price is reported for that date, the closing price on the first following date for which a closing
price is reported. For purposes of Awards effective as of the effective date of the Company’s initial public offering, Market
Value of Stock shall be the price at which the Company’s Stock is offered to the public in its initial public offering.
2.16.
Nonstatutory Option
means any Option that is not an Incentive Option.
2.17.
Option
means
an option to purchase shares of Stock.
2.18.
Optionee
means
an eligible individual to whom an Option shall have been granted under the Plan.
2.19.
Participant
means any holder of an outstanding Award under the Plan.
2.20.
Performance Criteria
and
Performance Goals
have the meanings given such terms in Section 7.7(f).
2.21.
Performance Period
means the one or more periods of time, which may be of varying and overlapping durations, selected by the Committee, over which
the attainment of one or more Performance Goals or other business objectives will be measured for purposes of determining a Participant’s
right to, and the payment of, an Award.
2.22.
Performance Unit
means a right granted to a Participant under Section 7.5, to receive cash, Stock or other Awards, the payment of which
is contingent on achieving Performance Goals or other business objectives established by the Committee.
2.23.
Plan
means
this 2014 Equity Incentive Plan of the Company, as amended from time to time, and including any attachments or addenda hereto.
2.24.
Qualified Performance-Based
Awards
means Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code.
2.25.
Restatement Effective
Date
means [•], 2017.
2.26.
Restricted
Stock
means a grant or sale of shares of Stock to a Participant subject to a Risk of Forfeiture.
2.27.
Restricted
Stock Units
means rights to receive shares of Stock at the close of a Restriction Period, subject to a Risk of Forfeiture.
2.28.
Restriction Period
means the period of time, established by the Committee in connection with an Award of Restricted Stock or Restricted Stock
Units, during which the shares of Restricted Stock or Restricted Stock Units are subject to a Risk of Forfeiture described in the
applicable Award Agreement.
2.29.
Risk of Forfeiture
means a limitation on the right of the Participant to retain Restricted Stock or Restricted Stock Units, including a right of the
Company to reacquire shares of Restricted Stock at less than their then Market Value, arising because of the occurrence or non-occurrence
of specified events or conditions.
2.30.
Stock
means
common stock, par value $0.001 per share, of the Company, and such other securities as may be substituted for such common stock
pursuant to Section 8.
2.31.
Stock
Appreciation Right
means a right to receive any excess in the Market Value of shares of Stock (except as otherwise provided
in Section 7.2(c)) over a specified exercise price.
2.32.
Stock Grant
means the grant of shares of Stock not subject to restrictions or other forfeiture conditions.
2.33.
Stockholders’
Agreement
means any agreement by and among the holders of at least a majority of the outstanding voting securities of the Company
and setting forth, among other provisions, restrictions upon the transfer of shares of Stock or on the exercise of rights appurtenant
thereto (including but not limited to voting rights).
2.34.
Ten Percent Owner
means a person who owns, or is deemed within the meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or any parent or subsidiary corporations of the Company,
as defined in Sections 424(e) and (f), respectively, of the Code). Whether a person is a Ten Percent Owner shall be determined
with respect to an Option based on the facts existing immediately prior to the Grant Date of the Option.
3. Term of the Plan
Unless the Plan shall have been earlier terminated by the Board,
Awards may be granted under this Plan at any time in the period commencing on the date of approval of the Plan by the Board and
ending immediately prior to the tenth anniversary of the earlier of the adoption of the Plan by the Board and approval of the Plan
by the Company’s stockholders. Awards granted pursuant to the Plan within that period shall not expire solely by reason of
the termination of the Plan. Awards of Incentive Options granted prior to stockholder approval of the Plan are expressly conditioned
upon such approval, but in the event of the failure of the stockholders to approve the Plan shall thereafter and for all purposes
be deemed to constitute Nonstatutory Options.
4. Stock Subject to the Plan
4.1.
Plan Share Limitations
.
(a)
Limitation
.
At no time shall the number of shares of Stock issued pursuant to or subject to outstanding Awards granted under the Plan (including
pursuant to Incentive Options), nor the number of shares of Stock issued pursuant to Incentive Options, exceed 704,000 shares of
Stock provided, however, that beginning on January 1, 2015, the number of shares of Stock authorized under this Section 4.1(a)
of the Plan will be increased each January 1 by an amount equal to four percent (4%) of outstanding Stock, as of the end of the
immediately preceding fiscal year. Notwithstanding the foregoing, the Board may act prior to January 1 of a given year to provide
that there will be no such January 1 increase in the number of shares of Stock authorized under this Section 4.1(a) of the Plan
for such year or that the increase in the number of shares of Stock authorized under this Section 4.1(a) of the Plan for such year
will be a lesser number than would otherwise occur pursuant to the preceding sentence. Notwithstanding the preceding sentences,
in no event shall the number of shares available for issuance pursuant to Incentive Options exceed 14,080,000 shares of Stock.
For purposes of this Section 4.1(a), “Stock” shall be deemed to include the number of shares of Stock that may be issued
upon conversion of any outstanding Convertible Securities at each January 1.
(b)
Application
.
For purposes of applying the foregoing limitation of Section 4.1(a), (i) if any Option or Stock Appreciation Right expires, terminates,
or is cancelled for any reason without having been exercised in full, or if any other Award is forfeited, the shares of Stock not
purchased by the holder or which are forfeited, as the case may be, shall again be available for Awards to be granted under the
Plan, (ii) if any Option is exercised by delivering previously owned shares of Stock in payment of the exercise price therefor,
only the net number of shares, that is, the number of shares of Stock issued minus the number received by the Company in payment
of the exercise price, shall be considered to have been issued pursuant to an Award granted under the Plan, and (iii) any shares
of Stock either delivered to or withheld by the Company in satisfaction of tax withholding obligations of the Company or an Affiliate
with respect to an Award shall again be available for Awards to be granted under the Plan.
In addition,
settlement of any Award shall not count against the foregoing limitations except to the extent settled in the form of
Stock
.
Shares of Stock issued pursuant to the Plan may be either authorized but unissued shares or shares held by the Company in
its treasury.
4.2.
Per Person Limitations
.
The maximum number of shares of Stock that may be subject to Options or Stock Appreciation Rights or any combination thereof granted
to any one Participant during any single calendar year shall be 1,408,000. The maximum number of shares of Stock that may be subject
to all other Awards or any combination thereof granted to any one Participant during any single calendar year that are intended
to be Qualified Performance-Based Awards shall be 1,408,000. The maximum value of awards denominated in cash granted to any one
person during any single calendar year and that are intended to be Qualified Performance-Based Awards shall be $30,000,000
.
Each of the foregoing limitations shall be doubled with respect to awards granted to an individual during the first calendar
year in which he or she commences employment. The per Participant limits described in this Section 4.2 shall be construed and applied
consistent with Section 162(m) of the Code.
4.3.
Adjustment of Limitations
.
Each of the share limitations of this Section 4 shall be subject to adjustment pursuant to Section 8 of the Plan, but in the
case of the limitations of Section 4.2, only if and to the extent consistent with Section 162(m) of the Code.
5. Administration
The Plan shall be administered by
the Committee;
provided, however
, that at any time and on any one or more occasions the Board may itself exercise any of
the powers and responsibilities assigned the Committee under the Plan and when so acting shall have the benefit of all of the provisions
of the Plan pertaining to the Committee’s exercise of its authorities hereunder; and
provided further, however,
that
the Committee may delegate to an executive officer or officers the authority to grant Awards hereunder to employees who are not
officers, and to consultants, up to such maximum number and in accordance with such other guidelines as the Committee shall specify
by resolution at any time or from time to time. Any such delegation may not include the authority to grant Restricted Stock, unless
the delegate is a committee of the Board,
including a committee consisting solely of an executive officer who is a Board
member
. Subject to the provisions of the Plan, the Committee shall have complete authority, in
its discretion, to make or to select the manner of making all determinations with respect to each Award to be granted by the Company
under the Plan including the officer, employee, consultant, advisor or director to receive the Award and the form of Award. In
making such determinations, the Committee may take into account the nature of the services rendered by the respective officers,
employees, consultants, advisors and directors, their present and potential contributions to the success of the Company and its
Affiliates, and such other factors as the Committee in its discretion shall deem relevant. Subject to the provisions of the Plan,
the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating
to it, to determine the terms and provisions of the respective Award Agreements (which need not be identical), and to make all
other determinations necessary or advisable for the administration of the Plan. The Committee’s determinations made in good
faith on matters referred to in the Plan shall be final, binding and conclusive on all participants, beneficiaries, heirs, assigns
or other persons having or claiming any interest under the Plan or an Award made pursuant hereto.
6. Authorization of Grants
6.1.
Eligibility
.
The Committee may grant from time to time and at any time prior to the termination of the Plan one or more Awards, either alone
or in combination with any other Awards, to any officer or employee of or consultant or advisor to one or more of the Company and
its Affiliates or to any non-employee member of the Board or of any board of directors (or similar governing authority) of any
Affiliate. However, only employees of the Company, and of any parent or subsidiary corporations of the Company, as defined in Sections 424(e)
and (f), respectively, of the Code, shall be eligible for the grant of an Incentive Option.
6.2.
General Terms of
Awards
. Each grant of an Award shall be subject to all applicable terms and conditions of the Plan (including but not limited
to any specific terms and conditions applicable to that type of Award set out in the following Section), and such other terms and
conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No prospective Participant shall have
any rights with respect to an Award, unless and until such Participant shall have complied with the applicable terms and conditions
of such Award (including if applicable delivering a fully executed copy of any agreement evidencing an Award to the Company).
6.3.
Effect
of Termination of Employment, Etc
.
Unless the Committee shall provide otherwise with respect to any Award (including,
but not limited to, in a Participant’s Award Agreement), if the Participant’s employment or other association with
the Company and its Affiliates ends for any reason, including because of the Participant’s employer ceasing to be an Affiliate,
(a) any outstanding Option or Stock Appreciation Right of the Participant shall cease to be exercisable in any respect not later
than ninety (90) days following that event and, for the period it remains exercisable following that event, shall be exercisable
only to the extent exercisable at the date of that event, and (b) any other outstanding Award of the Participant to the extent
that it is then still subject to Risk of Forfeiture shall be forfeited
or otherwise subject to
return to or repurchase by the Company on the terms specified in the applicable Award Agreement
. Cessation of the performance
of services in one capacity, for example, as an employee, shall not result in termination of an Award while the Participant continues
to perform services in another capacity, for example as a director. Military or sick leave or other bona fide leave shall not be
deemed a termination of employment or other association,
provided
that it does not exceed the longer of ninety (90) days
or the period during which the absent Participant’s reemployment rights, if any, are guaranteed by statute or by contract.
To the extent consistent with applicable law, the Committee may provide that Awards continue to vest for some or all of the period
of any such leave, or that their vesting shall be tolled during any such leave and only recommence upon the Participant’s
return from leave, if ever.
6.4.
Non-Transferability
of Awards
.
Except as otherwise provided in this Section 6.4, Awards shall not be transferable,
and no Award or interest therein may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. The provisions of the immediately preceding sentence shall not be applicable
to Stock Grants which shall not be subject to any transfer restrictions under this Section 6.4.
All
of a Participant’s rights in any Award may be exercised during the life of the Participant only by the Participant or the
Participant’s legal representative. However, the Committee may, at or after the grant of an Award of a Nonstatutory Option,
or shares of Restricted Stock, provide that such Award may be transferred by the recipient to a family member;
provided, however
,
that any such transfer is without payment of any consideration whatsoever and that no transfer shall be valid unless first approved
by the Committee, acting in its sole discretion. For this purpose, “family member”
means any child, stepchild,
grandchild, parent, grandparent, stepparent, 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, any person sharing the employee’s household
(other than a tenant or employee), a trust in which the foregoing persons have more than fifty (50) percent of the beneficial interests,
a foundation in which the foregoing persons (or the Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty (50) percent of the voting interests.
7. Specific Terms of Awards
7.1.
Options
.
(a)
Date of Grant
.
The granting of an Option shall take place at the time specified in the Award Agreement.
(b)
Exercise Price
.
The price at which shares of Stock may be acquired under each Incentive Option shall be not less than 100% of the Market Value
of Stock on the Grant Date, or not less than 110% of the Market Value of Stock on the Grant Date if the Optionee is a Ten Percent
Owner. The price at which shares of Stock may be acquired under each Nonstatutory Option shall not be so limited solely by reason
of this Section.
(c)
Option Period
.
No Incentive Option may be exercised on or after the tenth anniversary of the Grant Date, or on or after the fifth anniversary
of the Grant Date if the Optionee is a Ten Percent Owner. The Option period under each Nonstatutory Option shall not be so limited
solely by reason of this Section.
(d)
Exercisability
.
An Option may be immediately exercisable or become exercisable in such installments, cumulative or non-cumulative, as the Committee
may determine. In the case of an Option not otherwise immediately exercisable in full, the Committee may Accelerate such Option
in whole or in part at any time;
provided, however,
that in the case of an Incentive Option, any such Acceleration of the
Option would not cause the Option to fail to comply with the provisions of Section 422 of the Code or the Optionee consents
to the Acceleration.
(e)
Method of Exercise
.
An Option may be exercised by the Optionee giving written notice, in the manner provided in Section 17, specifying the number
of shares of Stock with respect to which the Option is then being exercised. The notice shall be accompanied by payment in the
form of cash or check payable to the order of the Company in an amount equal to the exercise price of the shares of Stock to be
purchased or, subject in each instance to the Committee’s approval, acting in its sole discretion, and to such conditions,
if any, as the Committee may deem necessary to avoid adverse accounting effects to the Company,
(i) by delivery to the Company of shares of Stock having a Market
Value equal to the exercise price of the shares to be purchased, or
(ii) by surrender of the Option as to all or part of the shares
of Stock for which the Option is then exercisable in exchange for shares of Stock having an aggregate Market Value equal to the
difference between (
1
) the aggregate Market Value of the surrendered portion of the Option, and (
2
) the aggregate
exercise price under the Option for the surrendered portion of the Option, or
(iii) unless prohibited by applicable law, by delivery to the Company
of the Optionee’s executed promissory note in the principal amount equal to the exercise price of the shares of Stock to
be purchased and otherwise in such form as the Committee shall have approved.
If the Stock is traded on an established market, payment of any exercise
price may also be made through and under the terms and conditions of any formal cashless exercise program authorized by the Company
entailing the sale of the Stock subject to an Option in a brokered transaction (other than to the Company). Receipt by the Company
of such notice and payment in any authorized or combination of authorized means shall constitute the exercise of the Option. Within
thirty (30) days thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or cause to be delivered
to the Optionee or his agent a certificate or certificates or shall cause the Stock to be held in book-entry position through the
direct registration system of the Company’s transfer agent for the number of shares then being purchased. Such shares of
Stock shall be fully paid and nonassessable.
(f)
Limit on Incentive Option
Characterization
. An Incentive Option shall be considered to be an Incentive Option only to the extent that the number of shares
of Stock for which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value (as of the date
of the grant of the Option) in excess of the “current limit”. The current limit for any Optionee for any calendar
year shall be $100,000
minus
the aggregate Market Value at the date of grant of the number of shares of Stock available
for purchase for the first time in the same year under each other Incentive Option previously granted to the Optionee under the
Plan, and under each other incentive stock option previously granted to the Optionee under any other incentive stock option plan
of the Company and its Affiliates, after December 31, 1986. Any shares of Stock which would cause the foregoing limit to
be violated shall be deemed to have been granted under a separate Nonstatutory Option, otherwise identical in its terms to those
of the Incentive Option.
(g)
Notification of Disposition
.
Each person exercising any Incentive Option granted under the Plan shall be deemed to have covenanted with the Company to report
to the Company any disposition of the shares of Stock issued upon such exercise prior to the expiration of the holding periods
specified by Section 422(a)(1) of the Code and, if and to the extent that the realization of income in such a disposition imposes
upon the Company federal, state, local or other withholding tax requirements, or any such withholding is required to secure for
the Company an otherwise available tax deduction, to remit to the Company an amount in cash sufficient to satisfy those requirements.
7.2.
Stock Appreciation
Rights
.
(a)
T
andem
or Stand-Alone
. Stock Appreciation Rights
may be granted in tandem with an Option
(at or, in the case of a Nonstatutory Option, after, the award of the Option), or alone and unrelated to an Option. Stock Appreciation
Rights in tandem with an Option shall terminate to the extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem Stock Appreciation Rights are exercised.
(b)
Exercise
Price
. Stock Appreciation Rights shall have an exercise price of not less than one hundred percent (100%) of the Market Value
of the Stock on the date of award, or in the case of Stock Appreciation Rights in tandem with Options, the exercise price of the
related Option.
(c)
Other
Terms
. Except as the Committee may deem inappropriate or inapplicable in the circumstances, Stock Appreciation Rights shall
be subject to terms and conditions substantially similar to those applicable to a Nonstatutory Option. In addition, a
Stock
Appreciation Right related to an Option which can only be exercised during limited periods following a Change of Control may entitle
the Participant to receive an amount based upon the highest price paid or offered for Stock in any transaction relating to the
Change of Control or paid during the thirty (30) day period immediately preceding the occurrence of the Change of Control in any
transaction reported in the stock market in which the Stock is normally traded.
7.3.
Restricted Stock
.
(a)
Purchase Price
.
Shares of Restricted Stock shall be issued under the Plan for such consideration, if any, in cash, other property or services,
or any combination thereof, as is determined by the Committee.
(b)
Issuance
of Stock
. Each Participant receiving a Restricted Stock Award, subject to subsection (c) below, shall be issued a stock certificate
in respect of such shares of Restricted Stock or
the shares shall be held in book-entry position through the direct registration
system of the Company’s transfer agent
. If a certificate is issued, such certificate shall
be registered in the name of such Participant, and, if applicable, shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Award substantially in the following form:
The shares evidenced by this certificate are subject to the terms and conditions
of Proteon Therapeutics, Inc.’s 2014 Equity Incentive Plan and an Award Agreement entered into by the registered owner and
Proteon Therapeutics, Inc., copies of which will be furnished by the Company to the holder of the shares evidenced by this certificate
upon written request and without charge.
If the Stock is in book-entry position through the direct registration
system of the Company’s transfer agent, the restrictions will be appropriately noted.
(c)
Escrow of Shares
.
The Committee may require that any stock certificates evidencing shares of Restricted Stock be held in custody by a designated
escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Participant
deliver a stock power, endorsed in blank, relating to the Stock covered by such Award.
(d)
Restrictions and Restriction
Period
. During the Restriction Period applicable to shares of Restricted Stock, such shares shall be subject to limitations
on transferability and a Risk of Forfeiture arising on the basis of such conditions related to the performance of services, Company
or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement. Any such
Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such basis
as it deems appropriate.
(e)
Rights Pending Lapse
of Risk of Forfeiture or Forfeiture of Award
. Except as otherwise provided in the Plan or the applicable Award Agreement, the
Participant shall have all of the rights of a stockholder of the Company with respect to any outstanding shares of Restricted Stock,
including the right to vote, and the right to receive any dividends with respect to, the shares of Restricted Stock (but any dividends
or other distributions payable in shares of Stock or other securities of the Company shall constitute additional Restricted Stock,
subject to the same Risk of Forfeiture as the shares of Restricted Stock in respect of which such shares of Stock or other securities
are paid). The Committee, as determined at the time of Award, may permit or require the payment of cash dividends to be deferred
and, if the Committee so determines, reinvested in additional Restricted Stock to the extent shares of Stock are available under
Section 4.
(f)
Lapse of Restrictions
.
If and when the Restriction Period expires without a prior forfeiture, any certificates for such shares shall be delivered to the
Participant promptly if not theretofore so delivered.
7.4.
Restricted Stock
Units
.
(a)
Character
. Each
Restricted Stock Unit shall entitle the recipient to a share of Stock at a close of such Restriction Period as the Committee may
establish and subject to a Risk of Forfeiture arising on the basis of such conditions relating to the performance of services,
Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement.
Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such
basis as it deems appropriate.
(b)
Form and Timing of
Payment
. Payment of earned Restricted Stock Units shall be made promptly following the close of the applicable Restriction
Period. At the discretion of the Committee, Participants may be entitled to receive payments equivalent to any dividends declared
with respect to Stock referenced in grants of Restricted Stock Units but only following the close of the applicable Restriction
Period and then only if the underlying Stock shall have been earned. Unless the Committee shall provide otherwise, any such dividend
equivalents shall be paid, if at all, without interest or other earnings.
7.5.
Performance Units
.
(a)
Character
.
Each Performance Unit shall entitle the recipient to the value of a specified number of shares of Stock, over the initial value
for such number of shares, if any, established by the Committee at the time of grant, at the close of a specified Performance Period
to the extent specified business objectives, including but not limited to Performance Goals, shall have been achieved.
(b)
Earning
of Performance Units
. The Committee shall set Performance Goals or other business objectives in its discretion which, depending
on the extent to which they are met within the applicable Performance Period, will determine the number and value of Performance
Units that will be paid out to the Participant. After the applicable Performance Period has ended, the holder of Performance Units
shall be entitled to receive payout on the number and value of Performance Units earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding Performance Goals or other business objectives
have been achieved.
(c)
Form
and Timing of Payment
. Payment of earned Performance Units shall be made in a single lump sum following the close of the applicable
Performance Period. At the discretion of the Committee, Participants may be entitled to receive any dividends declared with respect
to Stock which have been earned in connection with grants of Performance Units which have been earned, but not yet distributed
to Participants. The Committee may permit or, if it so provides at grant require, a Participant to defer such Participant’s
receipt of the payment of cash or the delivery of Stock that would otherwise be due to such Participant by virtue of the satisfaction
of any requirements or goals with respect to Performance Units. If any such deferral election is required or permitted, the Committee
shall establish rules and procedures for such payment deferrals.
7.6.
Stock Grants
.
Stock Grants shall be awarded solely in recognition of significant prior or expected contributions to the success of the Company
or its Affiliates, as an inducement to employment, in lieu of compensation otherwise already due and in such other limited circumstances
as the Committee deems appropriate. Stock Grants shall be made without forfeiture conditions of any kind.
7.7.
Qualified Performance-Based
Awards
.
(a)
Purpose
. The purpose
of this Section 7.7 is to provide the Committee the ability to qualify Awards as “performance-based compensation” under
Section 162(m) of the Code. If the Committee, in its discretion, decides to grant an Award as a Qualified Performance-Based Award,
the provisions of this Section 7.7 will control over any contrary provision contained in the Plan. In the course of granting any
Award, the Committee may specifically designate the Award as intended to qualify as a Qualified Performance-Based Award. However,
no Award shall be considered to have failed to qualify as a Qualified Performance-Based Award solely because the Award is not expressly
designated as a Qualified Performance-Based Award, if the Award otherwise satisfies the provisions of this Section 7.7 and the
requirements of Section 162(m) of the Code applicable to “performance-based compensation.”
(b)
Authority
. All
grants of Awards intended to qualify as Qualified Performance-Based Awards and the determination of the terms applicable thereto
shall be made by the Committee. If not all of the members thereof qualify as “outside directors” within the meaning
of Section 162 of the Code, however, all grants of Awards intended to qualify as Qualified Performance-Based Awards and the
determination of the terms applicable thereto shall be made by a subcommittee of the Committee consisting of such of the members
of the Committee as do so qualify. Any reference in this Section 7.7 to the Committee shall mean any such subcommittee if required
under the preceding sentence, and any action by such a subcommittee shall be considered the action of the Committee for purposes
of the Plan.
(c)
Discretion of Committee
with Respect to Qualified Performance-Based Awards
. Any form of Award permitted under the Plan, other than a Stock Grant, may
be granted as a Qualified Performance-Based Award. Options and Stock Appreciation Rights may be granted as Qualified Performance-Based
Awards in accordance with Section 7.1 and 7.2, respectively, except that the exercise price of any Option or Stock Appreciation
Right intended to qualify as a Qualified Performance-Based Award shall in no event be less that the Market Value of the Stock on
the date of grant, and may become exercisable based on continued service, on satisfaction of Performance Goals or other business
objectives, or on a combination thereof. Each other Award intended to qualify as a Qualified Performance-Based Award, such as Restricted
Stock, Restricted Stock Units, or Performance Units, shall be subject to satisfaction of one or more Performance Goals except as
otherwise provided in this Section 7.7. The Committee will have full discretion to select the length of any applicable Restriction
Period or Performance Period, the kind and/or level of the applicable Performance Goal, and whether the Performance Goal is to
apply to the Company, a subsidiary of the Company or any division or business unit or to the individual. Any Performance Goal or
Goals applicable to Qualified Performance-Based Awards shall be objective, shall be established not later than ninety (90) days
after the beginning of any applicable Performance Period (or at such other date as may be required or permitted for “performance-based
compensation” under Section 162(m) of the Code) and shall otherwise meet the requirements of Section 162(m) of the Code,
including the requirement that the outcome of the Performance Goal or Goals be substantially uncertain (as defined for purposes
of Section 162(m) of the Code) at the time established.
(d)
Payment of Qualified
Performance-Based Awards
. A Participant will be eligible to receive payment under a Qualified Performance-Based Award which
is subject to achievement of a Performance Goal or Goals only if the applicable Performance Goal or Goals are achieved within the
applicable Performance Period, as determined by the Committee,
provided
, that a Qualified Performance-Based Award may be
deemed earned as a result of death, becoming disabled, or in connection with a change of control (within the meaning of Section 162(m)
of the Code) if otherwise provided in the Plan or the applicable Award Agreement even if the Award would not constitute “performance-based
compensation” under Section 162(m) of the Code following the occurrence of such an event. In determining the actual size
of an individual Qualified Performance-Based Award, the Committee may reduce or eliminate the amount of the Qualified Performance-Based
Award earned for the Performance Period, if in its sole and absolute discretion, such reduction or elimination is appropriate.
(e)
Limitation on Adjustments
for Certain Events
. No adjustment of any Qualified Performance-Based Award pursuant to Section 8 shall be made except on such
basis, if any, as will not cause such Award to provide other than “performance-based compensation” within the meaning
of Section 162(m) of the Code.
(f)
Definitions
. For
purposes of the Plan
(i)
Performance Criteria
means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a
Participant for a Performance Period. The Performance Criteria used to establish Performance Goals are limited to: (i) net
earnings (either before or after one or more of (A) interest, (B) taxes, (C) depreciation and (D) amortization), (ii) gross
or net sales or revenue, (iii) net income (either before or after taxes), (iv) adjusted net income, (v) operating earnings
or profit, (vi) cash flow (including, but not limited to, operating cash flow and free cash flow, (vii) return on assets,
(viii) return on capital, (ix) return on stockholders’ equity, (x) total stockholder return, (xi) return
on sales, (xii) gross or net profit or operating margin, (xiii) costs, (xiv) expenses, (xv) working capital,
(xvi) earnings per share, (xvii) adjusted earnings per share, (xviii) price per share, (xix) regulatory body
approval for commercialization of a product, (xx) implementation, completion or attainment of objectives relating to research,
development, regulatory, commercial, or strategic milestones or developments; (xxi) market share, (xxii) economic value,
(xxiii) revenue, (xxiv) revenue growth and (xxv) operational and organizational metrics.
(ii)
Performance Goals
means, for a Performance Period, the written goal or goals established by the Committee for the Performance Period based upon one
or more of the Performance Criteria. The Performance Goals may be expressed in terms of overall Company performance or the performance
of a division, business unit, subsidiary, or an individual, either individually, alternatively or in any combination, applied to
either the Company as a whole or to a business unit or Affiliate, either individually, alternatively or in any combination, and
measured either quarterly, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established
target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee. The Committee
will objectively define the manner of calculating the Performance Goal or Goals it selects to use for such Performance Period for
such Participant, including whether or to what extent there shall not be taken into account any of the following events that occurs
during a Performance Period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii) the
effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals
for reorganization and restructuring programs and (v) any extraordinary, unusual, non-recurring or non-comparable items (A) as
described in Accounting Standard Codification Section 225-20, (B) as described in management’s discussion and analysis
of financial condition and results of operations appearing in the Company’s Annual Report to stockholders for the applicable
year, or (C) publicly announced by the Company in a press release or conference call relating to the Company’s results
of operations or financial condition for a completed quarterly or annual fiscal period.
7.8.
Awards
to Participants Outside the United States
.
The Committee may modify the terms of any Award under the Plan granted to
a Participant who is, at the time of grant or during the term of the Award, resident or primarily employed outside of the United
States in any manner deemed by the Committee to be necessary or appropriate in order that the Award shall conform to laws, regulations,
procedures, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of
the Participant’s residence or employment abroad, shall be as comparable as practicable to the value of such an Award to
a Participant who is resident or primarily employed in the United States. The Committee may establish supplements or sub-plans
to, or amendments, restatements, or alternative versions of, the Plan for the purpose of granting and administrating any such modified
Award. No such modification, supplement, sub-plan, amendment, restatement or alternative version may increase the share limit of
Section 4.
8. Adjustment Provisions
8.1.
Adjustment for Corporate
Actions
. All of the share numbers set forth in the Plan reflect the capital structure of the Company as of October 3, 2014.
If subsequent to that date the outstanding shares of Stock (or any other securities covered by the Plan by reason of the prior
application of this Section) are increased, decreased, or exchanged for a different number or kind of shares or other securities,
or if additional shares or new or different shares or other securities are distributed with respect to shares of Stock, as a result
of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar distribution
with respect to such shares of Stock, an appropriate and proportionate adjustment will be made in (i) the maximum numbers
and kinds of shares provided in Section 4, (ii) the numbers and kinds of shares or other securities subject to the then outstanding
Awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding Options
and Stock Appreciation Rights (without change in the aggregate purchase price as to which such Options or Rights remain exercisable),
and (iv) the repurchase price of each share of Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase
right.
8.2.
Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events
.
In the event of any
corporate action not specifically covered by the preceding Section, including but not limited to an extraordinary cash distribution
on Stock, a corporate separation or other reorganization or liquidation, the Committee may make such adjustment of outstanding
Awards and their terms, if any, as it, in its sole discretion, may deem equitable and appropriate in the circumstances.
The
Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in this Section) affecting the Company or the financial
statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines
that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan.
8.3.
Related Matters
.
Any adjustment in Awards made pursuant to Section 8.1 or 8.2 shall be determined and made, if at all, by the Committee, acting
in its sole discretion, and shall include any correlative modification of terms, including of Option exercise prices, rates of
vesting or exercisability, Risks of Forfeiture, applicable repurchase prices for Restricted Stock, and Performance Goals and other
business objectives which the Committee may deem necessary or appropriate so as to ensure the rights of the Participants in their
respective Awards are not substantially diminished nor enlarged as a result of the adjustment and corporate action other than as
expressly contemplated in this Section 8. The Committee, in its discretion, may determine that no fraction of a share of Stock
shall be purchasable or deliverable upon exercise, and in that event if any adjustment hereunder of the number of shares of Stock
covered by an Award would cause such number to include a fraction of a share of Stock, such number of shares of Stock shall be
adjusted to the nearest smaller whole number of shares. No adjustment of an Option exercise price per share pursuant to Sections
8.1 or 8.2 shall result in an exercise price which is less than the par value of the Stock.
8.4.
Transactions
.
(a)
Definition of Transaction
.
In this Section 8.4, “
Transaction
” means (1) any merger or consolidation of the Company with or into another
entity as a result of which the Stock of the Company is converted into or exchanged for the right to receive cash, securities or
other property or is cancelled, (2) any sale or exchange of all or substantially all of the outstanding Stock of the Company for
cash, securities or other property, (3) any sale, transfer, or other disposition of all or substantially all of the Company’s
assets to one or more other persons in a single transaction or series of related transactions or (4) any liquidation or dissolution
of the Company.
(b)
Treatment of Awards
.
In a Transaction, the Committee may take any one or more of the following actions as to all or any (or any portion of) outstanding
Awards, subject to the provisions of Section 9 of this Plan.
(1) Provide that any Awards
shall be assumed, or substantially equivalent rights shall be provided in substitution therefor, by the acquiring or succeeding
entity (or an affiliate thereof).
(2) Upon written notice
to the holders, provide that all or any of the holders’ unexercised outstanding Options and Stock Appreciation Rights (collectively,
“
Rights
”) will terminate immediately prior to the consummation of such Transaction unless exercised within a
specified period following the date of such notice.
(3) Provide that all or
any Awards that are subject to Risk of Forfeiture will terminate immediately prior to the consummation of such Transaction.
(4) Provide that all or
any outstanding Rights shall Accelerate so as to become exercisable prior to or upon such Transaction with respect to some or all
of the shares of Stock for which any such Rights would not then otherwise be exercisable by their terms.
(5) Provide that outstanding
all or any Awards that are subject to Risk of Forfeiture shall Accelerate so that the Risk of Forfeiture otherwise applicable to
such Awards shall expire prior to or upon such Transaction with respect to any such Awards that would then still otherwise be subject
to the Risk of Forfeiture.
(6) Provide for cash payments,
net of applicable tax withholdings, to be made to holders equal to the excess, if any, of (A) the acquisition price times the number
of shares of Stock subject to an Option (to the extent the exercise price does not exceed the acquisition price) over (B) the aggregate
exercise price for all such shares of Stock subject to the Option, in exchange for the termination of such Option; provided, that
if the acquisition price does not exceed the exercise price of any such Option, the Committee may cancel that Option without the
payment of any consideration therefore prior to or upon the Transaction. For purposes of this paragraph 6 and paragraph 7 below,
“
acquisition price
” means the amount of cash, and market value of any other consideration, received in payment
for a share of Stock surrendered in a Transaction but need not take into account any deferred consideration unless and until received.
(7) Provide for cash payments,
net of applicable tax withholdings, to be made to holder or holders of all or any Awards (other than Options) equal to the acquisition
price times the number of shares of Stock subject to any such Awards, in exchange for the termination of any such Awards; provided,
that the Committee may cancel, pursuant to paragraph 3 above, any such Award that is subject to a Risk of Forfeiture at the time
of the consummation of such Transaction without the payment of any consideration therefor prior to or upon the Transaction.
(8) Provide that, in connection
with a liquidation or dissolution of the Company, all or any Awards (other than Restricted Stock or Stock Grants) shall convert
into the right to receive liquidation proceeds net of the exercise price thereof and any applicable tax withholdings.
(9) Any combination of
the foregoing.
In the event that the Committee determines in its discretion to take
the actions contemplated under paragraph (1) above of this Section 8.4(b) with respect to all or any Awards, the Committee shall
ensure that, upon consummation of the Transaction, any such Awards are assumed and/or exchanged or replaced with another similar
award issued by the acquiring or succeeding entity (or an affiliate thereof) and that, as a result of such assumption and/or exchange
or replacement, the holder of such assumed Award and/or such exchanged or replaced similar award has the right to purchase or receive
the value of, for each share of Stock subject to such Award immediately prior to the consummation of the Transaction, the consideration
(whether cash, securities or other property) received as a result of the Transaction by holders of Stock for each share of Stock
held immediately prior to the consummation of the Transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding shares of Stock);
provided, however
, that if such
consideration received as a result of the Transaction is not solely common stock (or its equivalent) of the acquiring or succeeding
entity (or an affiliate thereof), the Committee may, with the consent of the acquiring or succeeding entity (or an affiliate thereof),
provide for the consideration to be received with respect to such assumed Award and/or such exchanged or replaced similar award
to consist of or be based solely on common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate thereof)
equivalent in value to the per share consideration received by holders of outstanding shares of Stock as a result of the Transaction;
and
provided
,
further
, that if such Award is an Option, the holder of such Option must exercise the Option and make
payment of the applicable exercise price in connection therewith in order to receive such consideration.
(c)
Treatment of Other
Awards
. Upon the occurrence of a Transaction other than a liquidation or dissolution of the Company which is not part of another
form of Transaction, then, subject to the provisions of Section 9 below, with respect to all outstanding Awards (other than Options
and Share Appreciation Rights) that are not terminated prior to or upon such Transaction, the repurchase and other rights of the
Company under each such Award shall inure to the benefit of the Company’s successor and shall, unless the Committee determines
otherwise, apply to the cash, securities or other property which the Stock was converted into or exchanged for pursuant to such
Transaction in the same manner and to the same extent as they applied to the Award.
(d)
Related Matters
.
In taking any of the actions permitted under this Section 8.4, the Committee shall not be obligated to treat all Awards, all
Awards held by a Participant, or all Awards of the same type, identically.
Any determinations required
to carry out the foregoing provisions of this Section 8.4, including but not limited to the market value of other consideration
received by holders of Stock in a Transaction and whether substantially equivalent Rights have been substituted, shall be made
by the Committee acting in its sole discretion.
In connection with any action or actions taken by the Committee in respect
of Awards and in connection with a Transaction, the Committee may require such acknowledgements of satisfaction and releases from
Participants as it may determine.
9. Change of Control
Except as otherwise provided below, upon the occurrence of a Change
of Control, to the extent that the surviving entity declines to continue, convert, assume or replace outstanding Awards, then,
notwithstanding anything express or implied to the contrary in Section 8.4 above:
(a)
any
and all Options and Stock Appreciation Rights not already exercisable in full shall Accelerate with respect to 100% of the shares
for which such Options or Stock Appreciation Rights are not then exercisable;
(b)
any
Risk of Forfeiture applicable to Restricted Stock and Restricted Stock Units which is not based on achievement of Performance Goals
or other business objectives shall lapse with respect to 100% of the Restricted Stock and Restricted Stock Units still subject
to such Risk of Forfeiture immediately prior to the Change of Control; and
(c)
all
outstanding Awards of Restricted Stock and Restricted Stock Units conditioned on the achievement of Performance Goals or other
business objectives and the payouts attainable under outstanding Performance Units shall be deemed to have been satisfied as of
the effective date of the Change of Control, except if and to the extent otherwise determined by the Committee in its sole discretion
at any time prior to, or upon, such Change of Control.
All such Awards of Performance Units and Restricted Stock Units shall
be paid to the extent earned to Participants in accordance with their terms within thirty (30) days following the effective date
of the Change of Control. None of the foregoing shall apply, however, (i) in the case of any Award pursuant to an Award Agreement
requiring other or additional terms upon a Change of Control (or similar event), (ii) if specifically prohibited under applicable
laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, or (iii) as otherwise
provided in Section 7.7, concerning Qualified Performance-Based Awards.
10. Settlement of Awards
10.1.
In
General
. Options and Restricted Stock shall be settled in accordance with their terms. All other Awards may be settled in cash,
Stock, or other Awards, or a combination thereof, as determined by the Committee at or after grant and subject to any contrary
Award Agreement. The Committee may not require settlement of any Award in Stock pursuant to the immediately preceding sentence
to the extent issuance of such Stock would be prohibited or unreasonably delayed by reason of any other provision of the Plan.
10.2.
Violation of Law
.
Notwithstanding any other provision of the Plan or the relevant Award Agreement, if, at any time, in the reasonable opinion of
the Company, the issuance of shares of Stock covered by an Award may constitute a violation of law, then the Company may delay
such issuance until (i) approval shall have been obtained from such governmental agencies, other than the Securities and Exchange
Commission, as may be required under any applicable law, rule, or regulation and (ii) in the case where such issuance would constitute
a violation of a law administered by or a regulation of the Securities and Exchange Commission, one of the following conditions
shall have been satisfied:
(a) the shares of Stock are
at the time of the issue of such shares effectively registered under the Securities Act of 1933, as amended; or
(b) the Company shall have
determined, on such basis as it deems appropriate (including an opinion of counsel in form and substance satisfactory to the Company)
that the sale, transfer, assignment, pledge, encumbrance or other disposition of such shares does not require registration under
the Securities Act of 1933, as amended or any applicable State securities laws.
Furthermore, the inability of the Company to obtain or maintain, or
the impracticability of it obtaining or maintaining, authority from any governmental agency having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance of any Stock hereunder, shall relieve the Company
of any liability in respect of the failure to issue such Stock as to which such requisite authority shall not have been obtained,
and shall constitute circumstances in which the Committee may determine to amend or cancel Awards pertaining to such Stock, with
or without consideration to the affected Participants.
10.3.
Corporate Restrictions
on Rights in Stock
. Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions upon
the transfer thereof which may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the Company.
Whenever Stock is to be issued pursuant to an Award, if the Committee so directs at or after grant, the Company shall be under
no obligation to issue such shares until such time, if ever, as the recipient of the Award (and any person who exercises any Option,
in whole or in part), shall have become a party to and bound by the Stockholders’ Agreement, if any.
10.4.
Investment Representations
.
The Company shall be under no obligation to issue any shares of Stock covered by any Award unless the shares to be issued pursuant
to Awards granted under the Plan have been effectively registered under the Securities Act of 1933, as amended, or the Participant
shall have made such written representations to the Company (upon which the Company believes it may reasonably rely) as the Company
may deem necessary or appropriate for purposes of confirming that the issuance of such shares will be exempt from the registration
requirements of that Act and any applicable state securities laws and otherwise in compliance with all applicable laws, rules and
regulations of any jurisdiction in which Participants may reside or primarily work, including but not limited to that the Participant
is acquiring the shares for his or her own account for the purpose of investment and not with a view to, or for sale in connection
with, the distribution of any such shares.
10.5.
Registration
.
If the Company shall deem it necessary or desirable to register under the Securities Act of 1933, as amended, or other applicable
statutes any shares of Stock issued or to be issued pursuant to Awards granted under the Plan, or to qualify any such shares of
Stock for exemption from the Securities Act of 1933, as amended or other applicable statutes, then the Company shall take such
action at its own expense. The Company may require from each recipient of an Award, or each holder of shares of Stock acquired
pursuant to the Plan, such information in writing for use in any registration statement, prospectus, preliminary prospectus or
offering circular as is reasonably necessary for that purpose and may require reasonable indemnity to the Company and its officers
and directors from that holder against all losses, claims, damage and liabilities arising from use of the information so furnished
and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they
were made. In addition, the Company may require of any such person that he or she agree that, without the prior written consent
of the Company or the managing underwriter in any public offering of shares of Stock, he or she will not sell, make any short sale
of, loan, grant any option for the purchase of, pledge or otherwise encumber, or otherwise dispose of, any shares of Stock during
the 180 day period commencing on the effective date of the registration statement relating to the underwritten public offering
of securities (or during such shorter or longer period of time as the Committee shall determine in its sole discretion, which period
of time shall commence from and after such effective date of such registration statement). Without limiting the generality of the
foregoing provisions of this Section 10.5, if in connection with any underwritten public offering of securities of the Company
the managing underwriter of such offering requires that the Company’s directors and officers enter into a lock-up agreement
containing provisions that are more restrictive than the provisions set forth in the preceding sentence, then (a) each holder of
shares of Stock acquired pursuant to the Plan (regardless of whether such person has complied or complies with the provisions of
clause (b) below) shall be bound by, and shall be deemed to have agreed to, the same lock-up terms as those to which the Company’s
directors and officers are required to adhere; and (b) at the request of the Company or such managing underwriter, each such person
shall execute and deliver a lock-up agreement in form and substance equivalent to that which is required to be executed by the
Company’s directors and officers.
10.6.
Placement of Legends;
Stop Orders; etc.
Each share of Stock to be issued pursuant to Awards granted under the Plan may bear a reference to the investment
representations made in accordance with Section 10.4 in addition to any other applicable restrictions under the Plan, and
the terms of the Award and under the Stockholders’ Agreement and, if applicable, to the fact that no registration statement
has been filed with the Securities and Exchange Commission in respect to such shares of Stock. All shares of Stock or other securities
issued under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of any stock exchange upon which the Stock is then listed, and any applicable
federal or state securities law, and the Committee may cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions, or, if the Stock will be held in book-entry position through the direct registration
system of the Company’s transfer agent, the restrictions will be appropriately noted.
10.7.
Tax Withholding
.
Whenever shares of Stock are issued or to be issued pursuant to Awards granted under the Plan,
the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy federal, state,
local, foreign or other withholding tax requirements if, when, and to the extent required by law (whether so required to secure
for the Company an otherwise available tax deduction or otherwise) prior to the delivery of any certificate or certificates, held
in book-entry position through the direct registration system of the Company’s transfer agent, for such shares. The obligations
of the Company under the Plan shall be conditional on satisfaction of all such withholding obligations and the Company shall, to
the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to a Participant
or to utilize any other withholding method prescribed by the Committee from time to time. However, in such cases
Participants
may elect, subject to the approval of the Committee, acting in its sole discretion, to satisfy an applicable withholding requirement,
in whole or in part, by having the Company withhold shares of Stock to satisfy their tax obligations. All elections shall be irrevocable,
made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee deems appropriate.
If shares of Stock are withheld to satisfy an applicable withholding requirement, the shares of Stock withheld shall have a Market
Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction,
provided
,
however
, if shares of Stock are withheld to satisfy a withholding requirement imposed by a country other
than the United States, the amount withheld may exceed such minimum, provided that it is not in excess of the actual amount required
to be withheld with respect to the Participant under applicable tax law or regulations.
10.8.
Company Charter
and By-Laws; Other Company Policies
. This Plan and all Awards granted hereunder are subject to the charter and By-Laws of the
Company, as they may be amended from time to time, and all other Company policies duly adopted by the Board, the Committee or any
other committee of the Board and as in effect from time to time regarding the acquisition, ownership or sale of Stock by officers,
employees, directors, consultants, advisors and other service providers, including, without limitation, policies intended to limit
the potential for insider trading and to avoid or recover compensation payable or paid on the basis of inaccurate financial results
or statements, employee conduct, and other similar events.
11. Reservation of Stock
The Company shall at all times during the term of the Plan and any
outstanding Awards granted hereunder reserve or otherwise keep available such number of shares of Stock as will be sufficient to
satisfy the requirements of the Plan (if then in effect) and the Awards and shall pay all fees and expenses necessarily incurred
by the Company in connection therewith.
12. Limitation of Rights
in Stock; No Special Service Rights
A Participant shall not be deemed for any purpose to be a stockholder
of the Company with respect to any of the shares of Stock subject to an Award, unless and until a certificate shall have been issued
therefor and delivered to the Participant or his agent, or the Stock shall be issued through the direct registration system of
the Company’s transfer agent. Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions
upon the transfer thereof which may be now or hereafter imposed by the certificate or articles of incorporation and the by-laws
of the Company. Nothing contained in the Plan or in any Award Agreement shall confer upon any recipient of an Award any right with
respect to the continuation of his or her employment or other association with the Company (or any Affiliate), or interfere in
any way with the right of the Company (or any Affiliate), subject to the terms of any separate employment or consulting agreement
or provision of law or corporate articles or by-laws to the contrary, at any time to terminate such employment or consulting agreement
or to increase or decrease, or otherwise adjust, the other terms and conditions of the recipient’s employment or other association
with the Company and its Affiliates.
13. Unfunded Status of Plan
The Plan is intended to constitute an “unfunded” plan
for incentive compensation, and the Plan is not intended to constitute a plan subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended. With respect to any payments not yet made to a Participant by the Company, nothing contained
herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole
discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the
Plan to deliver Stock or payments with respect to Awards hereunder,
provided, however
, that the existence of such trusts
or other arrangements is consistent with the unfunded status of the Plan.
14. Nonexclusivity of the
Plan
Neither the adoption of the Plan by the Board nor any action taken
in connection with the adoption or operation of the Plan shall be construed as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of stock options
and restricted stock other than under the Plan, and such arrangements may be either applicable generally or only in specific cases.
15. No Guarantee of Tax Consequences
It is intended that all Awards shall be granted and maintained on
a basis which ensures they are exempt from, or otherwise compliant with, the requirements of Section 409A of the Code, pertaining
non-qualified plans of deferred compensation, and the Plan shall be governed, interpreted and enforced consistent with such intent.
However, neither the Company nor any Affiliate, nor any director, officer, agent, representative or employee of either, guarantees
to the Participant or any other person any particular tax consequences as a result of the grant of, exercise of rights under, or
payment in respect of an Award, including but not limited to that an Option granted as an Incentive Option has or will qualify
as an “incentive stock option” within the meaning of Section 422 of the Code or that the provisions and penalties of
Section 409A of the Code will or will not apply and no person shall have any liability to a Participant or any other party if a
payment under an Award that is intended to benefit from favorable tax treatment or avoid adverse tax treatment fails to realize
such intention or for any action taken by the Board or the Committee with respect to the Award.
16. Termination and Amendment
of the Plan
16.1.
Termination or
Amendment of the Plan
. Subject to the limitations contained in Section 16.3 below, including specifically the requirement of
stockholder approval, if applicable, t
he Board may at any time suspend or terminate the Plan or
make such modifications of the Plan as it shall deem advisable. Unless the Board otherwise expressly provides, no amendment of
the Plan shall affect the terms of any Award outstanding on the date of such amendment.
16.2.
Termination or
Amendment of Outstanding Awards; Assumptions
. Subject to the limitations contained in Section 16.3 below, including specifically
the requirement of stockholder approval, if applicable, t
he Committee may at any time:
(a) amend the terms of any Award theretofore granted, prospectively
or retroactively, provided that the Award as amended is consistent with the terms of the Plan;
(b) within the limitations of the Plan, modify, extend or assume outstanding
Awards or accept the cancellation of outstanding Awards or of outstanding stock options or other equity-based compensation awards
granted by another issuer in return for the grant of new Awards for the same or a different number of shares of Stock and on the
same or different terms and conditions (including but not limited to the exercise price of any Option); and
(c) offer to buy out for a payment in cash or cash equivalents an Award
previously granted or authorize the recipient of an Award to elect to cash out an Award previously granted, in either case at such
time and based upon such terms and conditions as the Committee shall establish.
16.3.
Limitations on
Amendments, Etc.
(a) Without the approval of
the Company’s stockholders, no amendment or modification of the Plan by the Board may (i) increase the number of shares of
Stock which may be issued under the Plan, (ii) change the description of the persons eligible for Awards, or (iii) effect any other
change for which stockholder approval is required by law or the rules of any relevant stock exchange.
(b) No action by the Board
or the Committee pursuant to this Section 16 shall impair the rights of the recipient of any Award outstanding on the date of such
amendment or modification of such Award, as the case may be, without the Participant’s consent;
provided, however,
that no such consent shall be required (A) in the case of any amendment or termination of any outstanding Award that is permitted
by any provision of this Plan that is set forth in Section 16.4 below, Section 8, Section 9 or in any other section of this Plan
that is not Section 16.2 or (B) if the Board or Committee, as the case may be, (i) determines in its sole discretion and
prior to the date of any Change of Control that such amendment or alteration either is required or advisable in order for the Company,
the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the
Code, or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, (ii) determines
in its sole discretion and prior to the date of any Change of Control that such amendment or alteration is not reasonably likely
to significantly diminish the benefits provided under the Award, or that any such diminution has been adequately compensated, or
(iii) reasonably determines on or after the date of Change of Control that such amendment or alteration either is required or advisable
in order for the Company, the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of
Section 409A of the Code.
16.4
Option Repricing.
Notwithstanding anything in Section 16.3 express or implied to the contrary, the Committee is expressly authorized to amend
any or all outstanding Options at any time and from time to time to effect a repricing thereof by lowering the exercise price
applicable to the shares of Stock subject to such Option or Options without the consent or approval of the stockholders of the
Company or the holder or holders of such Option or Options, and, in connection with such repricing, to amend or modify any of
the other terms of the Option or Options so repriced, including, without limitation, for purposes of reducing the number of shares
subject to such Option or Options or for purposes of adversely affecting the provisions applicable to such Option or Options that
relate to the vesting or exercisability thereof, in each case without the approval or consent of stockholders of the Company or
the holder or holders of such Option or Options.
17. Notices and Other Communications
Any communication or notice required or permitted to be given under
the Plan shall be in such form as the Committee may determine from time to time. If a notice, demand, request or other communication
is required or permitted to be given in writing, then any such notice, demand, request or other communication hereunder to any
party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered,
certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular, certified or overnight mail, addressed
or telecopied, as the case may be, (i) if to the recipient of an Award, at his or her residence address last filed with the Company
and (ii) if to the Company, at its principal place of business, addressed to the attention of its Treasurer, or to such other address
or telecopier number, as the case may be, as the addressee may have designated by notice to the addressor. All such notices, requests,
demands and other communications shall be deemed to have been received: (i) in the case of personal delivery, on the date
of such delivery; (ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile transmission,
when confirmed by facsimile machine report.
18. Governing Law
The Plan and all Award Agreements and actions taken hereunder and
thereunder shall be governed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts, without
regard to the conflict of laws principles thereof.
[End of document.]
Appendix B
Proteon
Therapeutics, Inc.
AMENDED
AND RESTATED
2014 EQUITY INCENTIVE PLAN
Table Of Contents
1. Purpose
|
1
|
2. Definitions
|
1
|
3. Term of the Plan
|
4
|
4. Stock Subject to the Plan
|
5
|
5. Administration
|
6
|
6. Authorization of Grants
|
6
|
7. Specific Terms of Awards
|
7
|
8. Adjustment Provisions
|
14
|
9. Change of Control
|
17
|
10. Settlement of Awards
|
18
|
11. Reservation of Stock
|
20
|
12. Limitation of Rights in Stock; No Special Service Rights
|
20
|
13. Unfunded Status of Plan
|
21
|
14. Nonexclusivity of the Plan
|
21
|
15. No Guarantee of Tax Consequences
|
21
|
16. Termination and Amendment of the Plan
|
22
|
17. Notices and Other Communications
|
23
|
18. Governing Law
|
23
|
Proteon Therapeutics,
Inc.
Amended and Restated
2014 Equity Incentive Plan
1. Purpose
This Plan is intended to provide
incentives that will attract, retain and
motive
motivate
highly competent officers, directors, employees,
consultants and advisors to promote the success of the Company’s business and align employees’ interests with stockholders’
interests. The Plan is intended to be an incentive stock option plan within the meaning of Section 422 of the Code, but not all
Awards are required to be Incentive Options.
The Plan was first effective on August 21, 2014
,
and is being amended as of the Restatement Effective Date to clarify that the number of shares of Stock to be taken into account
for purposes of the “evergreen” calculation in Section 4.1(a) of the Plan includes the number of shares of Stock issuable
upon conversion of the Convertible Securities.
2. Definitions
As used in this Plan, the following terms shall have the respective
meanings set out below, unless the context clearly requires otherwise:
2.1.
Accelerate
,
Accelerated
, and
Acceleration
, means: (a) when used with respect to an Option or Stock Appreciation Right, that as
of the time of reference such Option or Stock Appreciation Right will become exercisable with respect to some or all of the shares
of Stock for which it was not then otherwise exercisable by its terms; (b) when used with respect to Restricted Stock or Restricted
Stock Units, that the Risk of Forfeiture otherwise applicable to such Restricted Stock or Restricted Stock Units shall expire with
respect to some or all of such shares of Restricted Stock or such Restricted Stock Units then still otherwise subject to the Risk
of Forfeiture; and (c) when used with respect to Performance Units, that the applicable Performance Goals or other business objectives
shall be deemed to have been met as to some or all of such Performance Units.
2.2.
Affiliate
means any corporation, partnership, limited liability company, business trust, or other entity controlling, controlled by or under
common control with the Company.
2.3.
Award
means
any grant or sale pursuant to the Plan of Options, Stock Appreciation Rights, Performance Units, Restricted Stock, Restricted Stock
Units, Stock Grants or any of the foregoing intended to constitute Qualified Performance-Based Awards.
2.4.
Award Agreement
means an agreement between the Company and the recipient of an Award, or other notice of grant of an Award, setting forth the terms
and conditions of the Award.
2.5.
Board
means
the Company’s Board of Directors.
2.6.
Change of Control
means the occurrence of any of the following after the date of the approval of the Plan by the Board:
(a) a Transaction (as defined in Section 8.4), unless securities
possessing more than 50% of the total combined voting power of the survivor’s or acquiror’s outstanding securities
(or the securities of any parent thereof) are held by a person or persons who held securities possessing more than 50% of the total
combined voting power of the Company’s outstanding securities immediately prior to that Transaction, or
(b) any person or group of persons (within the meaning of Section
13(d)(3) of
the Securities Exchange Act of 1934, as amended and in effect from time to time
)
that, directly or indirectly, acquires, including but not limited to by means of a merger or consolidation, beneficial ownership
(determined pursuant to Securities and Exchange Commission Rule 13d-3 promulgated under the said Exchange Act) of securities
possessing more than 50% of the total combined voting power of the Company’s outstanding securities unless pursuant to a
tender or exchange offer made directly to the Company’s stockholders that the Board recommends such stockholders accept,
other than (i) the Company or any of its Affiliates, (ii) an employee benefit plan of the Company or any of its Affiliates, (iii)
a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, or (iv)
an underwriter temporarily holding securities pursuant to an offering of such securities, or
(c) over a period of thirty-six (36) consecutive months or less,
there is a change in the composition of the Board such that a majority of the Board members (rounded up to the next whole number,
if a fraction) ceases, by reason of one or more proxy contests for the election of Board members, to be composed of individuals
who either (i) have been Board members continuously since the beginning of that period, or (ii) have been elected or
nominated for election as Board members during such period by at least a majority of the Board members described in the preceding
clause (i) who were still in office at the time that election or nomination was approved by the Board; or
(d) a majority of the Board votes in favor of a decision that a
Change of Control has occurred, which vote may adopted by the Board with the intention that such vote become effective subject
to and contingent upon the occurrence of certain events, in which case such Change of Control shall not be deemed to have occurred
unless and until such vote becomes effective in accordance with its terms.
2.7.
Code
means
the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto, and any regulations issued from
time to time thereunder.
2.8.
Committee
means the Compensation Committee of the Board, which in general is responsible for the administration of the Plan, as provided
in Section 5 of this Plan. For any period during which no such committee is in existence “Committee” shall mean
the Board and all authority and responsibility assigned to the Committee under the Plan shall be exercised, if at all, by the Board.
2.9.
Company
means
Proteon Therapeutics, Inc., a corporation organized under the laws of the State of Delaware.
2.10. Convertible
Security means any security that the Company may issue that is convertible into or exchangeable for Stock, including, but not limited
to, preferred stock or warrants.
2.11. Effective Date
means August 21, 2014.
2.12. “
Forfeiture
,”
“
forfeit
,” and derivations thereof, when used in respect of Restricted Stock purchased by a Participant, includes
the Company’s repurchase of such Restricted Stock at less than its then Market Value as a means intended to effect a forfeiture
of value.
2.13.
Grant Date
means the date as of which an Option is granted, as determined under Section 7.1(a).
2.14.
Incentive Option
means an Option which by its terms is to be treated as an “incentive stock option” within the meaning of Section 422
of the Code.
2.15.
Market Value
means the value of a share of Stock on a particular date determined by such methods or procedures as may be established by the
Committee. Unless otherwise determined by the Committee, the Market Value of Stock as of any date is the closing price for the
Stock as reported on the New York Stock Exchange (or on any other national securities exchange on which the Stock is then listed)
for that date or, if no closing price is reported for that date, the closing price on the first following date for which a closing
price is reported. For purposes of Awards effective as of the effective date of the Company’s initial public offering, Market
Value of Stock shall be the price at which the Company’s Stock is offered to the public in its initial public offering.
2.16.
Nonstatutory
Option
means any Option that is not an Incentive Option.
2.17.
Option
means
an option to purchase shares of Stock.
2.18.
Optionee
means an eligible individual to whom an Option shall have been granted under the Plan.
2.19.
Participant
means any holder of an outstanding Award under the Plan.
2.20.
Performance
Criteria
and
Performance Goals
have the meanings given such terms in Section 7.7(f).
2.21.
Performance
Period
means the one or more periods of time, which may be of varying and overlapping durations, selected by the Committee,
over which the attainment of one or more Performance Goals or other business objectives will be measured for purposes of determining
a Participant’s right to, and the payment of, an Award.
2.22.
Performance
Unit
means a right granted to a Participant under Section 7.5, to receive cash, Stock or other Awards, the payment of
which is contingent on achieving Performance Goals or other business objectives established by the Committee.
2.23.
Plan
means
this 2014 Equity Incentive Plan of the Company, as amended from time to time, and including any attachments or addenda hereto.
2.24.
Qualified Performance-Based
Awards
means Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code.
2.25. Restatement
Effective Date means [
•
], 2017.
2.26.
Restricted
Stock
means a grant or sale of shares of Stock to a Participant subject to a Risk of Forfeiture.
2.27.
Restricted
Stock Units
means rights to receive shares of Stock at the close of a Restriction Period, subject to a Risk of Forfeiture.
2.28.
Restriction
Period
means the period of time, established by the Committee in connection with an Award of Restricted Stock or Restricted
Stock Units, during which the shares of Restricted Stock or Restricted Stock Units are subject to a Risk of Forfeiture described
in the applicable Award Agreement.
2.29.
Risk of Forfeiture
means a limitation on the right of the Participant to retain Restricted Stock or Restricted Stock Units, including a right of the
Company to reacquire shares of Restricted Stock at less than their then Market Value, arising because of the occurrence or non-occurrence
of specified events or conditions.
2.30.
Stock
means
common stock, par value $0.001 per share, of the Company, and such other securities as may be substituted for such common stock
pursuant to Section 8.
2.31.
Stock
Appreciation Right
means a right to receive any excess in the Market Value of shares of Stock (except as otherwise provided
in Section 7.2(c)) over a specified exercise price.
2.32.
Stock Grant
means the grant of shares of Stock not subject to restrictions or other forfeiture conditions.
2.33.
Stockholders’
Agreement
means any agreement by and among the holders of at least a majority of the outstanding voting securities of the Company
and setting forth, among other provisions, restrictions upon the transfer of shares of Stock or on the exercise of rights appurtenant
thereto (including but not limited to voting rights).
2.34.
Ten Percent
Owner
means a person who owns, or is deemed within the meaning of Section 422(b)(6) of the Code to own, stock possessing more
than 10% of the total combined voting power of all classes of stock of the Company (or any parent or subsidiary corporations of
the Company, as defined in Sections 424(e) and (f), respectively, of the Code). Whether a person is a Ten Percent Owner shall
be determined with respect to an Option based on the facts existing immediately prior to the Grant Date of the Option.
3. Term of the Plan
Unless the Plan shall have been earlier terminated by the Board,
Awards may be granted under this Plan at any time in the period commencing on the date of approval of the Plan by the Board and
ending immediately prior to the tenth anniversary of the earlier of the adoption of the Plan by the Board and approval of the Plan
by the Company’s stockholders. Awards granted pursuant to the Plan within that period shall not expire solely by reason of
the termination of the Plan. Awards of Incentive Options granted prior to stockholder approval of the Plan are expressly conditioned
upon such approval, but in the event of the failure of the stockholders to approve the Plan shall thereafter and for all purposes
be deemed to constitute Nonstatutory Options.
4. Stock Subject to the
Plan
4.1.
Plan Share Limitations
.
(a)
Limitation
.
At no time shall the number of shares of Stock issued pursuant to or subject to outstanding Awards granted under the Plan (including
pursuant to Incentive Options), nor the number of shares of Stock issued pursuant to Incentive Options, exceed 704,000 shares of
Stock provided, however, that beginning on January 1, 2015, the number of shares of Stock authorized under this Section 4.1(a)
of the Plan will be increased each January 1 by an amount equal to four percent (4%) of outstanding Stock, as of the end of the
immediately preceding fiscal year. Notwithstanding the foregoing, the Board may act prior to January 1 of a given year to provide
that there will be no such January 1 increase in the number of shares of Stock authorized under this Section 4.1(a) of the Plan
for such year or that the increase in the number of shares of Stock authorized under this Section 4.1(a) of the Plan for such year
will be a lesser number than would otherwise occur pursuant to the preceding sentence. Notwithstanding the preceding sentences,
in no event shall the number of shares available for issuance pursuant to Incentive Options exceed 14,080,000 shares of Stock.
For purposes of this Section 4.1(a), “Stock” shall be deemed to include the number of shares of Stock that may be
issued upon conversion of any outstanding Convertible Securities at each January 1.
(b)
Application
.
For purposes of applying the foregoing limitation of Section 4.1(a), (i) if any Option or Stock Appreciation Right expires, terminates,
or is cancelled for any reason without having been exercised in full, or if any other Award is forfeited, the shares of Stock not
purchased by the holder or which are forfeited, as the case may be, shall again be available for Awards to be granted under the
Plan, (ii) if any Option is exercised by delivering previously owned shares of Stock in payment of the exercise price therefor,
only the net number of shares, that is, the number of shares of Stock issued minus the number received by the Company in payment
of the exercise price, shall be considered to have been issued pursuant to an Award granted under the Plan, and (iii) any shares
of Stock either delivered to or withheld by the Company in satisfaction of tax withholding obligations of the Company or an Affiliate
with respect to an Award shall again be available for Awards to be granted under the Plan.
In addition,
settlement of any Award shall not count against the foregoing limitations except to the extent settled in the form of
Stock
.
Shares of Stock issued pursuant to the Plan may be either authorized but unissued shares or shares held by the Company in
its treasury.
4.2.
Per Person Limitations
.
The maximum number of shares of Stock that may be subject to Options or Stock Appreciation Rights or any combination thereof granted
to any one Participant during any single calendar year shall be 1,408,000. The maximum number of shares of Stock that may be subject
to all other Awards or any combination thereof granted to any one Participant during any single calendar year that are intended
to be Qualified Performance-Based Awards shall be 1,408,000. The maximum value of awards denominated in cash granted to any one
person during any single calendar year and that are intended to be Qualified Performance-Based Awards shall be $30,000,000
.
Each of the foregoing limitations shall be doubled with respect to awards granted to an individual during the first calendar
year in which he or she commences employment. The per Participant limits described in this Section 4.2 shall be construed and applied
consistent with Section 162(m) of the Code.
4.3.
Adjustment of
Limitations
. Each of the share limitations of this Section 4 shall be subject to adjustment pursuant to Section 8 of the
Plan, but in the case of the limitations of Section 4.2, only if and to the extent consistent with Section 162(m) of the Code.
5. Administration
The Plan shall be administered
by the Committee;
provided, however
, that at any time and on any one or more occasions the Board may itself exercise any
of the powers and responsibilities assigned the Committee under the Plan and when so acting shall have the benefit of all of the
provisions of the Plan pertaining to the Committee’s exercise of its authorities hereunder; and
provided further, however,
that the Committee may delegate to an executive officer or officers the authority to grant Awards hereunder to employees who are
not officers, and to consultants, up to such maximum number and in accordance with such other guidelines as the Committee shall
specify by resolution at any time or from time to time. Any such delegation may not include the authority to grant Restricted Stock,
unless the delegate is a committee of the Board,
including a committee consisting solely of an executive officer who is
a Board member
. Subject to the provisions of the Plan, the Committee shall have complete authority,
in its discretion, to make or to select the manner of making all determinations with respect to each Award to be granted by the
Company under the Plan including the officer, employee, consultant, advisor or director to receive the Award and the form of Award.
In making such determinations, the Committee may take into account the nature of the services rendered by the respective officers,
employees, consultants, advisors and directors, their present and potential contributions to the success of the Company and its
Affiliates, and such other factors as the Committee in its discretion shall deem relevant. Subject to the provisions of the Plan,
the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating
to it, to determine the terms and provisions of the respective Award Agreements (which need not be identical), and to make all
other determinations necessary or advisable for the administration of the Plan. The Committee’s determinations made in good
faith on matters referred to in the Plan shall be final, binding and conclusive on all participants, beneficiaries, heirs, assigns
or other persons having or claiming any interest under the Plan or an Award made pursuant hereto.
6. Authorization of Grants
6.1.
Eligibility
.
The Committee may grant from time to time and at any time prior to the termination of the Plan one or more Awards, either alone
or in combination with any other Awards, to any officer or employee of or consultant or advisor to one or more of the Company and
its Affiliates or to any non-employee member of the Board or of any board of directors (or similar governing authority) of any
Affiliate. However, only employees of the Company, and of any parent or subsidiary corporations of the Company, as defined in Sections 424(e)
and (f), respectively, of the Code, shall be eligible for the grant of an Incentive Option.
6.2.
General Terms
of Awards
. Each grant of an Award shall be subject to all applicable terms and conditions of the Plan (including but not limited
to any specific terms and conditions applicable to that type of Award set out in the following Section), and such other terms and
conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No prospective Participant shall have
any rights with respect to an Award, unless and until such Participant shall have complied with the applicable terms and conditions
of such Award (including if applicable delivering a fully executed copy of any agreement evidencing an Award to the Company).
6.3.
Effect
of Termination of Employment, Etc
.
Unless the Committee shall provide otherwise with respect to any Award (including,
but not limited to, in a Participant’s Award Agreement), if the Participant’s employment or other association with
the Company and its Affiliates ends for any reason, including because of the Participant’s employer ceasing to be an Affiliate,
(a) any outstanding Option or Stock Appreciation Right of the Participant shall cease to be exercisable in any respect not later
than ninety (90) days following that event and, for the period it remains exercisable following that event, shall be exercisable
only to the extent exercisable at the date of that event, and (b) any other outstanding Award of the Participant to the extent
that it is then still subject to Risk of Forfeiture shall be forfeited
or otherwise subject to
return to or repurchase by the Company on the terms specified in the applicable Award Agreement
. Cessation of the performance
of services in one capacity, for example, as an employee, shall not result in termination of an Award while the Participant continues
to perform services in another capacity, for example as a director. Military or sick leave or other bona fide leave shall not be
deemed a termination of employment or other association,
provided
that it does not exceed the longer of ninety (90) days
or the period during which the absent Participant’s reemployment rights, if any, are guaranteed by statute or by contract.
To the extent consistent with applicable law, the Committee may provide that Awards continue to vest for some or all of the period
of any such leave, or that their vesting shall be tolled during any such leave and only recommence upon the Participant’s
return from leave, if ever.
6.4.
Non-Transferability
of Awards
.
Except as otherwise provided in this Section 6.4, Awards shall not be transferable,
and no Award or interest therein may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. The provisions of the immediately preceding sentence shall not be applicable
to Stock Grants which shall not be subject to any transfer restrictions under this Section 6.4.
All
of a Participant’s rights in any Award may be exercised during the life of the Participant only by the Participant or the
Participant’s legal representative. However, the Committee may, at or after the grant of an Award of a Nonstatutory Option,
or shares of Restricted Stock, provide that such Award may be transferred by the recipient to a family member;
provided, however
,
that any such transfer is without payment of any consideration whatsoever and that no transfer shall be valid unless first approved
by the Committee, acting in its sole discretion. For this purpose, “family member”
means any child, stepchild,
grandchild, parent, grandparent, stepparent, 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, any person sharing the employee’s household
(other than a tenant or employee), a trust in which the foregoing persons have more than fifty (50) percent of the beneficial interests,
a foundation in which the foregoing persons (or the Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty (50) percent of the voting interests.
7. Specific Terms of Awards
7.1.
Options
.
(a)
Date of Grant
.
The granting of an Option shall take place at the time specified in the Award Agreement.
(b)
Exercise Price
.
The price at which shares of Stock may be acquired under each Incentive Option shall be not less than 100% of the Market Value
of Stock on the Grant Date, or not less than 110% of the Market Value of Stock on the Grant Date if the Optionee is a Ten Percent
Owner. The price at which shares of Stock may be acquired under each Nonstatutory Option shall not be so limited solely by reason
of this Section.
(c)
Option Period
.
No Incentive Option may be exercised on or after the tenth anniversary of the Grant Date, or on or after the fifth anniversary
of the Grant Date if the Optionee is a Ten Percent Owner. The Option period under each Nonstatutory Option shall not be so limited
solely by reason of this Section.
(d)
Exercisability
.
An Option may be immediately exercisable or become exercisable in such installments, cumulative or non-cumulative, as the Committee
may determine. In the case of an Option not otherwise immediately exercisable in full, the Committee may Accelerate such Option
in whole or in part at any time;
provided, however,
that in the case of an Incentive Option, any such Acceleration of the
Option would not cause the Option to fail to comply with the provisions of Section 422 of the Code or the Optionee consents
to the Acceleration.
(e)
Method of Exercise
.
An Option may be exercised by the Optionee giving written notice, in the manner provided in Section 17, specifying the number
of shares of Stock with respect to which the Option is then being exercised. The notice shall be accompanied by payment in the
form of cash or check payable to the order of the Company in an amount equal to the exercise price of the shares of Stock to be
purchased or, subject in each instance to the Committee’s approval, acting in its sole discretion, and to such conditions,
if any, as the Committee may deem necessary to avoid adverse accounting effects to the Company,
(i) by delivery to the Company of shares of Stock having a Market
Value equal to the exercise price of the shares to be purchased, or
(ii) by surrender of the Option as to all or part of the shares
of Stock for which the Option is then exercisable in exchange for shares of Stock having an aggregate Market Value equal to the
difference between (
1
) the aggregate Market Value of the surrendered portion of the Option, and (
2
) the aggregate
exercise price under the Option for the surrendered portion of the Option, or
(iii) unless prohibited by applicable law, by delivery to the
Company of the Optionee’s executed promissory note in the principal amount equal to the exercise price of the shares of Stock
to be purchased and otherwise in such form as the Committee shall have approved.
If the Stock is traded on an established market, payment of any
exercise price may also be made through and under the terms and conditions of any formal cashless exercise program authorized by
the Company entailing the sale of the Stock subject to an Option in a brokered transaction (other than to the Company). Receipt
by the Company of such notice and payment in any authorized or combination of authorized means shall constitute the exercise of
the Option. Within thirty (30) days thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or
cause to be delivered to the Optionee or his agent a certificate or certificates or shall cause the Stock to be held in book-entry
position through the direct registration system of the Company’s transfer agent for the number of shares then being purchased.
Such shares of Stock shall be fully paid and nonassessable.
(f)
Limit on Incentive
Option Characterization
. An Incentive Option shall be considered to be an Incentive Option only to the extent that the number
of shares of Stock for which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value (as
of the date of the grant of the Option) in excess of the “current limit”. The current limit for any Optionee for any
calendar year shall be $100,000
minus
the aggregate Market Value at the date of grant of the number of shares of Stock
available for purchase for the first time in the same year under each other Incentive Option previously granted to the Optionee
under the Plan, and under each other incentive stock option previously granted to the Optionee under any other incentive stock
option plan of the Company and its Affiliates, after December 31, 1986. Any shares of Stock which would cause the foregoing
limit to be violated shall be deemed to have been granted under a separate Nonstatutory Option, otherwise identical in its terms
to those of the Incentive Option.
(g)
Notification of
Disposition
. Each person exercising any Incentive Option granted under the Plan shall be deemed to have covenanted with the
Company to report to the Company any disposition of the shares of Stock issued upon such exercise prior to the expiration of the
holding periods specified by Section 422(a)(1) of the Code and, if and to the extent that the realization of income in such a disposition
imposes upon the Company federal, state, local or other withholding tax requirements, or any such withholding is required to secure
for the Company an otherwise available tax deduction, to remit to the Company an amount in cash sufficient to satisfy those requirements.
7.2.
Stock Appreciation
Rights
.
(a)
T
andem
or Stand-Alone
. Stock Appreciation Rights
may be granted in tandem with an Option
(at or, in the case of a Nonstatutory Option, after, the award of the Option), or alone and unrelated to an Option. Stock Appreciation
Rights in tandem with an Option shall terminate to the extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem Stock Appreciation Rights are exercised.
(b)
Exercise
Price
. Stock Appreciation Rights shall have an exercise price of not less than one hundred percent (100%) of the Market Value
of the Stock on the date of award, or in the case of Stock Appreciation Rights in tandem with Options, the exercise price of the
related Option.
(c)
Other
Terms
. Except as the Committee may deem inappropriate or inapplicable in the circumstances, Stock Appreciation Rights shall
be subject to terms and conditions substantially similar to those applicable to a Nonstatutory Option. In addition, a
Stock
Appreciation Right related to an Option which can only be exercised during limited periods following a Change of Control may entitle
the Participant to receive an amount based upon the highest price paid or offered for Stock in any transaction relating to the
Change of Control or paid during the thirty (30) day period immediately preceding the occurrence of the Change of Control in any
transaction reported in the stock market in which the Stock is normally traded.
7.3.
Restricted Stock
.
(a)
Purchase Price
.
Shares of Restricted Stock shall be issued under the Plan for such consideration, if any, in cash, other property or services,
or any combination thereof, as is determined by the Committee.
(b)
Issuance
of Stock
. Each Participant receiving a Restricted Stock Award, subject to subsection (c) below, shall be issued a stock certificate
in respect of such shares of Restricted Stock or
the shares shall be held in book-entry position through the direct registration
system of the Company’s transfer agent
. If a certificate is issued, such certificate shall
be registered in the name of such Participant, and, if applicable, shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Award substantially in the following form:
The shares evidenced by this certificate are subject to the terms and conditions
of Proteon Therapeutics, Inc.’s 2014 Equity Incentive Plan and an Award Agreement entered into by the registered owner and
Proteon Therapeutics, Inc., copies of which will be furnished by the Company to the holder of the shares evidenced by this certificate
upon written request and without charge.
If the Stock is in book-entry position through the direct registration
system of the Company’s transfer agent, the restrictions will be appropriately noted.
(c)
Escrow of Shares
.
The Committee may require that any stock certificates evidencing shares of Restricted Stock be held in custody by a designated
escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Participant
deliver a stock power, endorsed in blank, relating to the Stock covered by such Award.
(d)
Restrictions and
Restriction Period
. During the Restriction Period applicable to shares of Restricted Stock, such shares shall be subject to
limitations on transferability and a Risk of Forfeiture arising on the basis of such conditions related to the performance of services,
Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement.
Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such
basis as it deems appropriate.
(e)
Rights Pending Lapse
of Risk of Forfeiture or Forfeiture of Award
. Except as otherwise provided in the Plan or the applicable Award Agreement, the
Participant shall have all of the rights of a stockholder of the Company with respect to any outstanding shares of Restricted Stock,
including the right to vote, and the right to receive any dividends with respect to, the shares of Restricted Stock (but any dividends
or other distributions payable in shares of Stock or other securities of the Company shall constitute additional Restricted Stock,
subject to the same Risk of Forfeiture as the shares of Restricted Stock in respect of which such shares of Stock or other securities
are paid). The Committee, as determined at the time of Award, may permit or require the payment of cash dividends to be deferred
and, if the Committee so determines, reinvested in additional Restricted Stock to the extent shares of Stock are available under
Section 4.
(f)
Lapse of Restrictions
.
If and when the Restriction Period expires without a prior forfeiture, any certificates for such shares shall be delivered to the
Participant promptly if not theretofore so delivered.
7.4.
Restricted Stock
Units
.
(a)
Character
. Each
Restricted Stock Unit shall entitle the recipient to a share of Stock at a close of such Restriction Period as the Committee may
establish and subject to a Risk of Forfeiture arising on the basis of such conditions relating to the performance of services,
Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement.
Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such
basis as it deems appropriate.
(b)
Form and Timing
of Payment
. Payment of earned Restricted Stock Units shall be made promptly following the close of the applicable Restriction
Period. At the discretion of the Committee, Participants may be entitled to receive payments equivalent to any dividends declared
with respect to Stock referenced in grants of Restricted Stock Units but only following the close of the applicable Restriction
Period and then only if the underlying Stock shall have been earned. Unless the Committee shall provide otherwise, any such dividend
equivalents shall be paid, if at all, without interest or other earnings.
7.5.
Performance Units
.
(a)
Character
.
Each Performance Unit shall entitle the recipient to the value of a specified number of shares of Stock, over the initial value
for such number of shares, if any, established by the Committee at the time of grant, at the close of a specified Performance Period
to the extent specified business objectives, including but not limited to Performance Goals, shall have been achieved.
(b)
Earning
of Performance Units
. The Committee shall set Performance Goals or other business objectives in its discretion which, depending
on the extent to which they are met within the applicable Performance Period, will determine the number and value of Performance
Units that will be paid out to the Participant. After the applicable Performance Period has ended, the holder of Performance Units
shall be entitled to receive payout on the number and value of Performance Units earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding Performance Goals or other business objectives
have been achieved.
(c)
Form
and Timing of Payment
. Payment of earned Performance Units shall be made in a single lump sum following the close of the applicable
Performance Period. At the discretion of the Committee, Participants may be entitled to receive any dividends declared with respect
to Stock which have been earned in connection with grants of Performance Units which have been earned, but not yet distributed
to Participants. The Committee may permit or, if it so provides at grant require, a Participant to defer such Participant’s
receipt of the payment of cash or the delivery of Stock that would otherwise be due to such Participant by virtue of the satisfaction
of any requirements or goals with respect to Performance Units. If any such deferral election is required or permitted, the Committee
shall establish rules and procedures for such payment deferrals.
7.6.
Stock Grants
.
Stock Grants shall be awarded solely in recognition of significant prior or expected contributions to the success of the Company
or its Affiliates, as an inducement to employment, in lieu of compensation otherwise already due and in such other limited circumstances
as the Committee deems appropriate. Stock Grants shall be made without forfeiture conditions of any kind.
7.7.
Qualified Performance-Based
Awards
.
(a)
Purpose
. The
purpose of this Section 7.7 is to provide the Committee the ability to qualify Awards as “performance-based compensation”
under Section 162(m) of the Code. If the Committee, in its discretion, decides to grant an Award as a Qualified Performance-Based
Award, the provisions of this Section 7.7 will control over any contrary provision contained in the Plan. In the course of granting
any Award, the Committee may specifically designate the Award as intended to qualify as a Qualified Performance-Based Award. However,
no Award shall be considered to have failed to qualify as a Qualified Performance-Based Award solely because the Award is not expressly
designated as a Qualified Performance-Based Award, if the Award otherwise satisfies the provisions of this Section 7.7 and the
requirements of Section 162(m) of the Code applicable to “performance-based compensation.”
(b)
Authority
. All
grants of Awards intended to qualify as Qualified Performance-Based Awards and the determination of the terms applicable thereto
shall be made by the Committee. If not all of the members thereof qualify as “outside directors” within the meaning
of Section 162 of the Code, however, all grants of Awards intended to qualify as Qualified Performance-Based Awards and the
determination of the terms applicable thereto shall be made by a subcommittee of the Committee consisting of such of the members
of the Committee as do so qualify. Any reference in this Section 7.7 to the Committee shall mean any such subcommittee if required
under the preceding sentence, and any action by such a subcommittee shall be considered the action of the Committee for purposes
of the Plan.
(c)
Discretion of Committee
with Respect to Qualified Performance-Based Awards
. Any form of Award permitted under the Plan, other than a Stock Grant, may
be granted as a Qualified Performance-Based Award. Options and Stock Appreciation Rights may be granted as Qualified Performance-Based
Awards in accordance with Section 7.1 and 7.2, respectively, except that the exercise price of any Option or Stock Appreciation
Right intended to qualify as a Qualified Performance-Based Award shall in no event be less that the Market Value of the Stock on
the date of grant, and may become exercisable based on continued service, on satisfaction of Performance Goals or other business
objectives, or on a combination thereof. Each other Award intended to qualify as a Qualified Performance-Based Award, such as Restricted
Stock, Restricted Stock Units, or Performance Units, shall be subject to satisfaction of one or more Performance Goals except as
otherwise provided in this Section 7.7. The Committee will have full discretion to select the length of any applicable Restriction
Period or Performance Period, the kind and/or level of the applicable Performance Goal, and whether the Performance Goal is to
apply to the Company, a subsidiary of the Company or any division or business unit or to the individual. Any Performance Goal or
Goals applicable to Qualified Performance-Based Awards shall be objective, shall be established not later than ninety (90) days
after the beginning of any applicable Performance Period (or at such other date as may be required or permitted for “performance-based
compensation” under Section 162(m) of the Code) and shall otherwise meet the requirements of Section 162(m) of the Code,
including the requirement that the outcome of the Performance Goal or Goals be substantially uncertain (as defined for purposes
of Section 162(m) of the Code) at the time established.
(d)
Payment of Qualified
Performance-Based Awards
. A Participant will be eligible to receive payment under a Qualified Performance-Based Award which
is subject to achievement of a Performance Goal or Goals only if the applicable Performance Goal or Goals are achieved within the
applicable Performance Period, as determined by the Committee,
provided
, that a Qualified Performance-Based Award may be
deemed earned as a result of death, becoming disabled, or in connection with a change of control (within the meaning of Section 162(m)
of the Code) if otherwise provided in the Plan or the applicable Award Agreement even if the Award would not constitute “performance-based
compensation” under Section 162(m) of the Code following the occurrence of such an event. In determining the actual size
of an individual Qualified Performance-Based Award, the Committee may reduce or eliminate the amount of the Qualified Performance-Based
Award earned for the Performance Period, if in its sole and absolute discretion, such reduction or elimination is appropriate.
(e)
Limitation on Adjustments
for Certain Events
. No adjustment of any Qualified Performance-Based Award pursuant to Section 8 shall be made except on such
basis, if any, as will not cause such Award to provide other than “performance-based compensation” within the meaning
of Section 162(m) of the Code.
(f)
Definitions
.
For purposes of the Plan
(i)
Performance
Criteria
means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals
for a Participant for a Performance Period. The Performance Criteria used to establish Performance Goals are limited to: (i) net
earnings (either before or after one or more of (A) interest, (B) taxes, (C) depreciation and (D) amortization), (ii) gross
or net sales or revenue, (iii) net income (either before or after taxes), (iv) adjusted net income, (v) operating earnings
or profit, (vi) cash flow (including, but not limited to, operating cash flow and free cash flow, (vii) return on assets,
(viii) return on capital, (ix) return on stockholders’ equity, (x) total stockholder return, (xi) return
on sales, (xii) gross or net profit or operating margin, (xiii) costs, (xiv) expenses, (xv) working capital,
(xvi) earnings per share, (xvii) adjusted earnings per share, (xviii) price per share, (xix) regulatory body
approval for commercialization of a product, (xx) implementation, completion or attainment of objectives relating to research,
development, regulatory, commercial, or strategic milestones or developments; (xxi) market share, (xxii) economic value,
(xxiii) revenue, (xxiv) revenue growth and (xxv) operational and organizational metrics.
(ii)
Performance
Goals
means, for a Performance Period, the written goal or goals established by the Committee for the Performance Period based
upon one or more of the Performance Criteria. The Performance Goals may be expressed in terms of overall Company performance or
the performance of a division, business unit, subsidiary, or an individual, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit or Affiliate, either individually, alternatively or in any combination,
and measured either quarterly, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established
target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee. The Committee
will objectively define the manner of calculating the Performance Goal or Goals it selects to use for such Performance Period for
such Participant, including whether or to what extent there shall not be taken into account any of the following events that occurs
during a Performance Period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii) the
effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals
for reorganization and restructuring programs and (v) any extraordinary, unusual, non-recurring or non-comparable items (A) as
described in Accounting Standard Codification Section 225-20, (B) as described in management’s discussion and analysis
of financial condition and results of operations appearing in the Company’s Annual Report to stockholders for the applicable
year, or (C) publicly announced by the Company in a press release or conference call relating to the Company’s results
of operations or financial condition for a completed quarterly or annual fiscal period.
7.8.
Awards
to Participants Outside the United States
.
The Committee may modify the terms of any Award under the Plan granted to
a Participant who is, at the time of grant or during the term of the Award, resident or primarily employed outside of the United
States in any manner deemed by the Committee to be necessary or appropriate in order that the Award shall conform to laws, regulations,
procedures, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of
the Participant’s residence or employment abroad, shall be as comparable as practicable to the value of such an Award to
a Participant who is resident or primarily employed in the United States. The Committee may establish supplements or sub-plans
to, or amendments, restatements, or alternative versions of, the Plan for the purpose of granting and administrating any such modified
Award. No such modification, supplement, sub-plan, amendment, restatement or alternative version may increase the share limit of
Section 4.
8. Adjustment Provisions
8.1.
Adjustment for
Corporate Actions
. All of the share numbers set forth in the Plan reflect the capital structure of the Company as of October
3, 2014. If subsequent to that date the outstanding shares of Stock (or any other securities covered by the Plan by reason of the
prior application of this Section) are increased, decreased, or exchanged for a different number or kind of shares or other securities,
or if additional shares or new or different shares or other securities are distributed with respect to shares of Stock, as a result
of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar distribution
with respect to such shares of Stock, an appropriate and proportionate adjustment will be made in (i) the maximum numbers
and kinds of shares provided in Section 4, (ii) the numbers and kinds of shares or other securities subject to the then outstanding
Awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding Options
and Stock Appreciation Rights (without change in the aggregate purchase price as to which such Options or Rights remain exercisable),
and (iv) the repurchase price of each share of Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase
right.
8.2.
Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events
.
In the event of any
corporate action not specifically covered by the preceding Section, including but not limited to an extraordinary cash distribution
on Stock, a corporate separation or other reorganization or liquidation, the Committee may make such adjustment of outstanding
Awards and their terms, if any, as it, in its sole discretion, may deem equitable and appropriate in the circumstances.
The
Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in this Section) affecting the Company or the financial
statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines
that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan.
8.3.
Related Matters
.
Any adjustment in Awards made pursuant to Section 8.1 or 8.2 shall be determined and made, if at all, by the Committee, acting
in its sole discretion, and shall include any correlative modification of terms, including of Option exercise prices, rates of
vesting or exercisability, Risks of Forfeiture, applicable repurchase prices for Restricted Stock, and Performance Goals and other
business objectives which the Committee may deem necessary or appropriate so as to ensure the rights of the Participants in their
respective Awards are not substantially diminished nor enlarged as a result of the adjustment and corporate action other than as
expressly contemplated in this Section 8. The Committee, in its discretion, may determine that no fraction of a share of Stock
shall be purchasable or deliverable upon exercise, and in that event if any adjustment hereunder of the number of shares of Stock
covered by an Award would cause such number to include a fraction of a share of Stock, such number of shares of Stock shall be
adjusted to the nearest smaller whole number of shares. No adjustment of an Option exercise price per share pursuant to Sections
8.1 or 8.2 shall result in an exercise price which is less than the par value of the Stock.
8.4.
Transactions
.
(a)
Definition of Transaction
.
In this Section 8.4, “
Transaction
” means (1) any merger or consolidation of the Company with or into another
entity as a result of which the Stock of the Company is converted into or exchanged for the right to receive cash, securities or
other property or is cancelled, (2) any sale or exchange of all or substantially all of the outstanding Stock of the Company for
cash, securities or other property, (3) any sale, transfer, or other disposition of all or substantially all of the Company’s
assets to one or more other persons in a single transaction or series of related transactions or (4) any liquidation or dissolution
of the Company.
(b)
Treatment of Awards
.
In a Transaction, the Committee may take any one or more of the following actions as to all or any (or any portion of) outstanding
Awards, subject to the provisions of Section 9 of this Plan.
(1) Provide that any
Awards shall be assumed, or substantially equivalent rights shall be provided in substitution therefor, by the acquiring or succeeding
entity (or an affiliate thereof).
(2) Upon written notice
to the holders, provide that all or any of the holders’ unexercised outstanding Options and Stock Appreciation Rights (collectively,
“
Rights
”) will terminate immediately prior to the consummation of such Transaction unless exercised within a
specified period following the date of such notice.
(3) Provide that all
or any Awards that are subject to Risk of Forfeiture will terminate immediately prior to the consummation of such Transaction.
(4) Provide that all
or any outstanding Rights shall Accelerate so as to become exercisable prior to or upon such Transaction with respect to some or
all of the shares of Stock for which any such Rights would not then otherwise be exercisable by their terms.
(5) Provide that outstanding
all or any Awards that are subject to Risk of Forfeiture shall Accelerate so that the Risk of Forfeiture otherwise applicable to
such Awards shall expire prior to or upon such Transaction with respect to any such Awards that would then still otherwise be subject
to the Risk of Forfeiture.
(6) Provide for cash
payments, net of applicable tax withholdings, to be made to holders equal to the excess, if any, of (A) the acquisition price times
the number of shares of Stock subject to an Option (to the extent the exercise price does not exceed the acquisition price) over
(B) the aggregate exercise price for all such shares of Stock subject to the Option, in exchange for the termination of such Option;
provided, that if the acquisition price does not exceed the exercise price of any such Option, the Committee may cancel that Option
without the payment of any consideration therefore prior to or upon the Transaction. For purposes of this paragraph 6 and paragraph
7 below, “
acquisition price
” means the amount of cash, and market value of any other consideration, received
in payment for a share of Stock surrendered in a Transaction but need not take into account any deferred consideration unless and
until received.
(7) Provide for cash
payments, net of applicable tax withholdings, to be made to holder or holders of all or any Awards (other than Options) equal to
the acquisition price times the number of shares of Stock subject to any such Awards, in exchange for the termination of any such
Awards; provided, that the Committee may cancel, pursuant to paragraph 3 above, any such Award that is subject to a Risk of Forfeiture
at the time of the consummation of such Transaction without the payment of any consideration therefor prior to or upon the Transaction.
(8) Provide that, in
connection with a liquidation or dissolution of the Company, all or any Awards (other than Restricted Stock or Stock Grants) shall
convert into the right to receive liquidation proceeds net of the exercise price thereof and any applicable tax withholdings.
(9) Any combination
of the foregoing.
In the event that the Committee determines in its discretion to
take the actions contemplated under paragraph (1) above of this Section 8.4(b) with respect to all or any Awards, the Committee
shall ensure that, upon consummation of the Transaction, any such Awards are assumed and/or exchanged or replaced with another
similar award issued by the acquiring or succeeding entity (or an affiliate thereof) and that, as a result of such assumption and/or
exchange or replacement, the holder of such assumed Award and/or such exchanged or replaced similar award has the right to purchase
or receive the value of, for each share of Stock subject to such Award immediately prior to the consummation of the Transaction,
the consideration (whether cash, securities or other property) received as a result of the Transaction by holders of Stock for
each share of Stock held immediately prior to the consummation of the Transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding shares of Stock);
provided, however
, that
if such consideration received as a result of the Transaction is not solely common stock (or its equivalent) of the acquiring or
succeeding entity (or an affiliate thereof), the Committee may, with the consent of the acquiring or succeeding entity (or an affiliate
thereof), provide for the consideration to be received with respect to such assumed Award and/or such exchanged or replaced similar
award to consist of or be based solely on common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate
thereof) equivalent in value to the per share consideration received by holders of outstanding shares of Stock as a result of the
Transaction; and
provided
,
further
, that if such Award is an Option, the holder of such Option must exercise the
Option and make payment of the applicable exercise price in connection therewith in order to receive such consideration.
(c)
Treatment of Other
Awards
. Upon the occurrence of a Transaction other than a liquidation or dissolution of the Company which is not part of another
form of Transaction, then, subject to the provisions of Section 9 below, with respect to all outstanding Awards (other than Options
and Share Appreciation Rights) that are not terminated prior to or upon such Transaction, the repurchase and other rights of the
Company under each such Award shall inure to the benefit of the Company’s successor and shall, unless the Committee determines
otherwise, apply to the cash, securities or other property which the Stock was converted into or exchanged for pursuant to such
Transaction in the same manner and to the same extent as they applied to the Award.
(d)
Related Matters
.
In taking any of the actions permitted under this Section 8.4, the Committee shall not be obligated to treat all Awards, all
Awards held by a Participant, or all Awards of the same type, identically.
Any determinations required
to carry out the foregoing provisions of this Section 8.4, including but not limited to the market value of other consideration
received by holders of Stock in a Transaction and whether substantially equivalent Rights have been substituted, shall be made
by the Committee acting in its sole discretion.
In connection with any action or actions taken by the Committee in respect
of Awards and in connection with a Transaction, the Committee may require such acknowledgements of satisfaction and releases from
Participants as it may determine.
9. Change of Control
Except as otherwise provided below, upon the occurrence of a Change
of Control, to the extent that the surviving entity declines to continue, convert, assume or replace outstanding Awards, then,
notwithstanding anything express or implied to the contrary in Section 8.4 above:
(a)
any
and all Options and Stock Appreciation Rights not already exercisable in full shall Accelerate with respect to 100% of the shares
for which such Options or Stock Appreciation Rights are not then exercisable;
(b)
any
Risk of Forfeiture applicable to Restricted Stock and Restricted Stock Units which is not based on achievement of Performance Goals
or other business objectives shall lapse with respect to 100% of the Restricted Stock and Restricted Stock Units still subject
to such Risk of Forfeiture immediately prior to the Change of Control; and
(c)
all
outstanding Awards of Restricted Stock and Restricted Stock Units conditioned on the achievement of Performance Goals or other
business objectives and the payouts attainable under outstanding Performance Units shall be deemed to have been satisfied as of
the effective date of the Change of Control, except if and to the extent otherwise determined by the Committee in its sole discretion
at any time prior to, or upon, such Change of Control.
All such Awards of Performance Units and Restricted Stock Units
shall be paid to the extent earned to Participants in accordance with their terms within thirty (30) days following the effective
date of the Change of Control. None of the foregoing shall apply, however, (i) in the case of any Award pursuant to an Award Agreement
requiring other or additional terms upon a Change of Control (or similar event), (ii) if specifically prohibited under applicable
laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, or (iii) as otherwise
provided in Section 7.7, concerning Qualified Performance-Based Awards.
10. Settlement of Awards
10.1.
In
General
. Options and Restricted Stock shall be settled in accordance with their terms. All other Awards may be settled in cash,
Stock, or other Awards, or a combination thereof, as determined by the Committee at or after grant and subject to any contrary
Award Agreement. The Committee may not require settlement of any Award in Stock pursuant to the immediately preceding sentence
to the extent issuance of such Stock would be prohibited or unreasonably delayed by reason of any other provision of the Plan.
10.2.
Violation of
Law
. Notwithstanding any other provision of the Plan or the relevant Award Agreement, if, at any time, in the reasonable opinion
of the Company, the issuance of shares of Stock covered by an Award may constitute a violation of law, then the Company may delay
such issuance until (i) approval shall have been obtained from such governmental agencies, other than the Securities and Exchange
Commission, as may be required under any applicable law, rule, or regulation and (ii) in the case where such issuance would constitute
a violation of a law administered by or a regulation of the Securities and Exchange Commission, one of the following conditions
shall have been satisfied:
(a) the shares of Stock
are at the time of the issue of such shares effectively registered under the Securities Act of 1933, as amended; or
(b) the Company shall have
determined, on such basis as it deems appropriate (including an opinion of counsel in form and substance satisfactory to the Company)
that the sale, transfer, assignment, pledge, encumbrance or other disposition of such shares does not require registration under
the Securities Act of 1933, as amended or any applicable State securities laws.
Furthermore, the inability of the Company to obtain or maintain,
or the impracticability of it obtaining or maintaining, authority from any governmental agency having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance of any Stock hereunder, shall relieve the Company
of any liability in respect of the failure to issue such Stock as to which such requisite authority shall not have been obtained,
and shall constitute circumstances in which the Committee may determine to amend or cancel Awards pertaining to such Stock, with
or without consideration to the affected Participants.
10.3.
Corporate Restrictions
on Rights in Stock
. Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions upon
the transfer thereof which may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the Company.
Whenever Stock is to be issued pursuant to an Award, if the Committee so directs at or after grant, the Company shall be under
no obligation to issue such shares until such time, if ever, as the recipient of the Award (and any person who exercises any Option,
in whole or in part), shall have become a party to and bound by the Stockholders’ Agreement, if any.
10.4.
Investment Representations
.
The Company shall be under no obligation to issue any shares of Stock covered by any Award unless the shares to be issued pursuant
to Awards granted under the Plan have been effectively registered under the Securities Act of 1933, as amended, or the Participant
shall have made such written representations to the Company (upon which the Company believes it may reasonably rely) as the Company
may deem necessary or appropriate for purposes of confirming that the issuance of such shares will be exempt from the registration
requirements of that Act and any applicable state securities laws and otherwise in compliance with all applicable laws, rules and
regulations of any jurisdiction in which Participants may reside or primarily work, including but not limited to that the Participant
is acquiring the shares for his or her own account for the purpose of investment and not with a view to, or for sale in connection
with, the distribution of any such shares.
10.5.
Registration
.
If the Company shall deem it necessary or desirable to register under the Securities Act of 1933, as amended, or other applicable
statutes any shares of Stock issued or to be issued pursuant to Awards granted under the Plan, or to qualify any such shares of
Stock for exemption from the Securities Act of 1933, as amended or other applicable statutes, then the Company shall take such
action at its own expense. The Company may require from each recipient of an Award, or each holder of shares of Stock acquired
pursuant to the Plan, such information in writing for use in any registration statement, prospectus, preliminary prospectus or
offering circular as is reasonably necessary for that purpose and may require reasonable indemnity to the Company and its officers
and directors from that holder against all losses, claims, damage and liabilities arising from use of the information so furnished
and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they
were made. In addition, the Company may require of any such person that he or she agree that, without the prior written consent
of the Company or the managing underwriter in any public offering of shares of Stock, he or she will not sell, make any short sale
of, loan, grant any option for the purchase of, pledge or otherwise encumber, or otherwise dispose of, any shares of Stock during
the 180 day period commencing on the effective date of the registration statement relating to the underwritten public offering
of securities (or during such shorter or longer period of time as the Committee shall determine in its sole discretion, which period
of time shall commence from and after such effective date of such registration statement). Without limiting the generality of the
foregoing provisions of this Section 10.5, if in connection with any underwritten public offering of securities of the Company
the managing underwriter of such offering requires that the Company’s directors and officers enter into a lock-up agreement
containing provisions that are more restrictive than the provisions set forth in the preceding sentence, then (a) each holder of
shares of Stock acquired pursuant to the Plan (regardless of whether such person has complied or complies with the provisions of
clause (b) below) shall be bound by, and shall be deemed to have agreed to, the same lock-up terms as those to which the Company’s
directors and officers are required to adhere; and (b) at the request of the Company or such managing underwriter, each such person
shall execute and deliver a lock-up agreement in form and substance equivalent to that which is required to be executed by the
Company’s directors and officers.
10.6.
Placement of
Legends; Stop Orders; etc.
Each share of Stock to be issued pursuant to Awards granted under the Plan may bear a reference
to the investment representations made in accordance with Section 10.4 in addition to any other applicable restrictions under
the Plan, and the terms of the Award and under the Stockholders’ Agreement and, if applicable, to the fact that no registration
statement has been filed with the Securities and Exchange Commission in respect to such shares of Stock. All shares of Stock or
other securities issued under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of any stock exchange upon which the Stock is then listed,
and any applicable federal or state securities law, and the Committee may cause a legend or legends to be placed on any such certificates
to make appropriate reference to such restrictions, or, if the Stock will be held in book-entry position through the direct registration
system of the Company’s transfer agent, the restrictions will be appropriately noted.
10.7.
Tax Withholding
.
Whenever shares of Stock are issued or to be issued pursuant to Awards granted under the Plan,
the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy federal, state,
local, foreign or other withholding tax requirements if, when, and to the extent required by law (whether so required to secure
for the Company an otherwise available tax deduction or otherwise) prior to the delivery of any certificate or certificates, held
in book-entry position through the direct registration system of the Company’s transfer agent, for such shares. The obligations
of the Company under the Plan shall be conditional on satisfaction of all such withholding obligations and the Company shall, to
the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to a Participant
or to utilize any other withholding method prescribed by the Committee from time to time. However, in such cases
Participants
may elect, subject to the approval of the Committee, acting in its sole discretion, to satisfy an applicable withholding requirement,
in whole or in part, by having the Company withhold shares of Stock to satisfy their tax obligations. All elections shall be irrevocable,
made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee deems appropriate.
If shares of Stock are withheld to satisfy an applicable withholding requirement, the shares of Stock withheld shall have a Market
Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction,
provided
,
however
, if shares of Stock are withheld to satisfy a withholding requirement imposed by a country other
than the United States, the amount withheld may exceed such minimum, provided that it is not in excess of the actual amount required
to be withheld with respect to the Participant under applicable tax law or regulations.
10.8.
Company Charter
and By-Laws; Other Company Policies
. This Plan and all Awards granted hereunder are subject to the charter and By-Laws of the
Company, as they may be amended from time to time, and all other Company policies duly adopted by the Board, the Committee or any
other committee of the Board and as in effect from time to time regarding the acquisition, ownership or sale of Stock by officers,
employees, directors, consultants, advisors and other service providers, including, without limitation, policies intended to limit
the potential for insider trading and to avoid or recover compensation payable or paid on the basis of inaccurate financial results
or statements, employee conduct, and other similar events.
11. Reservation of Stock
The Company shall at all times during the term of the Plan and
any outstanding Awards granted hereunder reserve or otherwise keep available such number of shares of Stock as will be sufficient
to satisfy the requirements of the Plan (if then in effect) and the Awards and shall pay all fees and expenses necessarily incurred
by the Company in connection therewith.
12. Limitation of Rights
in Stock; No Special Service Rights
A Participant shall not be deemed for any purpose to be a stockholder
of the Company with respect to any of the shares of Stock subject to an Award, unless and until a certificate shall have been issued
therefor and delivered to the Participant or his agent, or the Stock shall be issued through the direct registration system of
the Company’s transfer agent. Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions
upon the transfer thereof which may be now or hereafter imposed by the certificate or articles of incorporation and the by-laws
of the Company. Nothing contained in the Plan or in any Award Agreement shall confer upon any recipient of an Award any right with
respect to the continuation of his or her employment or other association with the Company (or any Affiliate), or interfere in
any way with the right of the Company (or any Affiliate), subject to the terms of any separate employment or consulting agreement
or provision of law or corporate articles or by-laws to the contrary, at any time to terminate such employment or consulting agreement
or to increase or decrease, or otherwise adjust, the other terms and conditions of the recipient’s employment or other association
with the Company and its Affiliates.
13. Unfunded Status of
Plan
The Plan is intended to constitute an “unfunded” plan
for incentive compensation, and the Plan is not intended to constitute a plan subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended. With respect to any payments not yet made to a Participant by the Company, nothing contained
herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole
discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the
Plan to deliver Stock or payments with respect to Awards hereunder,
provided, however
, that the existence of such trusts
or other arrangements is consistent with the unfunded status of the Plan.
14. Nonexclusivity of
the Plan
Neither the adoption of the Plan by the Board nor any action taken
in connection with the adoption or operation of the Plan shall be construed as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of stock options
and restricted stock other than under the Plan, and such arrangements may be either applicable generally or only in specific cases.
15. No Guarantee of Tax
Consequences
It is intended that all Awards shall be granted and maintained on a basis
which ensures they are exempt from, or otherwise compliant with, the requirements of Section 409A of the Code, pertaining non-qualified
plans of deferred compensation, and the Plan shall be governed, interpreted and enforced consistent with such intent. However,
neither the Company nor any Affiliate, nor any director, officer, agent, representative or employee of either, guarantees to the
Participant or any other person any particular tax consequences as a result of the grant of, exercise of rights under, or payment
in respect of an Award, including but not limited to that an Option granted as an Incentive Option has or will qualify as an “incentive
stock option” within the meaning of Section 422 of the Code or that the provisions and penalties of Section 409A of the Code
will or will not apply and no person shall have any liability to a Participant or any other party if a payment under an Award that
is intended to benefit from favorable tax treatment or avoid adverse tax treatment fails to realize such intention or for any action
taken by the Board or the Committee with respect to the Award.
16. Termination and Amendment
of the Plan
16.1.
Termination
or Amendment of the Plan
. Subject to the limitations contained in Section 16.3 below, including specifically the requirement
of stockholder approval, if applicable, t
he Board may at any time suspend or terminate the Plan
or make such modifications of the Plan as it shall deem advisable. Unless the Board otherwise expressly provides, no amendment
of the Plan shall affect the terms of any Award outstanding on the date of such amendment.
16.2.
Termination
or Amendment of Outstanding Awards; Assumptions
. Subject to the limitations contained in Section 16.3 below, including specifically
the requirement of stockholder approval, if applicable, t
he Committee may at any time:
(a) amend the terms of any Award theretofore granted, prospectively
or retroactively, provided that the Award as amended is consistent with the terms of the Plan;
(b) within the limitations of the Plan, modify, extend or assume
outstanding Awards or accept the cancellation of outstanding Awards or of outstanding stock options or other equity-based compensation
awards granted by another issuer in return for the grant of new Awards for the same or a different number of shares of Stock and
on the same or different terms and conditions (including but not limited to the exercise price of any Option); and
(c) offer to buy out for a payment in cash or cash equivalents an
Award previously granted or authorize the recipient of an Award to elect to cash out an Award previously granted, in either case
at such time and based upon such terms and conditions as the Committee shall establish.
16.3.
Limitations
on Amendments, Etc.
(a) Without the approval
of the Company’s stockholders, no amendment or modification of the Plan by the Board may (i) increase the number of shares
of Stock which may be issued under the Plan, (ii) change the description of the persons eligible for Awards, or (iii) effect any
other change for which stockholder approval is required by law or the rules of any relevant stock exchange.
(b) No action by the Board
or the Committee pursuant to this Section 16 shall impair the rights of the recipient of any Award outstanding on the date of such
amendment or modification of such Award, as the case may be, without the Participant’s consent;
provided, however,
that no such consent shall be required (A) in the case of any amendment or termination of any outstanding Award that is permitted
by any provision of this Plan that is set forth in Section 16.4 below, Section 8, Section 9 or in any other section of this Plan
that is not Section 16.2 or (B) if the Board or Committee, as the case may be, (i) determines in its sole discretion and
prior to the date of any Change of Control that such amendment or alteration either is required or advisable in order for the Company,
the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the
Code, or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, (ii) determines
in its sole discretion and prior to the date of any Change of Control that such amendment or alteration is not reasonably likely
to significantly diminish the benefits provided under the Award, or that any such diminution has been adequately compensated, or
(iii) reasonably determines on or after the date of Change of Control that such amendment or alteration either is required or advisable
in order for the Company, the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of
Section 409A of the Code.
16.4 Option Repricing.
Notwithstanding
anything in Section 16.3 express or implied to the contrary, the Committee is expressly authorized to amend any or all outstanding
Options at any time and from time to time to effect a repricing thereof by lowering the exercise price applicable to the shares
of Stock subject to such Option or Options without the consent or approval of the stockholders of the Company or the holder or
holders of such Option or Options, and, in connection with such repricing, to amend or modify any of the other terms of the Option
or Options so repriced, including, without limitation, for purposes of reducing the number of shares subject to such Option or
Options or for purposes of adversely affecting the provisions applicable to such Option or Options that relate to the vesting
or exercisability thereof, in each case without the approval or consent of stockholders of the Company or the holder or holders
of such Option or Options.
17. Notices and Other
Communications
Any communication or notice required or permitted to be given
under the Plan shall be in such form as the Committee may determine from time to time. If a notice, demand, request or other communication
is required or permitted to be given in writing, then any such notice, demand, request or other communication hereunder to any
party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered,
certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular, certified or overnight mail, addressed
or telecopied, as the case may be, (i) if to the recipient of an Award, at his or her residence address last filed with the Company
and (ii) if to the Company, at its principal place of business, addressed to the attention of its Treasurer, or to such other address
or telecopier number, as the case may be, as the addressee may have designated by notice to the addressor. All such notices, requests,
demands and other communications shall be deemed to have been received: (i) in the case of personal delivery, on the date
of such delivery; (ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile transmission,
when confirmed by facsimile machine report.
18. Governing Law
The Plan and all Award Agreements and actions taken hereunder
and thereunder shall be governed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts, without
regard to the conflict of laws principles thereof.
[End of document.]