(a)No Discretion. No person will have any discretion to select which Outside Directors will be granted Annual Awards or Alternative Annual Awards (as defined below), under this Policy or to determine the number of Shares to be covered by such Awards (except as provided in Sections 3(d)(iv) and 10 below).
(b)Initial Awards.
(i)Each individual who first becomes an Outside Director following the Effective Date automatically will be granted an Option (an “Initial Award”) to purchase Shares with a grant date fair value as determined in accordance with U.S. generally accepted accounting principles (the “Grant Value”) equal to $725,000, provided that the number of Shares subject to an Initial Award will not exceed 60,000 (meaning, for the avoidance of doubt, that the Grant Value of an Initial Award automatically will be reduced as applicable in order to prevent the number of Shares subject to such Initial Award from exceeding 60,000). The grant date of the Initial Award will be the first Trading Day on or after the date on which such individual first becomes an Outside Director (such first date as an Outside Director, the “Initial Start Date”), whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy. If an individual was an Employee-Director, becoming an Outside Director due to termination of the individual’s status as an Employee will not entitle the Outside Director to an Initial Award. Each Initial Award will be scheduled to vest as to one thirty-sixth (1/36th) of the Shares subject to the Initial Award on a monthly basis following the Initial Award’s grant date on the same day of the month as such grant date (or on the last day of the month, if there is no corresponding day in such month), subject to the Outside Director remaining a Service Provider through the applicable vesting date.
(ii)Following the Effective Date, each individual who first becomes an Outside Director may elect to receive, in lieu of the Initial Award described in Section 3(b)(i), an Option to purchase Shares with a Grant Value equal to $362,500 (the “Alternative Initial Option”) and Restricted Stock Units covering Shares with a Grant Value equal to $362,500 (the “Alternative Initial RSU Award,” and together with the Alternative Initial Option, each an “Alternative Initial Award”), provided that the number of Shares subject to an Alternative Initial Option and Alternative Initial RSU Award, collectively, will not exceed 30,000 (such election, the “Alternative Initial Award Election”). If so elected, (A) the Alternative Initial Option will be scheduled to vest in equal installments as to one thirty-sixth (1/36th) of the Shares subject to the Alternative Initial Option on a monthly basis following the Alternative Initial Option’s grant date, on the same day of the month as the grant date (or on the last day of the month, if there is no corresponding day in such month), subject to the Outside Director remaining a Service Provider through the applicable vesting date, and (B) the Alternative Initial RSU Award will be scheduled to vest in equal installments as to one third (1/3rd) of the Shares subject to the Alternative Initial RSU Award on an annual basis following the Alternative Initial Awards’ grant date, on the same day of the month as the grant date (or on the last day of the month, if there is no corresponding day in such month), subject to the Outside Director remaining a Service Provider through the applicable vesting date.
(i)On the first Trading Day immediately following each Annual Meeting of the Company’s stockholders (an “Annual Meeting”) that occurs after the Effective Date, each Outside Director automatically will be granted an Option to purchase Shares with a Grant Value equal to $400,000 (the “Annual Award”), provided that the number of Shares subject to an Annual Award will not exceed 30,000 (meaning, for the avoidance of doubt, that the Grant Value of an Annual Award automatically will be reduced as applicable in order to prevent the number of Shares subject to such Annual Award from exceeding 30,000). The Annual Award will be scheduled to vest in full upon the first anniversary of the date of grant or, if earlier, the day immediately before the date of the next Annual Meeting that occurs after the Annual Award’s grant date, subject to the Outside Director remaining a Service Provider through the applicable vesting date.
(ii)Following the Effective Date, each Outside Director may elect to receive, on the first Trading Day immediately following each Annual Meeting that occurs after the Effective Date, in lieu of the Annual Award described in Section 3(c)(i), an Option to purchase Shares with a Grant Value equal to $200,000 (the “Alternative Annual Option”) and Restricted Stock Units covering Shares with a Grant Value equal to $200,000 (the “Alternative Annual RSU Award,” and together with the Alternative Annual Option, each an “Alternative Annual Award”), provided that the number of Shares subject to an Alternative Annual Option and Alternative Annual RSU Award, collectively, will not exceed 30,000 (such election, the “Alternative Annual Award Election,” and together with the Alternative Initial Award Election, each an “Alternative Award Election”). If so elected, the Alternative