OTHER MATTERS
As of the time of preparation of this Proxy Statement, neither our Board nor management intends to bring before the meeting any business other than the matters referred to in the Notice of Annual Meeting and this
Proxy Statement. If any other business should properly come before the meeting, or any adjournment thereof, the persons named in the proxy will vote on such matters according to their best judgment and in their discretion.
Annual Report on Form
10-K
Our Annual Report on Form
10-K
for the year ended December 31, 2018, containing audited consolidated balance sheets as of December 31, 2018 and 2017 and audited
consolidated statements of operations and comprehensive loss, stockholders equity (deficit) and cash flows for each of the three years in the period ended December 31, 2018, is being distributed along with this Proxy Statement. The Annual
Report on Form
10-K
is not incorporated into this Proxy Statement and is not considered proxy-soliciting material. This Proxy Statement and our Annual Report on Form
10-K
for the year ended December 31, 2018 are available to you at no charge electronically at http://www.edocumentview.com/hrtx. Additional copies of the Annual Report on Form
10-K
for the year ended December 31, 2018 are available at no charge on written request. To obtain additional copies of the Annual Report on Form
10-K
for the year ended
December 31, 2018, please contact us 4242 Campus Point Court, Suite 200, San Diego, CA 92121, Attn.: David Szekeres, Senior Vice President, General Counsel, Business Development, and Corporate Secretary.
BY ORDER OF THE BOARD OF DIRECTORS
|
/s/ David Szekeres
|
David Szekeres, Senior Vice President, General Counsel, Business Development and Corporate Secretary
San Diego, California
April 26, 2019
|
64
EXHIBIT A
HERON THERAPEUTICS, INC.
AMENDED AND RESTATED 2007 EQUITY INCENTIVE PLAN
1. Purposes of the Plan.
The purpose of this Plan is to
encourage ownership in Heron Therapeutics, Inc., a Delaware corporation (the
Company
), by key personnel whose long-term employment or other service relationship with the Company is considered essential to the Companys
continued progress and, thereby, encourage recipients to act in the stockholders interest and share in the Companys success.
2.
Definitions.
As used herein, the following definitions shall apply:
(a)
Administrator
means the Board, any Committees or such delegates as shall be administering the Plan in accordance with Section 4 of the Plan.
(b)
Affiliate
means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a
significant ownership interest as determined by the Administrator.
(c)
Applicable Laws
means the requirements
relating to the administration of stock option and stock award plans under U.S. federal and state laws, any stock exchange or quotation system on which the Company has listed or submitted for quotation the Common Stock to the extent provided under
the terms of the Companys agreement with such exchange or quotation system and, with respect to Awards subject to the laws of any foreign jurisdiction where Awards are, or will be, granted under the Plan, the laws of such jurisdiction.
(d)
Award
means a Stock Award or Option granted in accordance with the terms of the Plan.
(e)
Awardee
means an Employee, Consultant or Director of the Company or any Affiliate who has been granted an Award under the
Plan.
(f)
Award Agreement
means a Stock Award Agreement and/or Option Agreement, which may be in written or
electronic format, in such form and with such terms and conditions as may be specified by the Administrator, evidencing the terms and conditions of an individual Award. Each Award Agreement is subject to the terms and conditions of the Plan.
(g)
Board
means the Board of Directors of the Company.
(h)
Cause
means, unless such term or an equivalent term is otherwise defined with respect to an Award by the Participants
Award Agreement, any of the following: (i) the Participants theft, dishonesty, willful misconduct, breach of
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fiduciary duty for personal profit, or falsification of any Company or Affiliate documents or records; (ii) the Participants material failure to abide by a Companys or
Affiliates code of conduct or other policies (including without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participants unauthorized use, misappropriation, destruction or diversion of
any tangible or intangible asset or corporate opportunity of the Company or an Affiliate (including, without limitation, the Participants improper use or disclosure of confidential or proprietary information); (iv) any intentional act by the
Participant which has a material detrimental effect on the Company or an Affiliates reputation or business; (v) the Participants repeated failure or inability to perform any reasonable assigned duties after written notice from the
Company or an Affiliate (including, without limitation, habitual absence from work for reasons other than illness), and a reasonable opportunity to cure, such failure or inability; (vi) any material breach by the Participant of any employment
or service agreement between the Participant and the Company or an Affiliate, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participants conviction (including any plea of guilty or nolo contendere) of any
criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participants ability to perform his or her duties with the Company or an Affiliate.
(i)
Change in Control
means, unless such term or an equivalent term is otherwise defined with respect to an Award by the
Participants Award Agreement, the occurrence of any of the following:
i. an Ownership Change Event or a series of related
Ownership Change Events (collectively, a
Transaction
) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their
ownership of shares of the Companys voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the
Company or such surviving entity immediately outstanding after the Transaction, or, in the case of an Ownership Change Event described in Section 2(bb)(iii), the entity to which the assets of the Company were transferred (the
Transferee ), as the case may be; or
ii. the liquidation or dissolution of the Company.
For purposes of the preceding sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of
the voting securities of one or more corporations or other business entities which own the Company or the Transferee, as the case may be, either directly or through one or more subsidiary corporations or other business entities. The Board shall have
the right to determine whether multiple sales or exchanges of the voting securities in the Company or multiple Ownership Change Events are related, and its determination shall be final, binding and conclusive. The Board may also, but need not,
specify that other transactions or events constitute a Change in Control.
(j)
Code
means the United States Internal
Revenue Code of 1986, as amended.
(k)
Committee
means the compensation committee of the Board or a committee of
Directors appointed by the Board in accordance with Section 4 of the Plan.
(l)
Common Stock
means the common
stock of the Company.
(m)
Company
means Heron Therapeutics, Inc., a Delaware corporation, or its successor.
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(n)
Consultant
means any person (including an advisor or an employee of an entity)
that is engaged by the Company or any Parent, Subsidiary or Affiliate, to render services and is compensated for such services.
(o)
Continuous Service
means that the Participants service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participants service
with the Company or an Affiliate, shall not terminate a Participants Continuous Service;
provided, however
, if the Company for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the
Board in its sole discretion, such Participants Continuous Service shall be considered to have terminated on the date such Company ceases to qualify as an Affiliate. To the extent permitted by law, the Board or the chief executive officer of
the Company, in that partys sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of: (i) any leave of absence approved by the Board or the chief executive officer of the Company, including
sick leave, military leave or any other personal leave; or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting
in a Stock Award only to such extent as may be provided in the Companys leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.
(p)
Conversion Award
has the meaning set forth in Section 4(b)(xii) of the Plan.
(q)
Director
means a member of the Board.
(r)
Effective Date
means the date of approval of the Plan by the stockholders of the Company in the manner and to the extent required by Applicable Laws.
(s)
Employee
means a regular, active employee of the Company or any Affiliate, including an Officer and/or Inside Director.
Within the limitations of Applicable Law, the Administrator shall have the discretion to determine the effect upon an Award and upon an individuals status as an Employee in the case of (i) any individual who is classified by the Company
or its Affiliate as leased from or otherwise employed by a third party or as intermittent or temporary, even if any such classification is changed retroactively as a result of an audit, litigation or otherwise, (ii) any leave of absence
approved by the Company or an Affiliate, (iii) any transfer between locations of employment with the Company or an Affiliate or between the Company and any Affiliate or between any Affiliates, (iv) any change in the Awardees status
from an Employee to a Consultant or Director, and (v) at the request of the Company or an Affiliate an Employee becomes employed by any partnership, joint venture or corporation not meeting the requirements of an Affiliate in which the Company
or an Affiliate is a party.
(t)
Exchange Act
means the Securities Exchange Act of 1934, as amended.
(u)
Fair Market Value
means, as of any date, the value of a share of Common Stock or other property as determined by the
Administrator, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following:
i. If, on such date, the Common Stock is listed on a national or regional securities exchange or market system, including without limitation the Nasdaq Stock Market, the Fair Market Value of a share of Common Stock
shall be the closing price
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on such date of a share of Common Stock (or the mean of the closing bid and asked prices of a share of Common Stock if the stock is so quoted instead) as quoted on such exchange or market system
constituting the primary market for the Common Stock, as reported in
The Wall Street Journal
or such other source as the Administrator deems reliable. If the relevant date does not fall on a day on which the Common Stock has traded on such
securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Common Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the
Administrator, in its discretion.
ii. If, on such date, the Common Stock is not listed on a national or regional securities exchange or
market system, the Fair Market Value of a share of Common Stock shall be as determined by the Administrator in good faith using a reasonable application of a reasonable valuation method without regard to any restriction other than a restriction
which, by its terms, will never lapse.
(v)
Grant Date
means, for all purposes, the date on which the Administrator
approves the determination of grant of an Award, or such other date as is determined by the Administrator, provided that in the case of any Incentive Stock Option, the grant date shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of commencement of the Awardees employment relationship with the Company.
(w)
Incentive Stock Option
means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(x)
Inside Director
means a Director who is an Employee.
(y)
Nasdaq
means the Nasdaq Stock Market or its successor.
(z)
Nonstatutory Stock Option
means an Option not intended to qualify as an Incentive Stock Option.
(aa)
Officer
means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
(bb)
Option
means a right granted under Section 8 to purchase a
number of Shares at such exercise price, at such times, and on such other terms and conditions as are specified in the agreement or other documents evidencing the Option (the Option Agreement). Both Options intended to qualify as
Incentive Stock Options and Nonstatutory Stock Options may be granted under the Plan.
(cc)
Outside Director
means a
Director who is not an Employee.
(dd)
Ownership Change Event
means the occurrence of any of the following with
respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or
consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company.
(ee)
Parent
means a parent corporation, whether now or hereafter existing, as defined in Section 424(e) of the Code, or any successor provision.
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(ff)
Participant
means the Awardee or any person (including any estate) to whom an
Award has been assigned or transferred as permitted hereunder.
(gg)
Performance Criteria
shall have the meaning set
forth in Section 13(b) of the Plan.
(hh)
Plan
means this Heron Therapeutics, Inc. 2007 Equity Incentive Plan.
(ii)
Restricted Stock Unit
means a bookkeeping entry representing an amount equivalent to the Fair Market Value of
one Share (or a fraction or multiple of such value), payable in cash, property or Shares. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, except as otherwise provided for by the Administrator.
(jj)
Share
means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.
(kk)
Stock Appreciation Right
means a right to receive cash and/or shares of Common Stock based on a change in the Fair Market
Value of a specific number of shares of Common Stock between the grant date and the exercise date granted under Section 12.
(ll)
Stock Award
means an award or issuance of Shares, Restricted Stock Units, Stock Appreciation Rights or other similar awards made under Section 12 of the Plan, the grant, issuance, retention, vesting, settlement, and/or
transferability of which is subject during specified periods of time to such conditions (including continued employment or performance conditions) and terms as are expressed in the agreement or other documents evidencing the Award (the Stock
Award Agreement ).
(mm)
Subsidiary
means any company (other than the Company) in an unbroken chain of
companies beginning with the Company, provided each company in the unbroken chain (other than the Company) owns, at the time of determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the
other companies in such chain.
(nn)
Termination of Continuous Service
shall mean ceasing to be in Continuous Service
as an Employee, Consultant or Director, as determined in the sole discretion of the Administrator. However, for Incentive Stock Option purposes, Termination of Continuous Service will occur when the Awardee ceases to be an employee (as determined in
accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company or one of its Subsidiaries. The Administrator shall determine whether any corporate transaction, such as a sale or
spin-off
of a division or business unit, or a joint venture, shall be deemed to result in a Termination of Continuous Service.
(oo)
Total and Permanent Disability
shall have the meaning set forth in Section 22(e)(3) of the Code.
3. Stock Subject to the Plan.
(a)
Aggregate Limits.
Subject to the provisions of
Section 14 of the Plan, the maximum aggregate number of Shares that may be sold or issued under the Plan is 25,800,000 shares of Common Stock. Shares subject to Awards granted under the Plan that are cancelled, expire or are forfeited shall be
available for
re-grant
under the Plan. If an Awardee pays the exercise or purchase price of an Award granted under the Plan through the tender or withholding of Shares, or if Shares are tendered or withheld to
satisfy any Company withholding obligations, the number of Shares so tendered or withheld shall become
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available for
re-issuance
thereafter under the Plan. The Shares subject to the Plan may be either Shares reacquired by the Company, including Shares
purchased in the open market, or authorized but unissued Shares.
(b)
Individual Award Limits
. Subject to the provisions of
Section 14 of the Plan, the aggregate number of Shares subject to Awards granted under this Plan during any calendar year to any one Awardee shall not exceed 50% of the maximum aggregate number of shares that are authorized for issuance
pursuant to Section 3(a) of the Plan, except that in connection with his or her first commencing service with the Company or an Affiliate, an Awardee may be granted Awards covering up to an additional 200,000 Shares during the year in which
such service commences.
(c)
Director Awards
. The aggregate dollar value of cash compensation and Awards (based on the grant date
fair value of such Awards) granted under the Plan or otherwise during any calendar year to any one Outside Director shall not exceed $750,000; provided, however, that in any calendar year in which an Outside Director first joins the Board or is
designated as Chairman of the Board, the maximum aggregate dollar value of equity-based and cash compensation granted to the Outside Director may be up to two hundred percent (200%) of the foregoing limit.
4. Administration of the Plan.
(a)
Procedure.
i.
Multiple Administrative Bodies
. The Plan shall be administered by the Board, a Committee and/or their
delegates.
ii.
Rule
16b-3
. To the extent desirable to qualify transactions hereunder as
exempt under Rule
16b-3
promulgated under the Exchange Act (Rule
16b-3),
Awards to Officers and Directors shall be made by the entire Board or a Committee of
two or more
non-employee
directors within the meaning of Rule
16b-3.
iii.
Other Administration
. The Board or a Committee may delegate to an authorized officer or officers of the Company the power to approve Awards to persons eligible to receive Awards under the Plan who are
not (A) subject to Section 16 of the Exchange Act or (B) any other executive officer.
iv.
Delegation of Authority for
the
Day-to-Day
Administration of the Plan
. Except to the extent prohibited by Applicable Law, the Administrator may delegate to one or more individuals the
day-to-day
administration of the Plan and any of the functions assigned to it in this Plan. Such delegation may be revoked at any time.
v.
Nasdaq
. To the extent that the Common Stock is then listed on Nasdaq, the Plan will be administered in a manner that complies with any
applicable Nasdaq or stock exchange listing requirements.
(b)
Powers of the Administrator
. Subject to the provisions of the Plan
and, in the case of a Committee or delegates acting as the Administrator, subject to the specific duties delegated to such Committee or delegates, the Administrator shall have the authority, in its discretion:
i. to select the Employees, Consultants and Directors of the Company or its Affiliates to whom Awards are to be granted hereunder;
A-6
ii. to determine the number of shares of Common Stock to be covered by each Award granted hereunder;
iii. to determine the type of Award to be granted to the selected Employees, Consultants and Directors;
iv. to approve forms of Award Agreements for use under the Plan;
v. to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise and/or purchase price
(if applicable), the time or times when an Award may be exercised (which may or may not be based on performance criteria), the vesting schedule, any vesting and/or exercisability acceleration or waiver of forfeiture restrictions, the acceptable
forms of consideration, the term, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine and may be established at the
time an Award is granted or thereafter;
vi. to correct administrative errors;
vii. to construe and interpret the terms of the Plan (including
sub-plans
and Plan addenda) and Awards
granted pursuant to the Plan;
viii. to adopt rules and procedures relating to the operation and administration of the Plan to
accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Administrator is specifically authorized (A) to adopt the rules and procedures regarding the conversion of local currency,
withholding procedures and handling of stock certificates which vary with local requirements and (B) to adopt
sub-plans
and Plan addenda as the Administrator deems desirable, to accommodate foreign laws,
regulations and practice;
ix. to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and
regulations relating to
sub-plans
and Plan addenda;
x. to modify or amend each Award,
including, but not limited to, the acceleration of vesting and/or exercisability, provided, however, that any such amendment is subject to Section 15 of the Plan and except as set forth in that Section, may not impair any outstanding Award
unless agreed to in writing by the Participant;
xi. to allow Participants to satisfy withholding tax amounts by electing to have the
Company withhold from the Shares to be issued upon exercise of an Option or vesting of a Stock Award that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld
shall be determined in such manner and on such date that the Administrator shall determine or, in the absence of provision otherwise, on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have
Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may provide;
xii. to
authorize conversion or substitution under the Plan of any or all stock options, stock appreciation rights or other stock awards held by service providers of an entity acquired by the Company (the
Conversion Awards
). Any
conversion or substitution shall be effective as of the close of the merger, acquisition or other transaction. The Conversion Awards
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may be Nonstatutory Stock Options or Incentive Stock Options, as determined by the Administrator, with respect to options granted by the acquired entity; provided, however, that with respect to
the conversion of stock appreciation rights in the acquired entity, the Conversion Awards shall be Nonstatutory Stock Options. Unless otherwise determined by the Administrator at the time of conversion or substitution, all Conversion Awards shall
have the same terms and conditions as Awards generally granted by the Company under the Plan;
xiii. to authorize any person to execute
on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
xiv. to
impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an Award,
including without limitation, (A) restrictions under an insider trading policy or under any other Company policy relating to Company stock and stock ownership and (B) restrictions as to the use of a specified brokerage firm for such
resales or other transfers;
xv. to provide, either at the time an Award is granted or by subsequent action, that an Award shall contain
as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash or a combination thereof, the amount of which is
determined by reference to the value of the Award;
xvi. to cause all outstanding Awards held by an Awardee to terminate immediately in
their entirety (including as to vested Options) upon first notification to the Awardee of the Awardees Termination of Continuous Service for Cause. If an Awardees Continuous Service with the Company is suspended pending an investigation
of whether the Awardee shall be terminated for Cause, the Administrator has the authority to cause all the Awardees rights under all outstanding Awards to be suspended during the investigation period in which event the Awardee shall have no
right to exercise any outstanding Awards.
xvii. to determine whether and to what extent the vesting of Awards shall be tolled during
any unpaid leave of absence. In the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon an Awardees returning from military leave (under conditions that would entitle him or her to
protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Options to the same extent as would have applied had the Awardee continued to provide services to
the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave.
xviii. to make
all other determinations deemed necessary or advisable for administering the Plan and any Award granted hereunder.
(c)
Effect of
Administrators Decision
. All decisions, determinations and interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, shall be final and
binding on all Participants and on all other persons. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without
limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select.
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5. Eligibility.
Awards may be granted to Employees, Consultants and Directors of the Company or any of its Affiliates; provided that Incentive Stock Options may be granted only to
Employees of the Company or of a Subsidiary of the Company.
6. Term of Plan.
The Plan shall become effective on the Effective Date. It shall continue in effect for a term of ten (10) years from the later of the Effective Date or the date any amendment to add shares to the Plan is
approved by stockholders of the Company unless terminated earlier under Section 15 of the Plan.
7. Term of Award.
The term of each Award shall be determined by the Administrator and stated in the Award Agreement. In the case of an Option, the term shall be ten (10) years
from the Grant Date or such shorter term as may be provided in the Award Agreement; provided that an Incentive Stock Option granted to an Employee who on the Grant Date owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Subsidiary shall have a term of no more than five (5) years from the Grant Date.
8. Options.
The Administrator may grant an Option or provide for the grant of an Option, either from time to time in the discretion of the Administrator or
automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the satisfaction of an event or condition within the control of the Awardee or within the control of others.
(a)
Option Agreement
. Each Option Agreement shall contain provisions regarding (i) the number of Shares that may be issued upon
exercise of the Option, (ii) the type of Option, (iii) the exercise price of the Shares and the means of payment for the Shares, (iv) the term of the Option, (v) such terms and conditions on the vesting and/or exercisability of
an Option as may be determined from time to time by the Administrator, (vi) restrictions on the transfer of the Option or the Shares issued upon exercise of the Option and forfeiture provisions, and (vii) such further terms and conditions,
in each case not inconsistent with this Plan as may be determined from time to time by the Administrator.
(b)
Exercise Price
.
The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following:
i. In the case of an Incentive Stock Option, the per Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the Grant Date; provided however, that in the case of
an Incentive Stock Option granted to an Employee who on the Grant Date owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise
price shall be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the Grant Date.
ii. In the case of a
Nonstatutory Stock Option, the per Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the Grant Date.
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iii. Notwithstanding the foregoing, at the Administrators discretion, Conversion Awards may be
granted in substitution and/or conversion of options of an acquired entity, with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of such substitution and/or conversion.
(c)
Vesting Period and Exercise Dates
. Options granted under this Plan shall vest and/or be exercisable at such time and in such
installments during the period prior to the expiration of the Options term as determined by the Administrator. The Administrator shall have the right to make the timing of the ability to exercise any Option granted under this Plan subject to
continued employment, the passage of time and/or such performance requirements as deemed appropriate by the Administrator, or to grant fully vested Options. At any time after the grant of an Option, the Administrator may reduce or eliminate any
restrictions surrounding any Participants right to exercise all or part of the Option.
(d)
Form of Consideration
. The
Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment, either through the terms of the Option Agreement or at the time of exercise of an Option. Acceptable forms of consideration
may include:
i. cash;
ii. check or wire transfer (denominated in U.S. Dollars);
iii. subject to the Companys discretion to refuse for any reason and at any time to accept such consideration and subject to any conditions or limitations established by the Administrator, other Shares held
by the Participant which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;
iv. consideration received by the Company under a broker-assisted sale and remittance program acceptable to the Administrator;
v. cashless net exercise arrangement pursuant to which the Company will reduce the number of Shares issued upon exercise by the largest whole number of Shares having an aggregate Fair Market Value that
does not exceed the aggregate exercise price; provided that the Company shall accept a cash or other payment from the Participant to the extent of any remaining balance of the exercise price not satisfied by such reduction in the number of whole
Shares to be issued;
vi. such other consideration and method of payment for the issuance of Shares to the extent permitted by
Applicable Laws; or
vii. any combination of the foregoing methods of payment.
(e)
No Option (or Stock Appreciation Right) Repricings
. Other than in connection with a change in the Companys capitalization (as
described in Section 14(a) of the Plan), a Repricing (as defined below) is prohibited without approval by the stockholders of the Company.
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Repricing
means any of the following or any other action that has the same purpose
and effect: (a) lowering the exercise price of an outstanding Option or Stock Appreciation Right granted under this Plan after it is granted; (b) any other action affecting an outstanding Option or Stock Appreciation Right granted under
this Plan that is treated as a repricing under United States generally accepted accounting principles; (c) canceling an outstanding Option or Stock Appreciation Right granted under this Plan at a time when its exercise or purchase price exceeds
the then fair market value of the stock underlying such outstanding Option or Stock Appreciation Right, in exchange for another Option or Stock Appreciation Right or a cash payment, unless the cancellation and exchange occurs in connection with a
merger, consolidation, sale of substantially all the Companys assets, acquisition,
spin-off,
spin-out,
or other similar corporate transaction.
9. Effect of Termination of Continuous Service on Awards
(a)
Generally
. Unless otherwise provided for by the Administrator, upon an Awardees Termination of Continuous Service other than as a result of circumstances described in Sections 9(b), (c), (d) and
(e) below, all outstanding Awards granted to such Awardee that were vested and exercisable as of the date of the Awardees Termination of Continuous Service may be exercised by the Awardee until the earlier of (A) three (3) months
following Awardees Termination of Continuous Service or (B) the expiration of the term of such Award; provided, however, that the Administrator may in the Award Agreement specify a period of time (but not beyond the expiration date of the
Award) following Termination of Continuous Service during which the Awardee may exercise the Award as to Shares that were vested and exercisable as of the date of Termination of Continuous Service. To the extent such a period following Termination
of Continuous Service is specified, the Award shall automatically terminate at the end of such period to the extent the Awardee has not exercised it within such period.
(b)
Disability of Awardee
. Unless otherwise provided for by the Administrator, upon an Awardees Termination of Continuous Service as a result of the Awardees disability, including Total and
Permanent Disability, all outstanding Awards granted to such Awardee that were vested and exercisable as of the date of the Awardees Termination of Continuous Service may be exercised by the Awardee until the earlier of (A) twelve (12)
months following Awardees Termination of Continuous Service as a result of Awardees disability, including Total and Permanent Disability or (B) the expiration of the term of such Award. If the Participant does not exercise such
Award within the time specified, the Award (to the extent not exercised) shall automatically terminate.
(c)
Death of Awardee
.
Unless otherwise provided for by the Administrator, upon an Awardees Termination of Continuous Service as a result of the Awardees death, all outstanding Awards granted to such Awardee that were vested and exercisable as of the date of
the Awardees death may be exercised until the earlier of (A) twelve (12) months following the Awardees death or (B) the expiration of the term of such Award. If an Award is held by the Awardee when he or she dies, such Award
may be exercised, to the extent the Award is vested and exercisable, by the beneficiary designated by the Awardee (as provided in Section 16 of the Plan), the executor or administrator of the Awardees estate or, if none, by the person(s)
entitled to exercise the Award under the Awardees will or the laws of descent or distribution; provided that the Company need not accept exercise of an Award by such beneficiary, executor or administrator unless the Company has satisfactory
evidence of such persons authority to act as such. If the Award is not so exercised within the time specified, such Award (to the extent not exercised) shall automatically terminate. The Awardees service shall be deemed to have
terminated on account of death if the Awardee dies within three (3) months (or such longer period as determined by the Administrator, in its discretion) after the Awardees Termination of Continuous Service.
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(d)
Termination for Cause.
The Administrator has the authority to cause all outstanding Awards
held by an Awardee to terminate immediately in their entirety (including as to vested Awards) upon first notification to the Awardee of the Awardees Termination of Continuous Service for Cause in accordance with Section 4(b)(xvi) above.
(e)
Other Terminations of Continuous Service.
The Administrator may provide in the applicable Award Agreement for different
treatment of Awards upon Termination of Continuous Service of the Awardee than that specified above.
(f)
Extension of Exercise
Period.
The Administrator shall have full power and authority to extend the period of time for which an Award is to remain exercisable following an Awardees Termination of Continuous Service from the periods set forth in Sections 9(a),
(b), (c), (d) and (e) above or in the Award Agreement to such greater time as the Administrator shall deem appropriate, provided that in no event shall such Award be exercisable later than the date of expiration of the term of such Award as set
forth in the Award Agreement.
(g)
Extension if Exercise Prevented by Law.
Notwithstanding the foregoing, other than a
termination for Cause, if a sale within the applicable time periods set forth in Section 9(a), (b), (c) and (e) above or in the Award Agreement is prevented by Section 18 below, the Award shall remain exercisable until thirty
(30) days after the date the Awardee is notified by the Company that the Award is exercisable, but in any event no later than the Award expiration date.
(h)
Extension if Subject to Section
16(b).
Notwithstanding the foregoing, other than a termination
for Cause, if a sale within the applicable time periods set forth in Section 9(a), (b), (c) and (e) above or in the Award Agreement would subject the Awardee to a suit under Section 16(b) of the Exchange Act, the Award shall remain
exercisable until the earliest to occur of (i) the tenth (10
th
) day
following the date on which a sale of shares by the Awardee would no longer be subject to suit, (ii) the one hundred ninetieth (190
th
) day after Awardees Termination of Continuous Service, or (iii) the Award expiration date.
10. Incentive Stock Option Limitations/Terms.
(a)
Eligibility.
Only employees (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company or any of its Subsidiaries may be granted
Incentive Stock Options.
(b)
$100,000 Limitation.
Notwithstanding the designation Incentive Stock Option in an
Option Agreement, if and to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Awardee during any calendar year (under all plans of the Company and
any of its Subsidiaries) exceeds U.S. $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 10(b), Incentive Stock Options shall be taken into account in the order in which they were granted. The
Fair Market Value of the Shares shall be determined as of the Grant Date.
(c)
Transferability.
An Incentive Stock Option may not
be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner by the Awardee otherwise than by will or the laws of descent and distribution, and, during the lifetime of such Awardee, may only be exercised by the Awardee. If the
terms of an Incentive Stock Option are amended to permit transferability, the Option will be treated for tax purposes as a Nonstatutory Stock Option. The designation of a beneficiary by an Awardee will not constitute a transfer.
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(d)
Exercise Price.
The per Share exercise price of an Incentive Stock Option shall be
determined by the Administrator in accordance with Section 8(b)(i) of the Plan.
(e)
Other Terms.
Option Agreements
evidencing Incentive Stock Options shall contain such other terms and conditions as may be necessary to qualify, to the extent determined desirable by the Administrator, with the applicable provisions of Section 422 of the Code.
11. Exercise of Award.
(a)
Procedure
for Exercise.
i. Any Award granted hereunder shall be exercisable according to the terms of the Plan and at such times and under
such conditions as determined by the Administrator and set forth in the respective Award Agreement.
ii. An Award shall be deemed
exercised when the Company receives (A) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Award; (B) full payment for the Shares with respect to which the related
Award is exercised; and (C) payment of all applicable withholding taxes (if any).
iii. An Award may not be exercised for a
fraction of a Share.
(b)
Rights as a Stockholder.
The Company shall issue (or cause to be issued) such Shares as
administratively practicable after the Award is exercised. Shares issued upon exercise of an Award shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Unless
provided otherwise by the Administrator or pursuant to this Plan, until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the Shares subject to an Award, notwithstanding the exercise of the Award.
12. Stock Awards.
(a)
Stock Award
Agreement.
Each Stock Award Agreement shall contain provisions regarding (i) the number of Shares subject to such Stock Award or a formula for determining such number, (ii) the purchase price of the Shares, if any, and the means of
payment for the Shares, (iii) the performance criteria (including Performance Criteria), if any, and level of achievement versus these criteria that shall determine the number of Shares granted, issued, retainable and/or vested, (iv) such
terms and conditions on the grant, issuance, vesting, settlement and/or forfeiture of the Shares as may be determined from time to time by the Administrator, (v) restrictions on the transferability of the Stock Award and (vi) such further
terms and conditions in each case not inconsistent with this Plan as may be determined from time to time by the Administrator.
(b)
Restrictions and Performance Criteria.
The grant, issuance, retention, settlement and/or vesting of each Stock Award or the Shares subject thereto may be subject to such performance criteria (including Performance Criteria) and level of
achievement versus these criteria as the Administrator shall determine, which criteria may be based on financial
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performance, personal performance evaluations and/or completion of service by the Awardee. The Committee shall establish the Performance Criteria applicable to, and the formula for calculating
the amount payable under, the Award no later than the earlier of (a) the date ninety (90) days after the commencement of the applicable performance period, or (b) the date on which 25% of the performance period has elapsed, and in any
event at a time when the achievement of the applicable Performance Criteria remains substantially uncertain.
(c)
Forfeiture.
Unless otherwise provided for by the Administrator, upon the Awardees Termination of Continuous Service, the Stock Award and the Shares subject thereto shall be forfeited, provided that to the extent that the Participant purchased or earned
any Shares, the Company shall have a right to repurchase the unvested Shares at such price and on such terms and conditions as the Administrator determines.
(d)
Rights as a Stockholder.
Unless otherwise provided by the Administrator in the Award Agreement, the Participant shall have the rights equivalent to those of a stockholder and shall be a stockholder only
after Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) to the Participant. Unless otherwise provided by the Administrator, a Participant holding Stock Units
shall not be entitled to receive dividend payments or any credit therefor as if he or she was an actual stockholder.
(e) Stock
Appreciation Rights.
i.
General.
Stock Appreciation Rights may be granted either alone, in addition to, or in tandem with other
Awards granted under the Plan. The Administrator may grant Stock Appreciation Rights to eligible Participants subject to terms and conditions not inconsistent with this Plan and determined by the Administrator. The specific terms and conditions
applicable to the Participant shall be provided for in the Stock Award Agreement. Stock Appreciation Rights shall be exercisable, in whole or in part, at such times as the Administrator shall specify in the Stock Award Agreement.
ii.
Exercise of Stock Appreciation Right.
Upon the exercise of a Stock Appreciation Right, in whole or in part, the Participant shall be
entitled to a payment in an amount equal to the excess of the Fair Market Value on the date of exercise of a fixed number of Shares covered by the exercised portion of the Stock Appreciation Right, over the Fair Market Value on the Grant Date of the
Shares covered by the exercised portion of the Stock Appreciation Right (or such other amount calculated with respect to Shares subject to the Award as the Administrator may determine). The amount due to the Participant upon the exercise of a Stock
Appreciation Right shall be paid in such form of consideration as determined by the Administrator and may be in cash, Shares or a combination thereof, over the period or periods specified in the Stock Award Agreement. A Stock Award Agreement may
place limits on the amount that may be paid over any specified period or periods upon the exercise of a Stock Appreciation Right, on an aggregate basis or as to any Participant. A Stock Appreciation Right shall be considered exercised when the
Company receives written notice of exercise in accordance with the terms of the Stock Award Agreement from the person entitled to exercise the Stock Appreciation Right.
iii.
Nonassignability of Stock Appreciation Rights.
Except as determined by the Administrator, no Stock Appreciation Right shall be assignable or otherwise transferable by the Participant except by will or
by the laws of descent and distribution.
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13. Other Provisions Applicable to Awards.
(a)
Non-Transferability
of Awards.
Unless determined otherwise by the Administrator, an Award may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner for value other than by beneficiary designation, will or by the laws of descent or distribution. Subject to Section 10(c), the Administrator may in its
discretion make an Award transferable to an Awardees family member or any other person or entity as it deems appropriate. If the Administrator makes an Award transferable, either at the time of grant or thereafter, such Award shall contain
such additional terms and conditions as the Administrator deems appropriate, and any transferee shall be deemed to be bound by such terms upon acceptance of such transfer.
(b)
Performance Criteria.
For purposes of this Plan, the term Performance Criteria shall mean any one or more of the following performance criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a business unit, Affiliate or business segment, either individually, alternatively or in any combination, and measured either 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 Administrator in the Award: (i) cash flow;
(ii) earnings (including gross margin; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings before taxes; and net earnings); (iii) earnings per share; (iv) growth in earnings or
earnings per share; (v) stock price; (vi) return on equity or average stockholders equity; (vii) total stockholder return; (viii) return on capital; (ix) return on assets or net assets; (x) return on investment;
(xi) revenue or growth in revenue; (xii) income or net income; (xiii) operating income or net operating income, in aggregate or per share; (xiv) operating profit or net operating profit; (xv) operating margin;
(xvi) return on operating revenue; (xvii) market share; (xviii) contract awards or backlog; (xix) overhead or other expense reduction; (xx) growth in stockholder value relative to the moving average of the S&P 500 Index
or a peer group index; (xxi) credit rating; (xxii) strategic plan development and implementation (including individual performance objectives that relate to achievement of the Companys or any business units strategic plan);
(xxiii) improvement in workforce diversity; (xxiv) growth of revenue, operating income or net income; (xxv) efficiency ratio; (xxvi) ratio of nonperforming assets to total assets; and (xxvii) any other similar criteria. The Committee
may adjust any evaluation of performance under a Performance Criteria to exclude any of the following events that occurs during a performance period: (A) asset write-downs; (B) litigation or claim judgments or settlements; (C) the
effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; (E) any gains or losses classified as extraordinary or as
discontinued operations in the Companys financial statements; and (F) mergers, acquisitions or divestitures.
(c)
Certification.
Prior to the payment of any compensation under an Award subject to any Performance Criteria, the Committee shall certify the extent to which any Performance Criteria and any other material terms under such Award have been
satisfied (other than in cases where such relate solely to the increase in the value of the Common Stock).
(d)
Tax Withholding
Obligation.
As a condition of the grant, issuance, vesting, exercise or settlement of an Award granted under the Plan, the Participant shall make such arrangements as the Administrator may require for the satisfaction of any applicable federal,
state, local or foreign withholding tax obligations that may arise in connection with such grant, issuance, vesting, exercise or settlement of the Award. The Company shall not be required to issue any Shares under the Plan until such obligations are
satisfied.
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(e)
Compliance with Section
409A.
Notwithstanding anything to the contrary
contained herein, to the extent that the Administrator determines that any Award granted under the Plan is subject to Code Section 409A and unless otherwise specified in the applicable Award Agreement, the Award Agreement evidencing such Award
shall incorporate the terms and conditions necessary for such Award to avoid the consequences described in Code Section 409A(a)(1), and to the maximum extent permitted under Applicable Law (and unless otherwise stated in the applicable Award
Agreement), the Plan and the Award Agreements shall be interpreted in a manner that results in their conforming to the requirements of Code Section 409A(a)(2), (3) and (4) and any Department of Treasury or Internal Revenue Service
regulations or other interpretive guidance issued under Section 409A (whenever issued, the
Guidance
). Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement provides otherwise, with specific
reference to this sentence), to the extent that a Participant holding an Award that constitutes deferred compensation under Section 409A and the Guidance is a specified employee (also as defined thereunder), no
distribution or payment of any amount shall be made before a date that is six (6) months following the date of such Participants separation from service (as defined in Section 409A and the Guidance) or, if earlier, the
date of the Participants death.
(f)
Deferral of Award Benefits.
The Administrator may in its discretion and upon such
terms and conditions as it determines appropriate permit one or more Participants whom it selects to (a) defer compensation payable pursuant to the terms of an Award, or (b) defer compensation arising outside the terms of this Plan
pursuant to a program that provides for deferred payment in satisfaction of such other compensation amounts through the issuance of one or more Awards. Any such deferral arrangement shall be evidenced by an Award Agreement in such form as the
Administrator shall from time to time establish, and no such deferral arrangement shall be a valid and binding obligation unless evidenced by a fully executed Award Agreement, the form of which the Administrator has approved, including through the
Administrators establishing a written program (the
Program
) under this Plan to govern the form of Award Agreements participating in such Program. Any such Award Agreement or Program shall specify the treatment of dividends
or dividend equivalent rights (if any) that apply to Awards governed thereby, and shall further provide that any elections governing payment of amounts pursuant to such Program shall be in writing, shall be delivered to the Company or its agent in a
form and manner that complies with Code Section 409A and the Guidance, and shall specify the amount to be distributed in settlement of the deferral arrangement, as well as the time and form of such distribution in a manner that complies with
Code Section 409A and the Guidance.
14. Adjustments upon Changes in Capitalization, Dissolution, or Change In Control
(a)
Changes in Capitalization.
Subject to any required action by the stockholders of the Company, the number of shares of Common Stock
covered by each outstanding Award, the number of shares of Common Stock which have been authorized for issuance under the Plan, but as to which no Awards have yet been granted or which have been returned to the Plan upon cancellation, forfeiture or
expiration of an Award, the price per Share subject to each such outstanding Award and each of the share limits set forth in Section 3(a) and 3(b), shall be proportionately adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, payment of a dividend or distribution in a form other than stock (excepting normal cash dividends) that has a
material effect on the Fair Market Value of the shares of Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been effected without receipt of consideration. Such adjustment shall be made by the Administrator, whose determination in that respect
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shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Award.
(b)
Dissolution or Liquidation.
In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of
such proposed transaction. To the extent it has not been previously exercised or the Shares subject thereto issued to the Awardee and unless otherwise determined by the Administrator, an Award will terminate immediately prior to the consummation of
such proposed transaction.
(c)
Change in Control.
In the event there is a Change in Control of the Company, as determined by the
Board or a Committee, the Board or Committee may, in its discretion, (i) provide for the assumption or substitution of, or adjustment (including to the number and type of Shares and exercise or purchase price applicable) to, each outstanding
Award; (ii) accelerate the vesting of Options and terminate any restrictions on Stock Awards; and/or (iii) provide for termination of Awards as a result of the Change in Control on such terms and conditions as it deems appropriate,
including providing for the cancellation of Awards for a cash or other payment to the Participant.
For purposes of this
Section 14(c), an Award shall be considered assumed, without limitation, if, at the time of issuance of the stock or other consideration upon a Change in Control, as the case may be, each holder of an Award would be entitled to receive upon
exercise of the Award the same number and kind of shares of stock or the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the transaction if the holder had been, immediately prior
to such transaction, the holder of the number of Shares covered by the Award at such time (after giving effect to any adjustments in the number of Shares covered by the Award as provided for in Section 14(a); provided that if such consideration
received in the transaction is not solely common stock of the successor corporation, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon exercise of the Award to be solely common
stock of the successor corporation equal to the Fair Market Value of the per Share consideration received by holders of Common Stock in the transaction.
15. Amendment and Termination of the Plan.
(a)
Amendment and Termination.
The Administrator may amend, alter or discontinue the Plan or any Award Agreement, but any such amendment
shall be subject to approval of the stockholders of the Company in the manner and to the extent required by Applicable Laws. In addition, without limiting the foregoing, unless approved by the stockholders of the Company, no such amendment shall be
made that would:
i. materially increase the maximum number of Shares for which Awards may be granted under the Plan, other than an
increase pursuant to Section 3 or Section 14 of the Plan; or
ii. reduce the minimum exercise prices at which Options may be
granted under the Plan (as set forth in Section 8(b)); or
iii. result in a Repricing (as defined in Section 8(e)) of Options
or Stock Appreciation Rights; or
iv. change the class of persons eligible to receive Awards under the Plan.
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(b)
Effect of Amendment or Termination.
No amendment, suspension or termination of the Plan
shall impair the rights of any Award, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company; provided further that the Administrator may amend
an outstanding Award in order to conform it to the Administrators intent (in its sole discretion) that such Award not be subject to Code Section 409A(a)(1)(B). Termination of the Plan shall not affect the Administrators ability to
exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
(c)
Effect of the Plan on Other Arrangements.
Neither the adoption of the Plan by the Board or a Committee nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power
of the Board or any Committee to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the granting of restricted stock, stock options or cash bonuses otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in specific cases. The value of Awards granted pursuant to the Plan will not be included as compensation, earnings, salaries or other similar terms used when calculating an
Awardees benefits under any employee benefit plan sponsored by the Company or any Subsidiary except as such plan otherwise expressly provides.
16. Designation of Beneficiary.
(a) An
Awardee may file a written designation of a beneficiary who is to receive the Awardees rights pursuant to Awardees Award or the Awardee may include his or her Awards in an omnibus beneficiary designation for all benefits under the Plan.
To the extent that Awardee has completed a designation of beneficiary while employed with the Company, such beneficiary designation shall remain in effect with respect to any Award hereunder until changed by the Awardee to the extent enforceable
under Applicable Law.
(b) Such designation of beneficiary may be changed by the Awardee at any time by written notice. In the event of
the death of an Awardee and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Awardees death, the Company shall allow the executor or administrator of the estate of the Awardee to exercise the
Award, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may allow the spouse or one or more dependents or relatives of the Awardee to exercise the Award to the extent
permissible under Applicable Law or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.
17. No Right to Awards or to Employment.
No person shall
have any claim or right to be granted an Award and the grant of any Award shall not be construed as giving an Awardee the right to continue in the employ or service of the Company or its Affiliates. Further, the Company and its Affiliates expressly
reserve the right, at any time, to dismiss any Employee, Consultant or Awardee at any time without liability or any claim under the Plan, except as provided herein or in any Award Agreement entered into hereunder.
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18. Legal Compliance.
Subject to Section 22, Shares shall not be issued pursuant to the exercise of an Option or Stock Award unless the exercise of such Option or Stock Award and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.
19. Reservation
of Shares.
The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
20. Notice.
Any written notice to the Company required by any provisions of this Plan shall be addressed to the Secretary of the Company and shall be effective when received.
21. Governing Law; Interpretation of Plan and Awards.
(a) This Plan and all determinations made and actions taken pursuant hereto shall be governed by the substantive laws, but not the choice of law rules, of the state of Delaware.
(b) In the event that any provision of the Plan or any Award granted under the Plan is declared to be illegal, invalid or otherwise unenforceable
by a court of competent jurisdiction, such provision shall be reformed, if possible, to the extent necessary to render it legal, valid and enforceable, or otherwise deleted, and the remainder of the terms of the Plan and/or Award shall not be
affected except to the extent necessary to reform or delete such illegal, invalid or unenforceable provision.
(c) The headings
preceding the text of the sections hereof are inserted solely for convenience of reference, and shall not constitute a part of the Plan, nor shall they affect its meaning, construction or effect.
(d) The terms of the Plan and any Award shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs,
beneficiaries, successors and assigns.
(e) All questions arising under the Plan or under any Award shall be decided by the
Administrator in its total and absolute discretion. In the event the Participant believes that a decision by the Administrator with respect to such person was arbitrary or capricious, the Participant may request arbitration with respect to such
decision. The review by the arbitrator shall be limited to determining whether the Administrators decision was arbitrary or capricious. This arbitration shall be the sole and exclusive review permitted of the Administrators decision, and
the Awardee shall as a condition to the receipt of an Award be deemed to explicitly waive any right to judicial review.
(f) Notice of
demand for arbitration shall be made in writing to the Administrator within thirty (30) days after the applicable decision by the Administrator. The arbitrator shall be appointed in accordance with the Commercial Rules of Dispute Resolution of
the American Arbitration Association; provided, however, that the arbitration shall not be administered by the
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American Arbitration Association. The arbitration shall be administered and conducted by the arbitrator pursuant to the Commercial Rules of Dispute Resolution of the American Arbitration
Association. The decision of the arbitrator on the issue(s) presented for arbitration shall be final and conclusive and may be enforced in any court of competent jurisdiction.
22. Limitation on Liability.
The Company and any Affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant, an Employee, an Awardee or any other persons as to:
(a)
The
Non-Issuance
of Shares.
The
non-issuance
or sale of Shares (including under Section 18 above) as to which the Company has been unable, or the Arbitration deems it
infeasible, to obtain from any regulatory body having jurisdiction the authority deemed by the Companys counsel to be necessary to the lawful issuance and sale of any shares hereunder; and
(b)
Tax Consequences.
Any tax consequence realized by any Participant, Employee, Awardee or other person due to the receipt, vesting,
exercise or settlement of any Option or other Award granted hereunder or due to the transfer of any Shares issued hereunder. The Participant is responsible for, and by accepting an Award under the Plan agrees to bear, all taxes of any nature that
are legally imposed upon the Participant in connection with an Award, and the Company does not assume, and will not be liable to any party for, any cost or liability arising in connection with such tax liability legally imposed on the Participant.
In particular, Awards issued under the Plan may be characterized by the Internal Revenue Service (the IRS) as deferred compensation under the Code resulting in additional taxes, including in some cases interest and penalties.
In the event the IRS determines that an Award constitutes deferred compensation under the Code or challenges any good faith characterization made by the Company or any other party of the tax treatment applicable to an Award, the Participant will be
responsible for the additional taxes, and interest and penalties, if any, that are determined to apply if such challenge succeeds, and the Company will not reimburse the Participant for the amount of any additional taxes, penalties or interest that
result.
(c)
Forfeiture.
The requirement that Participant forfeit an Award, or the benefits received or to be received under an
Award, pursuant to any Applicable Law.
23. Indemnification.
In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Company or an Affiliate, members of the Board and any officers or employees of the
Company or an Affiliate to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder,
and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in any such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the
institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same.
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24. Unfunded Plan.
Insofar as it provides for Awards, the Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Awardees who are granted Stock Awards under this Plan, any such accounts will be used
merely as a bookkeeping convenience. The Company shall not be required to segregate any assets which may at any time be represented by Awards, nor shall this Plan be construed as providing for such segregation, nor shall the Company nor the
Administrator be deemed to be a trustee of stock or cash to be awarded under the Plan. Any liability of the Company to any Participant with respect to an Award shall be based solely upon any contractual obligations which may be created by the Plan;
no such obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Administrator shall be required to give any security or bond for the performance of any
obligation which may be created by this Plan.
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EXHIBIT B
HERON THERAPEUTICS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
(as amended through June 18, 2019)
1. PURPOSE.
This Heron Therapeutics, Inc. 1997 Employee Stock Purchase Plan is designed to encourage and assist employees of Heron Therapeutics, Inc. and participating subsidiaries to acquire an equity interest in the Company through the purchase of shares of
Company common stock.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) Administrator shall mean the entity, either the Board or the committee of the Board, responsible for administering this Plan, as
provided in Section 3.
(b) Board shall mean the Board of Directors of the Company, as constituted from time to time.
(c) Code shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.
(d) Company shall mean Heron Therapeutics, Inc., a Delaware corporation, and Participating Subsidiaries.
(e) Common Stock shall mean the Common Stock, $.01 par value, of the Company.
(f) Employee shall mean any individual who is an employee of the Company or a Participating Subsidiary within the meaning of
Section 3401(c) of the Code and the Treasury Regulations thereunder.
(g) Enrollment Date shall have the meaning set
forth in Section 6.
(h) Fair market value means as of any given date: (i) the closing price of the Common Stock
on the NASDAQ Stock Market as reported in the Wall Street Journal; or (ii) if the Common Stock is no longer quoted on the NASDAQ Stock Market, but is listed on an established stock exchange or quoted on any other established interdealer
quotation system, the closing price for the Common Stock on such exchange or system, as reported in the Wall Street Journal; or (iii) in the absence of an established market for the Common Stock, the fair market value of the Common Stock as
determined by the Administrator in good faith.
(i) Lower Price Enrollment Date shall have the meaning set forth in
Section 6.
(j) Option Period shall have the meaning set forth in Section 7(b).
(k) Participating Subsidiary shall mean a Subsidiary which has been designated by the Administrator as covered by the Plan.
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(l) Plan shall mean this Heron Therapeutics, Inc. 1997 Employee Stock Purchase Plan, as it
may be amended from time to time.
(m) Purchase Date shall have the meaning set forth in Section 9(a).
(n) Section unless the context clearly indicates otherwise, shall refer to a Section of this Plan.
(o) Subsidiary shall mean a subsidiary corporation of the Company, whether now or hereafter existing, within the meaning of
Section 424(f) of the Code, but only for so long as it is a subsidiary corporation.
(p) Trading Day means
any day on which regular trading occurs on any established stock exchange or market system on which the Common Stock is traded.
3. ADMINISTRATION.
(a) Administrator. The Plan shall be administered by the Board or, upon delegation by the Board, by a committee of the Board (in either
case, the Administrator). In connection with the administration of the Plan, the Administrator shall have the powers possessed by the Board. The Administrator may act only by a majority of its members. The Administrator may delegate
administrative duties to such employees of the Company as it deems proper, so long as such delegation is not otherwise prohibited by Rule
16b-3
under the Securities Exchange Act of 1934, as amended, or other
applicable law. The Board at any time may terminate the authority delegated to any committee of the Board pursuant to this Section 3(a) and revest in the Board the administration of the Plan.
(b) Administrator Determinations Binding. The Administrator may adopt, alter and repeal administrative rules, guidelines and practices governing
the Plan and the options granted under it as it shall deem advisable from time to time, may interpret the terms and provisions of the Plan and the Options granted under it, may correct any defect, omission or inconsistency in the Plan or in any
Option; and may otherwise supervise the administration of the Plan and the Options granted under it. The Administrator may establish, under guidelines from the Board, limits on the number of shares which may be purchased by each participant on an
annual or other periodic basis or on the number of shares which may be purchased on any Purchase Date. All decisions made by the Administrator under the Plan shall be binding on all persons, including the Company and all participants in the Plan. No
member of the Administrator shall be liable for any action that he or she has in good faith taken or failed to take with respect to this Plan.
4.
NUMBER OF SHARES.
(a) The Company has reserved for sale under the Plan 775,000 shares of Common Stock. Shares sold under the Plan may
be newly issued shares or shares reacquired in private transactions or open market purchases, but all shares sold under the Plan, regardless of source, shall be counted against the 775,000 share limitation. If at any Purchase Date, the shares
available under the Plan are less than the number all participants would otherwise be entitled to purchase on such date, purchases shall be reduced proportionately to eliminate the deficit. If, at any Purchase Date, the shares which may be purchased
by a participant are restricted on account of a limit on the aggregate shares which may be purchased per employee, purchases under each option shall be reduced proportionately. Any funds that cannot be applied to the purchase of shares due to such
reductions shall be refunded to participants as soon as administratively feasible.
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(b) In the event of any reorganization, recapitalization, stock split, reverse stock split, stock
dividend, combination of shares, merger, consolidation, offering of rights, or other similar change in the capital structure of the Company, the Board may make such adjustment, if any, as it deems appropriate in the number, kind, and purchase price
of the shares available for purchase under the Plan and in the maximum number of shares subject to any option under the Plan.
5. ELIGIBILITY
REQUIREMENTS.
(a) Each Employee of the Company, except those described in the next paragraph, shall become eligible to participate in
the Plan in accordance with Section 6 on the first Enrollment Date on or following commencement of his or her employment by the Company or following such period of employment as is designated by the Administrator from time to time.
Participation in the Plan is entirely voluntary.
(b) The following Employees are not eligible to participate in the Plan:
(i) Employees who would, immediately upon enrollment in the Plan, own directly or indirectly, or hold options or rights to acquire stock
possessing, five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any subsidiary of the Company; and
(ii) Employees who are customarily employed by the Company fewer than twenty (20) hours per week or fewer than five (5) months in any calendar year.
6. ENROLLMENT. Any eligible employee may enroll or
re-enroll
in the Plan each year as of the close of the first trading day
of: (a) May and November of each such year; or (b) such other days as may be established by the Board from time to time (the Enrollment Dates); provided, that the first Enrollment Date shall be April 30, 1997. In order to
enroll, an eligible employee must complete, sign, and submit to the Company an enrollment form. Any enrollment form received by the Company by the 20th day of the month preceding an Enrollment Date (or by the Enrollment Date in the case of employees
hired after such 20th day or in the case of the first Enrollment Date), or such other date established by the Administrator from time to time, will be effective on that Enrollment Date. In addition, the Administrator may
re-enroll
existing participants in the Plan on any Enrollment Date (the Lower Price Enrollment Date) on which the fair market value of the Common Stock is lower than the fair market value on such
participants existing Enrollment Date. A participant may elect not to
re-enroll
on a Lower Price Enrollment Date by filing a written statement with the Company declaring such election prior to the Lower
Price Enrollment Date.
7. GRANT OF OPTION ENROLLMENT.
(a) Enrollment or
re-enrollment
by a participant in the Plan on an Enrollment Date will constitute the grant by the Company to the participant of an option to purchase shares
of Common Stock from the Company under the Plan. Any participant whose option expires and who has not withdrawn from the Plan will automatically be
re-enrolled
in the Plan and granted a new option on the
Enrollment Date immediately following the date on which the option expires.
(b) Except as provided in Section 10, each option
granted under the Plan shall have the following terms:
(i) the option will have a term of not more than twenty-four (24) months or
such shorter option period as may be established by the Board from time to time (the Option Period). Notwithstanding the foregoing, however, whether or not
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all shares have been purchased thereunder, the option will expire on the earlier to occur of: (A) the completion of the purchase of shares on the last Purchase Date occurring within
twenty-four (24) months after the Enrollment Date for such option, or such shorter option period as may be established by the Board before an Enrollment Date for all options to be granted on such date; or (B) the date on which the
employees participation in the Plan terminates for any reason;
(ii) payment for shares purchased under the option will be made
only through payroll withholding in accordance with Section 8;
(iii) purchase of shares upon exercise of the option will be
effected only on the Purchase Dates established in accordance with Section 9;
(iv) the option, if not altered, amended or revoked
by the Company prior to the relevant Purchase Date, may be accepted only by (x) there having been withheld from the compensation of the employee in accordance with the terms of the Plan amounts sufficient to purchase the Common Stock intended
to be purchased under the option, and (y) the employee being employed by the Company and not having withdrawn from the Plan on the relevant Purchase Date.
(v) the price per share under the option will be determined as provided in Section 9;
(vi) the
maximum number of shares available for purchase under an option for each one percent (1%) of compensation designated by an employee in accordance with Section 8 will, unless otherwise established by the Board before an Enrollment Date for
all options to be granted on such date, be determined by dividing $25,000 by the fair market value of a share of Common Stock on the Enrollment Date, dividing the result by the maximum number of percentage points that an employee may designate under
Section 8 at the time such option is granted, and multiplying the result by the number of calendar years included in whole or in part in the period from grant to expiration of the option;
(vii) the option (taken together with all other options then outstanding under this and all other similar stock purchase plans of the Company and
any subsidiary of the Company, collectively Options) will in no event give the participant the right to purchase shares at a rate per calendar year which accrues in excess of $25,000 of fair market value of such shares, less the fair
market value of any shares accrued and already purchased during such year under Options which have expired or terminated, determined at the applicable Enrollment Dates; and
(viii) the option will in all respects be subject to the terms and conditions of the Plan, as interpreted by the Administrator from time to time.
8. PAYROLL AND TAX WITHHOLDING; USE BY COMPANY.
(a) Each participant shall elect to have amounts
withheld from his or her compensation paid by the Company during the Option Period, at a rate equal to any whole percentage up to a maximum of ten percent (10%), or such lesser percentage as the Board may establish from time to time before an
Enrollment Date. Compensation includes regular salary payments, annual and quarterly bonuses,
hire-on
bonuses, cash recognition awards, commissions, overtime pay, shift premiums, and elective contributions by
the participant to qualified employee benefit plans, but excludes all other payments including, without limitation, long-term disability or workers compensation payments, car allowances, employee referral bonuses,
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relocation payments, expense reimbursements (including but not limited to travel, entertainment, and moving expenses), salary
gross-up
payments, and
non-cash
recognition awards. The participant shall designate a rate of withholding in his or her enrollment form and may elect to increase or decrease the rate of contribution effective as of any Enrollment Date, by
delivery to the Company, not later than ten (10) days before such Enrollment Date, of a written notice indicating the revised withholding rate.
(b) Payroll withholdings shall be credited to an account maintained for purposes of the Plan on behalf of each participant, as soon as administratively feasible after the withholding occurs. The Company shall be
entitled to use the withholdings for any corporate purpose, shall have no obligation to pay interest on withholdings to any participant, and shall not be obligated to segregate withholdings.
(c) Upon disposition of shares acquired by exercise of an option, the participant shall pay, or make provision adequate to the Company for payment
of, all federal, state, and other tax (and similar) withholdings that the Company determines, in its discretion, are required due to the disposition, including any such withholding that the Company determines in its discretion is necessary to allow
the Company to claim tax deductions or other benefits in connection with the disposition. A participant shall make such similar provisions for payment that the Company determines, in its discretion, are required due to the exercise of an option,
including such provisions as are necessary to allow the Company to claim tax deductions or other benefits in connection with the exercise of the option.
9. PURCHASE OF SHARES.
(a) On the last Trading
Day immediately preceding an Enrollment Date (other than the first Enrollment Date), or on such other days as may be established by the Board from time to time prior to an Enrollment Date for all options to be granted on such Enrollment Date (each a
Purchase Date), the Company shall apply the funds then credited to each participants payroll withholdings account to the purchase of whole shares of Common Stock. The cost to the participant for the shares purchased under any
option shall be not less than eighty-five percent (85%) of the lower of:
(i) the fair market value of the Common Stock on the
Enrollment Date for such option; or
(ii) the fair market value of the Common Stock on the date such option is exercised.
(b) Any funds in an amount less than the cost of one share of Common Stock left in a participants payroll withholdings account on a Purchase
Date shall be carried forward in such account for application on the next Purchase Date.
(c) Notwithstanding the terms of
Section 9(a), no funds credited to any employees payroll withholdings account shall be used to purchase Common Stock on any date prior to the date that the Plan has been approved by the stockholders of the Company, as noted in
Section 21. If such approval is not forthcoming within one year from the date that the Plan was approved by the Board of Directors, all amounts withheld shall be distributed to the participants as soon as administratively feasible.
10. WITHDRAWAL FROM THE PLAN. A participant may withdraw from the Plan in full (but not in part) at any time, effective after written notice thereof is received by
the Company. Unless the Administrator elects to permit a withdrawing participant to
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invest funds credited to his or her withholding account on the Purchase Date immediately following notice of withdrawal, all funds credited to a participants payroll withholdings account
shall be distributed to him or her without interest within sixty (60) days after notice of withdrawal is received by the Company. Any eligible employee who has withdrawn from the Plan may enroll in the Plan again on any subsequent Enrollment
Date in accordance with the provisions of Section 6.
11. TERMINATION OF EMPLOYMENT. Participation in the Plan terminates immediately when a
participant ceases to be employed by the Company for any reason whatsoever (including death or disability) or otherwise becomes ineligible to participate in the Plan. As soon as administratively feasible after termination, the Company shall pay to
the participant or his or her beneficiary or legal representative, all amounts credited to the participants payroll withholdings account; provided, however, that if a participant ceases to be employed by the Company because of the commencement
of employment with a Subsidiary of the Company that is not a Participating Subsidiary, funds then credited to such participants payroll withholdings account shall be applied to the purchase of whole shares of Common Stock at the next Purchase
Date and any funds remaining after such purchase shall be paid to the participant.
12. DESIGNATION OF BENEFICIARY.
(a) Each participant may designate one or more beneficiaries in the event of death and may, in his or her sole discretion, change such designation
at any time. Any such designation shall be effective upon receipt in written form by the Company and shall control over any disposition by will or otherwise.
(b) As soon as administratively feasible after the death of a participant, amounts credited to his or her account shall be paid in cash to the designated beneficiaries or, in the absence of a designation, to the
executor, administrator, or other legal representative of the participants estate. Such payment shall relieve the Company of further liability with respect to the Plan on account of the deceased participant. If more than one beneficiary is
designated, each beneficiary shall receive an equal portion of the account unless the participant has given express contrary written instructions.
13.
ASSIGNMENT.
(a) The rights of a participant under the Plan shall not be assignable by such participant, by operation of law or
otherwise. No participant may create a lien on any funds, securities, rights, or other property held by the Company for the account of the participant under the Plan, except to the extent that there has been a designation of beneficiaries in
accordance with the Plan, and except to the extent permitted by the laws of descent and distribution if beneficiaries have not been designated.
(b) A participants right to purchase shares under the Plan shall be exercisable only during the participants lifetime and only by him or her, except that a participant may direct the Company in the
enrollment form to issue share certificates to the participant and his or her spouse in community property, to the participant jointly with one or more other persons with right of survivorship, or to certain forms of trusts approved by the
Administrator.
14. ADMINISTRATIVE ASSISTANCE. If the Administrator in its discretion so elects, it may retain a brokerage firm, bank, or other
financial institution to assist in the purchase of shares, delivery of reports, or other administrative aspects of the Plan. If the Administrator so elects, each participant shall (unless prohibited by the laws of the nation of his or her employment
or residence)
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be deemed upon enrollment in the Plan to have authorized the establishment of an account on his or her behalf at such institution. Shares purchased by a participant under the Plan shall be held
in the account in the name in which the share certificate would otherwise be issued pursuant to Section 13(b).
15. COSTS. All costs and expenses
incurred in administering the Plan shall be paid by the Company, except that any stamp duties or transfer taxes applicable to participation in the Plan may be charged to the account of such participant by the Company. Any brokerage fees for the
purchase of shares by a participant shall be paid by the Company, but brokerage fees for the resale of shares by a participant shall be borne by the participant.
16. EQUAL RIGHTS AND PRIVILEGES. All eligible employees shall have equal rights and privileges with respect to the Plan so that the Plan qualifies as an employee stock purchase plan within the meaning
of Section 423 of the Code and the related Treasury Regulations. Any provision of the Plan which is inconsistent with Section 423 of the Code shall without further act or amendment by the Company or the Board be reformed to comply with the
requirements of Section 423. This Section 16 shall take precedence over all other provisions of the Plan.
17. APPLICABLE LAW. The Plan shall
be governed by the substantive laws (excluding the conflict of laws rules) of the State of California.
18. MODIFICATION AND TERMINATION.
(a) The Board may amend, alter, or terminate the Plan at any time, including amendments to outstanding options. No amendment shall require
stockholder approval, except:
(i) for an increase in the number of shares reserved for purchase under the Plan;
(ii) to the extent required for the Plan to comply with Section 423 of the Code;
(iii) to the extent required by other applicable laws, regulations or rules; or
(iv) to the extent the Board otherwise concludes that stockholder approval is advisable.
(b) In the event the Plan is terminated, the Board may elect to terminate all outstanding options either immediately or upon completion of the
purchase of shares on the next Purchase Date, or may elect to permit options to expire in accordance with their terms (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all funds
contributed to the Plan that have not been used to purchase shares shall be returned to the participants as soon as administratively feasible.
(c) In the event of the sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, or the dissolution or liquidation of the Company, each option
outstanding under the Plan shall be assumed by any purchaser of all or substantially all of the assets of the Company or by a successor by merger to the Company (or the parent company of such purchaser or successor) in compliance with
Section 424 of the Code, unless otherwise provided by the Board in its sole discretion, in which event, a Purchase Date shall occur immediately before the effective date of such event.
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19. RIGHTS AS AN EMPLOYEE. Nothing in the Plan shall be construed to give any person the right to remain in the employ
of the Company or to affect the Companys right to terminate the employment of any person at any time with or without cause.
20. RIGHTS AS A
SHAREHOLDER; DELIVERY OF CERTIFICATES. Unless otherwise determined by the Board, certificates evidencing shares purchased on any Purchase Date shall be delivered to a participant only if he or she makes a written request to the Administrator.
Participants shall be treated as the owners of their shares effective as of the Purchase Date.
21. BOARD AND SHAREHOLDER APPROVAL. The Plan was
approved by the Board of Directors on March 5, 1997, and by the holders of a majority of the votes cast at a duly held shareholders meeting on June 18, 1997, at which a quorum of the voting power of the Company was represented in
person or by proxy.
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4. To approve, on an advisory basis, the frequency of future advisory votes to approve compensation paid to the Companys Named
Executive Officers. 1 Year 2 Years 3 Years Abstain 01Kevin Tang* 04John Poyhonen* * Each to serve until the 2020 Annual Meeting of Stockholders and until their successors are duly elected and qualified. 02Barry Quart, Pharm.D.*
05Christian Waage* 03Craig Johnson* For Against Withhold For Against Withhold For Against Withhold 1 U P X Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.
0329KD + + Proposals The Board of Directors recommends that you vote FOR all the nominees listed, FOR Proposals 2 and 3, for every 1 YEAR in Proposal 4 and FOR each of Proposals 5 and 6. 2. To ratify the appointment of
OUM & Co. LLP as the Companys independent registered public accounting firm for the year ending December 31, 2019. 3. To approve, on an advisory basis, compensation paid to the Companys Named Executive Officers during the year
ended December 31, 2018. 1. Election of Directors: For Against Abstain Date and sign exactly as name(s) appear(s) on this proxy. If signing for estates, trusts, corporations or other entities, title or capacity should be stated. If shares are
held jointly, each holder should sign. Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box. Signature 2 Please keep signature within the box. Authorized Signatures This section must
be completed for your vote to be counted. Date and Sign Below 5. To amend the Companys 2007 Amended and Restated Equity Incentive Plan to increase the number of shares of common stock authorized for issuance thereunder from 18,800,000
to 25,800,000. 6. To amend the Companys 1997 Employee Stock Purchase Plan, as amended to increase the number of shares of common stock authorized for issuance thereunder from 475,000 to 775,000. 7. In their discretion, the proxyholders are
authorized to transact such other business as may properly come before the meeting or any adjournments or postponements thereof. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q Annual Meeting Proxy Card For
Against Abstain For Against Abstain For Against Abstain 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE______________ SACKPACK_____________ 1234 5678 9012 345 MMMMMMMMM MMMMMMMMMMMMMMM 4 1 6 5 9 1 MR A
SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND C 1234567890 J N T C123456789 MMMMMMMMMMMM MMMMMMM
000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext If no electronic voting, delete QR code and control # Î â^ You may vote online or by phone instead
of mailing this card. Online Go to www.investorvote.com/HRTX or scan the QR code login details are located in the shaded bar below. Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/HRTX Phone Call toll free
1-800-652-VOTE
(8683) within the USA, US territories and Canada Votes submitted electronically must be received by 1:00 a.m., PDT,
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Proxy Solicited by the Board of Directors for the Annual Meeting of Stockholders to be held June 18, 2019 The undersigned hereby appoints Barry Quart and David Szekeres, or either of them, each with full power of substitution, as the
proxyholder(s) of the undersigned to represent the undersigned and vote all the shares of the Common Stock of Heron Therapeutics, Inc. (the Company), which the undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company. The Annual Meeting of Stockholders of Heron Therapeutics, Inc. will be held on June 18, 2019 at 9:00 a.m. local time at 4242 Campus Point Court, San Diego, CA 92121, for the purposes stated herein, as
more fully described in the accompanying Proxy Statement. The Board of Directors recommends that you vote FOR all the nominees listed, FOR Proposals 2 and 3, for every 1 YEAR in Proposal 4 and FOR each of Proposals 5 and 6. This proxy,
when properly executed, will be voted in the manner directed. WHEN NO CHOICE IS INDICATED THIS PROXY WILL BE VOTED IN ACCORDANCE WITH BOARD OF DIRECTORS RECOMMENDATIONS AS STATED HEREIN. This proxy may be revoked by the undersigned at any
time, prior to the time it is voted, by any of the means described in the accompanying proxy statement. CONTINUED AND TO BE SIGNED ON REVERSE SIDE. If you vote by telephone or the Internet, please DO NOT mail back this proxy card. Proxy HERON
THERAPEUTICS, INC. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
Non-Voting
Items + + Change of Address Please print new address below. Important notice
regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders, The Proxy Statement and
10-K
are available at: www.edocumentview.com/HRTX