UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
   
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
OF
THE SECURITIES EXCHANGE ACT OF 1934
   

Filed by the Registrantx Filed by a Party other than the Registranto

Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
LA JOLLA PHARMACEUTICAL COMPANY
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LA JOLLA PHARMACEUTICAL COMPANY
10182 Telesis4550 Towne Centre Court, 6th Floor, San Diego, California 92121
   

NOTICE OF THE 2018 ANNUAL MEETING OF SHAREHOLDERS
To Be Held Onon September 1, 201712, 2018

To our Shareholders:

You are cordially invited to attend the 20172018 Annual Meeting of Shareholders (the “Annual Meeting”) of La Jolla Pharmaceutical Company (the “Company”). The meetingAnnual Meeting will be held at the La Jolla Beach and Tennis Club, located at 2000 Spindrift Drive, La Jolla, California,4550 Towne Centre Court, San Diego, CA 92121, on September 1, 201712, 2018 at 9:00 a.m., local time. The Annual Meeting will be held for the following purposes:
1.To elect up to five directors to serve until the Company’s 20182019 Annual Meeting of Shareholders;Shareholders and until their successors are elected and qualified;
2.To ratify the selection of Squar Milner LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017;2018;
3.To approve an amendment to the Company’s 2013 Equity Incentive Plan to increase the number of shares authorized for issuance thereunder;2018 Employee Stock Purchase Plan; and
4.To transact any other business that may properly come before the meetingAnnual Meeting or any adjournment or postponement of the meeting.Annual Meeting.

The foregoing items of business are more fully described in the proxy statementDefinitive Proxy Statement (the “Proxy Statement”) accompanying this notice.

Only shareholders of record at the close of business on JulyAugust 17, 2017, the record date of the Annual Meeting, will be2018 are entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. The Company’s Board of Directors has carefully reviewed and considered the foregoing Proposalsproposals and recommends that you vote FOR“FOR” each director nominee and each Proposalproposal described in the proxy statement.Proxy Statement. It is important that your shares be represented, either in person or by proxy, at the Annual Meeting, regardless of the size of your holdings. Accordingly, the Company urges you to vote promptly by completing, signing, dating signing and returning the enclosed proxy card or voting instruction form in the enclosed postage-prepaid envelope or by voting via telephone or the Internet as instructed in these materials.the enclosed proxy card or voting instruction form. This will not limit your right to attend or vote at the Annual Meeting. You may revoke your proxy at any time before it has been voted at the meeting.Annual Meeting.

By the Order of the Board of Directors,

/s/ George F. Tidmarsh

George Tidmarsh, M.D., Ph.D.
Chief Executive Officer

San Diego, California
July 31, 2017August 22, 2018




Important Notice Regarding the Availability of Proxy Materials for the 2018 Annual Meeting of Shareholders to Be Held Onon September 1, 201712, 2018

The Proxy Statement and our 20162017 Annual Report are available at www.proxyvote.com
   

YOUR VOTE IS IMPORTANT

Whether or not you expect to attend the Annual Meeting, we urge you are urged to mark, sign, datevote promptly by completing, signing, dating and returnreturning the enclosed proxy card as promptly as possibleor voting instruction form in the enclosed postage-prepaid envelope enclosed for that purpose or followvia telephone or the instructions onInternet as instructed in the enclosed proxy card to vote via telephone or the Internet.voting instruction form. Even if you have voted by proxy, you may still vote in person if you attend the Annual Meeting. Please note, however, that if your shares are held of record by a broker, fiduciary or custodian and you wish to vote at the meeting,Annual Meeting, you must obtain a proxy card issued in your name from that intermediary. A majority of the outstanding shares of Common Stockcommon stock entitled to vote at the Annual Meeting must be represented at the Annual Meeting, either in person or by proxy, to constitute a quorum.




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DEFINITIVE PROXY STATEMENT FOR
FOR THE 2018 ANNUAL MEETING OF SHAREHOLDERS
September 1, 201712, 2018 at 9:00 a.m., local time
   

GENERAL INFORMATION

This proxy statementDefinitive Proxy Statement (this “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of La Jolla Pharmaceutical Company (the “Company”) for use at the 2018 Annual Meeting of Shareholders, to be held on September 1, 2017,12, 2018, at 9:00 a.m., local time, or at any other time following adjournments or postponements thereof (the “Annual Meeting”). The Annual Meeting will be held at the4550 Towne Centre Court, La Jolla, Beach and Tennis Club, located at 2000 Spindrift Drive, La Jolla, California.California, 92121. This proxy statement,Proxy Statement, the related proxy, and Notice of the 2018 Annual Meeting of Shareholders, isthe 2017 Annual Report and the related proxy are being mailed to our shareholders on or about July 31, 2017.August 22, 2018.

Only shareholders of record at the close of business on JulyAugust 17, 20172018 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting.Meeting or any adjournment or postponement thereof. At the close of business on the Record Date, 22,123,45626,226,201 shares of common stock, par value $0.0001 per share, (the “Common Stock”), were issued and outstanding and held by 4 holders of record.outstanding. Each share of Common Stockcommon stock is entitled to one vote on each matter to be voted uponon at the Annual Meeting; shareholdersMeeting. Shareholders will not be entitled to cumulate votes in the election of directors. Shares cannot be voted at the Annual Meeting unless the holder thereof is presentrepresented, either in person or represented by proxy. A majority of the outstanding shares of Common Stockcommon stock entitled to vote at the Annual Meeting must be represented at the Annual Meeting, either in person or by proxy, to constitute a quorum.

Our Board has selected George F. Tidmarsh, M.D., Ph.D. and Dennis M. Mulroy to serve as proxies at the Annual Meeting. The shares of Common Stockcommon stock represented by each executed and returned proxy will be voted in accordance with the directionsinstructions indicated on the proxy card.card or voting instruction form.

If you sign your proxy card or voting instruction form without giving specific instructions, the Company will vote your shares “FOR” the Proposalsdirector nominees and nomineesproposals set forth in this proxy statement.Proxy Statement. The proxy also confers discretionary authority to vote the shares authorizedentitled to be voted thereby on any matter that may properly may be presented for action atcome before the Annual Meeting; we currently know of no other business to be presented.

Any proxy given may be revoked by the person giving it at any time before it is voted at the Annual Meeting. If you have not voted through your broker, fiduciary or custodian, there are three ways fora shareholder of record, you tomay revoke your proxy and change your vote. First,vote through one of the following three ways: (i) you may send a written notice to the Company’s secretarySecretary stating that you would like to revoke your proxy. Second,proxy (ii) you may complete and submit a new proxy card, but it must bear a later date than the original proxy, or you may submit new proxy instructions via telephone or the Internet. Third,Internet; or (iii) you may vote in person at the Annual Meeting. However,Meeting, however, your attendance at the Annual Meeting will not, by itself, revoke your proxy. If you have instructed a broker, fiduciary or custodian to vote your shares, you must follow the directions you receive from your broker, fiduciary or custodian to revoke your proxy and change your vote. Your last vote will be the vote that is counted.

We will provide copies of this proxy statementProxy Statement and accompanying materials to brokers, fiduciaries and custodians for forwarding to beneficial owners and will reimburse these persons for their costs of forwarding these materials. Our directors, officers and employees may solicit proxies by telephone, facsimile or personal solicitation. We will not pay additional compensation for any of these services.



QUESTIONS AND ANSWERS REGARDING
THIS SOLICITATION AND VOTING AT THE ANNUAL MEETING

Q.Why am I receiving these proxy materials?
A.You are receiving these proxy materials from us because you were a shareholder at the close of business on the Record Date. As a shareholder on the Record Date, you are invited to attend the Annual Meeting and are entitled to, and requested to, vote on the items of business described in this proxy statement.Proxy Statement.
Q.How many shares must be present to conduct business?
A.A majority of the outstanding shares of Common Stockcommon stock entitled to vote at the Annual Meeting must be represented at the Annual Meeting, either in person or by proxy, to constitute a quorum. A quorum is required to conduct business at the Annual Meeting.
Q.What will be voted on at the Annual Meeting?
A.The items of business scheduled to be voted on at the Annual Meeting are as follows:
1.To elect up to five directors to serve until the Company’s 20182019 Annual Meeting of Shareholders;Shareholders and until their successors are elected and qualified;
2.
To ratify the selection of Squar Milner LLP (“Squar Milner”) as the Company’s independent registered public accounting firm for the year ending December 31, 2017;2018; and
3.To approve an amendment to the Company’s 2013 Equity Incentive Plan to increase the number of shares authorized for issuance thereunder; and
4.To transact any other business that may properly come before the meeting or any adjournment or postponement of the meeting.2018 Employee Stock Purchase Plan.
Q.How does the Board recommend that I vote?
A.The Board recommends that you vote your shares “FOR” each director nominee and in favor of the other“FOR” Proposals presented herein.2 and 3.
Q.What shares can I vote at the Annual Meeting?
A.You may vote all shares of Common Stockcommon stock owned by you as of the Record Date, including: (1)(i) shares held directly in your name as the shareholder of record; and (2)(ii) shares held for you as the beneficial owner through a broker, fiduciary or custodian.
Q.What is the difference between holding shares as a shareholder of record and as a beneficial owner?
A.Most of our shareholders hold their shares of Common Stockcommon stock through a broker, fiduciary or custodian as beneficial owners, rather than directly in their own name.name as shareholders of record. As summarized below, there are some distinctions between shares heldshareholders of record and those owned beneficially.beneficial owners.
Shareholders of Record. If your shares are registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, you are considered to be, with respect to those shares, the shareholder of record, and these proxy materials are being sent directly to you by us. As the shareholder of record, you have the right to vote in person at the Annual Meeting, vote by proxy using the enclosed proxy card or vote by proxy via telephone or the Internet. We have enclosed a proxy card for you to use, which also contains instructions on how to vote via telephone or the Internet.
Beneficial Owner. If your shares are held in a brokerage account or by another nominee,a fiduciary or custodian, you are considered to be, with respect to those shares, the beneficial owner of shares held in street“street name,” and these proxy materials, as well as a voting instruction form, are being forwarded to you from that organization, together with a voting instruction form.your broker, fiduciary or custodian. As the beneficial owner, you have the right to directinstruct your broker, fiduciary or custodian how to vote and are also invited to attend the Annual Meeting. Please note that since a beneficial owner is not the shareholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a “legal proxy” from the broker, fiduciary or custodian that holds your shares, giving you the right to vote thesuch shares at the Annual Meeting. Your broker, fiduciary or custodian has enclosed or provided voting instructions for you to use in directing the broker, fiduciary or custodian how to vote your shares.


Q.How can I vote my shares without attending the Annual Meeting?
A.Whether you hold shares directly as theare a shareholder of record or beneficially in street name,a beneficial owner, you may direct how your shares are voted without attending the Annual Meeting. Shareholders of record of our Common Stock may vote by proxy using the enclosed proxy card or vote by proxy via telephone or the Internet. Shareholders who hold shares beneficially in street nameBeneficial owners may cause their shares to be voted by proxy using the proxy card or voting instruction form provided by their broker, fiduciary or custodian and mailing themit in the accompanying postage-prepaid envelope or vote via telephone or the Internet.
Q.How can I vote my shares in person at the Annual Meeting?
A.
Shares held in your name as the shareholderShareholders of record may be votedvote in person at the Annual Meeting. Shares held beneficially in street nameBeneficial owners may be votednot vote in person only if youat the Annual Meeting unless they obtain a “legal proxy” from the broker, fiduciary or custodian that holds yourthe shares, giving youthem the right to vote such shares at the shares.Annual Meeting. Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy card or voting instructions,instruction form, as described above, so that your vote will be counted if you later decide not to, or are unable to, attend the Annual Meeting.
Q.Is my vote confidential?
A.Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except: (1)(i) as necessary to meet applicable legal requirements; (2)(ii) to allow for the tabulation of votes and the certification of the vote; and (3)(iii) to facilitate a successful proxy solicitation. Occasionally, shareholders provide written comments on their proxy card or voting instruction form, which may then be forwarded to the Company’s management.
Q.How are votes counted?
A.If you provide specific instructions with regard to an item, your shares will be voted as you instruct on such item. If you are a shareholder of record and sign your proxy card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board (“FOR” the director nominees identified herein, “FOR” Proposals 2 and 3, and in the discretion of the proxy holders on any other matters that properly come before the Annual Meeting).
Q.What is a “broker non-vote”?
A.A broker non-vote“broker non-vote” occurs when a beneficial owner of shares held in “street name” does not give instructions to the broker, fiduciary or custodian holding the shares as to how to vote on matters deemed “non-routine.” Generally, if shares are held in street“street name,” the beneficial owner of the shares is entitled to give voting instructions to the broker, fiduciary or custodian holding the shares. If the beneficial owner does not provide voting instructions, the broker, fiduciary or custodian can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the New York Stock Exchange, “non-routine” matters are generally those involving a contest or a matter that may substantially affect the rights or privileges of shareholders, such as mergers, dissolutions or other shareholder proposals, as well as the election of directors and the approval of proposals relating to equity compensation plans. Because rulings on proposals are made pursuant to rules and interpretations governing the conduct of brokerage firms, rather than rules that apply directly to the Company, we have not made any determinations or predictions on how such rulings will be made. However, we have indicated below with respect to each proposal what the effect of a broker non-vote would be if a broker non-vote is returned with respect to that proposal. Broker non-votes will be counted as present for the purpose of determining the presence of a quorum.
Q. How are abstentions counted?
A.If you return a proxy card or voting instruction form that indicates an abstention from voting on all matters, the shares represented will be counted as present for the purpose of determining the presence of a quorum, but they will not be voted on any matter at the Annual Meeting.
With regard to the election of directors, votes may be cast in favor of a director nominee or withheld. Because directorsdirector nominees are elected by plurality, abstentions will be entirely excluded from the vote and will have no effect on its outcome.the outcome of the vote.
With regard to Proposals 2 and 3, these matters require the approval of a majority of the votes cast on the matter affirmatively or negatively. Because abstentions are neither an affirmative nor a negative vote, they will be disregarded. However, as noted above, approvalApproval of Proposals 2 and 3 also requires the affirmative vote of a majority of the shares necessary to constitute a quorum. As a result, a large number of abstentions could prevent the approval of these Proposals.proposals.


Q.What should I do if I receive more than one proxy?
A.You may receive more than one set of these proxy solicitation materials, including multiple copies of this proxy statementProxy Statement and multiple proxy cards or voting instruction cards.forms. For example, if you hold your shares inwith more than one broker, fiduciary or custodian, you may receive a separate voting instruction card forform from each brokerage account in which you hold shares.intermediary. In addition, if you are a shareholder of record and your shares are registered in more than one name, you may receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction cardform that you receive to ensure that all of your shares are voted.
Q.Who is soliciting my vote, and who is paying the costs?
A.Your vote is being solicited on behalf of the Board, and the Company will pay the costs associated with the solicitation of proxies, including preparation, assembly, printing and mailing of this proxy statement.Proxy Statement.
Q.
How can I find out the results of the voting?
A.We intend to announce preliminary voting results at the meetingAnnual Meeting and publish final results in a Current Report on Form 8-K within four business days following the Annual Meeting.
Q.Whom should I contact if I have questions?
A.If you have any additional questions about the Annual Meeting or the Proposalsproposals presented in this proxy statement,Proxy Statement, you should contact:
Dennis M. Mulroy
Chief Financial Officer
La Jolla Pharmaceutical Company
10182 Telesis4550 Towne Centre Court 6th Floor
San Diego, CA 92121
(858) 433-6839207-4264



PROPOSAL 1: ELECTION OF DIRECTORS

Our Board of Directors

We currently have five members of our Board of Directors (the “Board”): George F. Tidmarsh, M.D., Ph.D., Kevin C. Tang, Laura L. Douglass, Craig A. Johnson and Robert H. Rosen. All five of the incumbent directors have been nominated for reelection at the Annual Meeting. DirectorsDirector nominees elected at the Annual Meeting will hold office until the 20182019 Annual Meeting of Shareholders and in each case, until their successors are elected and qualified, unless they resign or their seats become vacant due to death, removal or other cause in accordance with our Articles of Incorporation. All of the director nominees have indicated their willingness to serve, if elected.

Unless authority to vote for any of the director nominees is withheld in a proxy, shares represented by proxies will be voted FOR“FOR” all director nominees. In the event that any director nominee for director becomes unavailable for reelection as a result of an unexpected occurrence, such shares will be voted for the election of such substitute nominee, if any, as the Board may propose. Alternatively, the Board may elect to reduce the size of the Board within the range authorized under the Articles of Incorporation.

The biographies of the director nominees and their ages as of July 1, 20172018 are set forth below.

Director Nominees for Director

The people listed below are nominated for election to the Board, to serve a one-year term until his or her successor is elected and qualified following the 20182019 Annual Meeting of Shareholders. Our Board recommends that you vote FOR“FOR” the following director nominees:
Name Age Position
George F. Tidmarsh, M.D., Ph.D. 5758
 President, Chief Executive Officer, Secretary and Director
Kevin C. Tang 5051
 Director, Chairman of the Board
Laura L. Douglass 5354
 Director
Craig A. Johnson 5556
 Director
Robert H. Rosen 6162
 Director

The biographies of the members of our Board appear below.

George F. Tidmarsh, M.D., Ph.D., has served as President, Chief Executive Officer, Secretary and a director of the Company since January 2012. Dr. Tidmarsh has more than 25 years of experience creating, building and leading biotechnology and pharmaceutical companies and developing innovative pharmaceutical products. Prior to joining the Company, Dr. Tidmarsh was the Chief Executive Officer of Solana Therapeutics, Inc. from August 2011 to January 2012. In 2006, he founded Metronome Therapeutics, Inc., where he served as its Chief Executive Officer until its acquisition by Spectrum Pharmaceuticals, Inc. in 2010. In 2005, Dr. Tidmarsh founded Horizon Pharma, Inc., where he served as its President and Chief Executive Officer until 2008 and as a director and consultant until 2011. In 2001, he founded Threshold Pharmaceuticals, Inc., where he served as its President until 2005. Earlier in his career, Dr. Tidmarsh led the development of Doxil® (doxorubicin hydrochloride liposomal injection) while serving as Director of Oncology at Liposome Technology, Inc. Doxil has become a standard-of-care treatment for patients suffering from ovarian cancer. HeDr. Tidmarsh has also served as a director of Odonate Therapeutics, Inc. since 2016 and serves as a director of the Citizens Oncology Foundation, a non-profit organization. Dr. Tidmarsh received his M.D. and Ph.D. from Stanford University, where he completed fellowship training in Pediatric Oncology and Neonatology and remains a Consulting Professormember of the Adjunct Faculty in Pediatrics and Neonatology. The Board has concluded that Dr. Tidmarsh should serve on our Board based on his extensive experience creating, building and leading biotechnology companies.

Kevin C. Tanghas served as a director and as Chairman of the Board of the Company since August 2014. Mr. Tang has more than 20 years of experience in evaluating, creating and building biotechnology companies that are focused on developing treatments for life-threatening and debilitating diseases and conditions. Since 2013, Mr. Tang ishas served as the Chairman and Chief Executive Officer of Odonate Therapeutics, LLC,Inc., a biopharmaceuticalpharmaceutical company dedicated to the development of best-in-class therapeutics that improve and extend the lives of patients with cancer. Mr. Tang is also is the President of Tang Capital Management, LLC, a life sciences-focused investment company he founded in 2002. Since 2009, Mr. Tang has served as a director of Heron Therapeutics, Inc. and, since 2012, has served as Chairman. From 2009 through its acquisition by Endo


Pharmaceuticals, Inc. in 2010, he served as a director of Penwest Pharmaceuticals Co. In 2006, Mr. Tang co-founded Ardea Biosciences, Inc. and served as a director from inception through its acquisition by AstraZeneca PLC in 2012. From 2001 to 2008, he was a director of Trimeris, Inc. From 1993 to 2001, Mr. Tang held various positions at Deutsche Banc Alex Brown, Inc., an investment banking firm, most recently serving as Managing Director and head of the firm’s Life Sciences research group. Since 2009, Mr. Tang has served as a director of Heron Therapeutics, Inc. and, since 2012, has served as the Chairman of its Board of Directors. In 2006, Mr. Tang co-founded Ardea Biosciences, Inc.


and served as a director from its inception through its acquisition by AstraZeneca PLC in 2012. From 2009 through its acquisition by Endo Pharmaceuticals, Inc. in 2010, he served as a director of Penwest Pharmaceuticals Co. From 2001 to 2008, Mr. Tang was a director of Trimeris, Inc. (acquired by Synageva Biopharma Corp.). Mr. Tang received a B.S. degree from Duke University. The Board has concluded that Mr. Tang should serve on our Boardas a director based on his extensive experience forming and building biotechnology companies, serving as a director of numerous biotechnology companies and serving as a manager of funds specializing in the area of life sciences.

Laura L. Douglass has served as a director of the Company since October 2013. Ms. Douglass has more thanover 25 years of operatingmanagement experience of increasing responsibility in the drug developmentbiopharmaceutical industry with a particular expertise inacross multiple disciplines, including clinical trial designresearch and execution.operations. Ms. Douglass is currently the President and Chief Executive Officer of Next Generation Clinical Research Consulting, Inc., a contract research organization servicing the pharmaceutical industry that she founded in 1999. Additionally, Ms. Douglass serves as the President and Chief Executive Officer for Eufaeria Biosciences, Inc. Ms. Douglass is also a founder and director of SB Bancorp, Inc. and Settlers Bank, Inc. She also serves as a director of Agrace HospiceCare. Ms. Douglass received a nursing degree from The University of the State of New York-Albany. The Board has concluded that Ms. Douglass should serve on our Board based on her substantial operating experience and expertise in clinical trial management.

Craig A. Johnsonhas served as a director of the Company since October 2013. Mr. Johnson has more than 25 years of experience serving in senior financial management roles and governing corporations, primarily in the biotechnology industry. Mr. Johnson is currentlyhas served as a director of MiratiOdonate Therapeutics, Inc., since July 2017, of Heron Therapeutics, Inc. since 2014, of Mirati Therapeutics, Inc. since 2013 and of GenomeDx Biosciences, Inc. since 2015. Mr. Johnson also served as a director of Ardea Biosciences, Inc. from 2008 until its acquisition by AstraZeneca PLC in 2012 and as a director of Adamis Pharmaceuticals Corporation from 2011 to 2014. From 2011 to 2012, he wasserved as Chief Financial Officer of PURE Bioscience, Inc. From, and, from 2010 to 2011, he wasMr. Johnson served as Senior Vice President and Chief Financial Officer of NovaDel Pharma Inc. Mr. JohnsonFrom 2004 through its acquisition by Raptor Pharmaceuticals Corp. in 2009, he served as Vice President and Chief Financial Officer of TorreyPines Therapeutics, Inc. and, from 2004 until its acquisition by Raptor Pharmaceutical Corp. in 2009 and thento 2010, as Vice President of a wholly-owned subsidiary of Raptor from 2009Pharmaceuticals Corp. From 1994 to 2010. He2004, Mr. Johnson held severalvarious positions includingat MitoKor, Inc., most recently serving as Chief Financial Officer and Senior Vice President of Operations, at MitoKor, Inc. from 1994 to 2004. Prior to 1994, Mr. Johnson held senior financial positions with several early-stage technology companies and also practiced as a Certified Public Accountant with Price Waterhouse.Operations. Mr. Johnson received a B.B.A. degree in accounting from the University of Michigan-Dearborn. The Board has concluded that Mr. Johnson should serve on our Boardas a director based on his substantial experience governingserving as a director of biotechnology companies and his expertise in financial management.

Robert H. Rosen has served as a director of the Company since 2014. Mr. Rosen has served as a director of Odonate Therapeutics, Inc. since July 2014.2017. Mr. Rosen has more than 25 years of experience serving in leadership positions in biotechnology and pharmaceutical companies and commercializing innovative pharmaceutical products. Since 2013, Mr. Rosen has served as President and as a director of Heron Therapeutics, Inc. since May 2013. Prior, and, from 2012 to his appointment as President of Heron Therapeutics, he2013, served as Senior Vice President and Chief Commercial Officer beginning in October 2012. Prior to joiningof Heron Therapeutics, Inc. From 2014 to 2015, Mr. Rosen served as a director of Conkwest, Inc. (now NantKwest, Inc.). In 2012, he served as Managing Partner of Scotia Nordic LLC, a life sciences advisory firm. From April 2011 to March 2012, Mr. Rosen served as Senior Vice President of Global Commercial Operations at Dendreon Corporation. From 2005 to 2011, he served as Global Head of Oncology at Bayer HealthCare Pharmaceuticals, where he was responsible for the development of the oncology business unit for regions that included the Americas, Europe, Japan and Asia Pacific. During his tenure at Bayer, Mr. Rosen led the launch of Nexavar® (sorafenib) for the treatment of renal cell carcinoma and hepatocellular carcinoma.Pharmaceuticals. From 2002 to 2005, Mr. Rosen was Vice President of the Oncology Business Unit at Sanofi-Synthèlabo Inc., where he was responsible for the development of Sanofi’s U.S. oncology business and the launch of Eloxatin® (oxaliplatin) for colon cancer. From November 2014 to December 2015, Mr. Rosen served as a director of Conkwest, Inc. (now NantKwest, Inc.). Mr. Rosen received a B.S. degree in pharmacy from Northeastern University. The Board has concluded that Mr. Rosen should serve on our Boardas a director based on his extensive leadership experience in the biotechnology and pharmaceutical industryindustries and expertise in commercializing innovative pharmaceutical products.

Vote Required

The five director nominees who receive the greatest number of affirmative votes of the shares presentcast, either in person or by proxy, will be elected as directors. Any shares that are not voted, whether by abstention, broker non-votes or otherwise, will not affect the election of directors. Proxies solicited by the Board will be voted for all nominees unless you specify otherwise in your proxy.

We strongly encourage you to submit your voting instruction card and exercise your right to vote as a shareholder.



Recommendation of the Board of Directors

The Board of Directors unanimously recommends that you vote “FOR” the director nominees identified above.



PROPOSAL 2: RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our Board has selected Squar Milner LLP (“Squar Milner”) to serve as our independent registered public accounting firm for the year ending December 31, 2017.2018. Squar Milner has served as our independent registered public accounting firm since January 2013 andwhen they commenced auditing our financial statements for the year ended December 31, 2012.

The selection of our independent registered public accounting firm is not required to be submitted for shareholder approval. Nonetheless, the Board is seeking ratification of its selection of Squar Milner as a matter of good corporate governance. If the shareholders do not ratify this selection, the Board will reconsider its selection of Squar Milner and will either continue to retain the firm or appoint a new independent registered public accounting firm. Even if the selection is ratified, the Board may, in its sole discretion, determine to appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our and our shareholders’ best interests.

Representatives of Squar Milner are expected to be present at the Annual Meeting, and theyMeeting. They will be given an opportunity to make a statement if they desire to do so and are expected to be available to respond to any appropriate questions from shareholders.

Independent Registered Public Accounting Firm and Fees

The following table presents the fees for services provided by Squar Milner LLP during the fiscal years ended December 31, 20162017 and 2015:2016:
2016 20152017 2016
Audit Fees$141,068
 $177,656
$145,471
 $141,068
Audit-Related Fees10,260
 31,402
Audit-related Fees35,776
 10,260
Tax Fees13,083
 7,910
—
 13,083
Total$164,411
 $216,968
$181,247
 $164,411

Audit Fees. TheAudit fees identified under this caption wereconsist of fees for professional services rendered by Squar Milner forfor: (1) the annual audit of our consolidated financial statements and internal control over financial reporting. The fees identified under this caption also include fees for professional services rendered by Squar Milner forreporting included in our Annual Report on Form 10-K; and (2) the reviewreviews of theour unaudited condensed consolidated financial statements included in our quarterly reports on Form 10-Q.

Audit-RelatedAudit-related Fees.  Audit relatedAudit-related fees consist of fees paid tofor professional services rendered by Squar Milner in connection with their consents on the Company’s registration statementsour Registration Statements on Forms S-3 and S-8.

Tax Fees.  Tax fees consist principally of fees for professional services rendered by Squar Milner for assistance related to tax compliance and reporting.

Pre-approval Policy.  Our Audit Committee approves in advance all services provided by our independent registered public accounting firm. All engagements of our independent registered public accounting firm for 20162017 and 20152016 were pre-approved by the Audit Committee.

Vote Required

The approval of a majority of the votes cast affirmatively or negatively is required to approve this Proposal.proposal. Further, approval of this Proposal alsoproposal requires the affirmative vote of a majority of the shares necessary to constitute a quorum for the Annual Meeting. As a result, broker non-votes and abstentions will be disregarded in determining whether the affirmative votes cast represent a majority of the total number of votes cast on this Proposal (the so-called “majority-of-the-quorum” requirement).proposal. However, a large number of abstentionsbroker non-votes or broker non-votesabstentions could prevent approval of this Proposalproposal under the majority-of-the-quorum requirement.

Recommendation of the Board of Directors

The Board of Directors unanimously recommends that you vote “FOR” the ratification of the selection of Squar Milner LLP as the Company’s independent registered public accounting firm.



PROPOSAL 3: AMENDMENT TOAPPROVAL OF THE COMPANY’S 2013 EQUITY INCENTIVE2018 EMPLOYEE STOCK PURCHASE PLAN

The current total share reserve underOn July 26, 2018, the Board of Directors adopted and approved the Company’s 2013 Equity Incentive2018 Employee Stock Purchase Plan (the “2013 PlanESPP”), subject to receipt of shareholder approval. The Board is 4,600,000 shares of Common Stock. As of July 1, 2017, equity awards covering a total of 3,838,115 shares were outstanding,now submitting the ESPP to shareholders for their adoption and 558,992 shares remained available for new grants underapproval at the 2013 Plan.Annual Meeting.

We useThe purpose of the 2013 PlanESPP is to provide meaningful equity incentivesa means for eligible employees to recruit, retainaccumulate shares of the Company’s common stock over time through regular payroll deductions.

The Compensation Committee of the Board will administer the ESPP and reward qualified employees, consultantswill be responsible for interpreting its provisions. It is the intention of the Company that the ESPP (excluding any sub-plans thereof, except as expressly provided in the terms of such sub-plan) will qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code, and directors of appropriate experience and stature. By increasing stock ownership, we aimthe ESPP will be administered accordingly.

Subject to alignadjustment as set forth in the interests of qualified employees, consultants and directors withESPP, the interests of our shareholders. Our Board has unanimously approved, subject to shareholder approval, an amendment to the 2013 Plan to increase theaggregate number of shares authorized for issuance thereunderof common stock which may be issued pursuant to a total of 8,100,000 shares, representing an increase of 3,500,000 shares. If this Proposal is approved, the text of Section 4(a) of the 2013 Plan, which sets forth the authorized share reserve under the plan,ESPP will initially be amended and restated to read as follows:

4. LIMITS ON AWARDS UNDER THE PLAN

(a)Number of Shares.750,000. The maximum number of shares of Stockcommon stock that may be delivered upon satisfaction of Awards under the Plan shallissued to any employee in a given Offering Period (as defined below) will be 8,100,0005,000 shares of Stock (the “Reserve”)common stock (subject to further limits on the total amount of compensation that can be contributed to the ESPP in a given Offering Period, as described below). The limits set forth inCompensation Committee may change this Section 4(a) shall be construedlimitation at any time on a prospective basis to comply with Section 422. Without limiting the generality of the foregoing, no more than 8,100,000 shares of Stock may be issued in satisfaction of the exercise or surrender of ISOs granted under the Plan. To the extent consistent with the requirements of Section 422 and with other applicable legal requirements (including applicable stock exchange requirements), Stock issued under awards of an acquired company that are converted, replaced, or adjusted in connection with the acquisition shall not reduce the number of shares available for Awards under the Plan.

Existing Equity Plan Information

The following table includes aggregated information regarding awards outstanding under our 2013 Plan, the number of shares available forapply to future awards under our 2013 Plan as of July 1, 2017, and the proposed number of shares issuable under the 2013 Plan:
 
Number
of shares
 
As a percentage of
stock outstanding(1)
Outstanding stock options3,838,115
 11.41%
Outstanding restricted stock awards and exercised options202,893
 0.60%
Total shares issued or subject to outstanding awards as of July 1, 20174,041,008
 12.01%
Total shares available for future awards as of July 1, 2017558,992
 1.66%
Proposed increase in shares available for future awards3,500,000
 10.41%
Proposed shares available for future awards4,058,992
 12.07%

1.Percentage outstanding is calculated on an as-converted, fully diluted basis, which includes the Common Stock underlying our issued and outstanding convertible preferred stock and options to purchase Common Stock.

The maximum term for stock options under the 2013 Plan is ten years and the weighted-average remaining term of outstanding stock options is approximately 8.6 years. Certain additional information with respect to all of our equity compensation plans in effect as of December 31, 2016 is provided under the heading “Equity Compensation Plan Information.”Offering Periods.

The potential dilution from the 3,500,000 share increase requestedadoption and approval of the ESPP is approximately 10.41% (calculated as2.86%, based on the additionaltotal shares requested, divided by the as-converted, fully-diluted sharesof common stock outstanding as of the Record Date). If the potential share request is approved, the Company's total potential dilution from the shares available for issuance under the 2013 Plan would increase from 1.66% (calculated as the total shares available for future awards under the 2013 Plan as of the Record Date, divided by the as-converted, fully-diluted shares outstanding as of the Record Date) to 12.07% (calculated as the quotient of: (a) the sum of: (i) the shares available for future awards under the 2013 Plan as of the Record Date; plus (ii) the 3,500,000 requested share increase; divided by (b) the as-converted, fully-diluted shares outstanding as of the Record Date). The Board has considered this potential dilution level and believes that the resulting dilution levels would be within normal ranges for similarly situated biotechnology companies.July 1, 2018.



In addition to overall dilution, in recommending the sizeSummary of the increase in the share reserve under the 2013 Plan, the Compensation Committee considered annual dilution from the Company’s equity incentive plans. The Company measures annual dilution as the total number of shares subject to equity awards granted during the year, less cancellations and other shares returned to the reserve, divided by total common shares and common share equivalents outstanding at the end of the year. The Company’s annual dilution under the 2013 Plan for 2016 calculated on this basis was approximately 5.5%.

The Company manages its long-term dilution goal by limiting the number of shares subject to equity awards that it grants annually, commonly referred to as burn rate. Burn rate is defined as the number of shares granted under the Company’s equity incentive plans, less cancellations and other shares returned to the reserve, divided by the average number of shares of Common Stock and common share equivalents outstanding during the year. The Company has calculated the annualized burn rate under the 2013 Plan for the past three years, as set forth in the following table:
 
Options
Granted
 
Full-Value
Shares Granted
 
Total
Granted
 
Average
Number of Fully
 Diluted Shares
 
Annualized
Burn Rate
2014 - 20164,064,000 7,000 4,071,000 24,943,000 5.44%

An additional metric that the Company uses to measure the cumulative impact of its equity incentive programs is overhang. Overhang equals the quotient of: (a) the sum of: (1) the number of shares subject to equity awards outstanding but not exercised or settled, plus (2) the number of shares available to be granted under the equity plans; divided by (b) the sum of: (1) the total number of as-converted, fully-diluted shares outstanding as of the Record Date, plus (2) the number of shares available to be granted under the equity plans. If the proposed amendment to the 2013 Plan is approved, the Company’s overhang calculated on this basis would increase to approximately 21% and then would be expected to decline as awards are exercised and/or become vested.

Reasons for Seeking Shareholder Approval

The Board believes that equity-based compensation is a critical part of the Company’s compensation program. Shareholder approval of the amendment to increase the shares available under the 2013 Plan would allow us to continue to attract and retain directors, executives, other employees and consultants with equity incentives. The Company granted an average of 1,721,000 equity awards per year under its existing equity incentive plans during 2015 and 2016. The Company estimates that the availability of 3,500,000 additional shares for future awards would provide a sufficient number of shares to enable the Company to continue to make awards for the next one to two years, depending on the size of the commercial team expected to be hired, our clinical development programs, other related personnel growth and the amount, timing and financial terms of fundraising activity, which may impact the timing and degree of overall dilution.

General Provisions of the 2013 PlanESPP

The following is a summarydescription of the principalmaterial features of the 2013 Plan.ESPP. The summary below is qualified in its entirety by the termscomplete text of the 2013 Plan, as proposed to be amended, a copy of whichESPP is attached hereto as Appendix Aand to this Proxy Statement. The following discussion is incorporatedqualified in all respects by reference herein.

Purpose.to The purpose of the 2013 Plan is to advance our and our shareholders’ interests by providing eligible persons with financial incentives to promote the success of our business objectives, by increasing eligible persons’ proprietary interest in us and by giving us a means to attract and retain employees, directors and consultants of appropriate experience and stature.

Administration, Amendment and Termination. Appendix AThe 2013 Plan will be administered by the Board (the “.Administrator”), except that the Board may delegate: (i) to one or more of its members such of its duties, powers and responsibilities as it may determine; and (ii) to such employees or other persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, the term “Administrator” includes the person or persons so delegated to the extent of such delegation. The Administrator has the authority to: (i) interpret the 2013 Plan; (ii) determine eligibility for and grant awards under the 2013 Plan; (iii) determine, modify or waive the terms and conditions of any award granted under the 2013 Plan; (iv) prescribe forms, rules and procedures; and (v) otherwise do all things necessary to carry out the purposes of the 2013 Plan.

The Administrator, in its discretion, selects from the class of eligible persons those individuals to whom awards will be granted and determines the nature, dates, amounts, exercise prices, vesting periods and other relevant terms of such awards. The Administrator may modify the terms and conditions of an award, which requires the consent of the recipient of such award


if the modification will adversely affect the recipient’s rights under the award. However, outstanding options may not be re-priced without shareholder approval. All determinations of the Administrator are conclusive and binding on all parties.

Eligibility. The Administrator will select participants from among those key employeesEmployees of the Company and directorscertain subsidiaries (other than shareholders who own or have the right to acquire 5% or more of the shares of common stock and, consultants and advisorsif so determined by the Compensation Committee, individuals deemed “highly compensated employees” under the Internal Revenue Code) are eligible to participate under a specific offering period (“Offering Period”) under the ESPP if they begin working prior to the Company or its affiliates who,applicable enrollment period of such Offering Period. The Compensation Committee may determine the length of each Offering Period. In the absence of such a determination, the Offering Period will be six months, and there will be no overlapping Offering Periods. No employee will be eligible to participate in the opinionESPP if such person’s customary employment is for less than 20 hours per week or for less than five months per year. The Compensation Committee may establish additional administrative rules requiring that employment commence some minimum period (not to exceed 90 days) prior to an enrollment period and/or that customary employment exceed a specified number of the Administrator, are inhours or period during a positioncalendar year to make a significant contributionbe eligible to participate with respect to the successassociated Offering Period. Employees participate in the ESPP by electing payroll deductions that accumulate to purchase shares at a discount. Non-employee directors are not eligible to participate in the ESPP. As of July 1, 2018, approximately 4 executive officers and 324 other employees of the Company and its affiliates; provided, that, subject to such express exceptions, if any, as the Administrator may establish, eligibility may be further limited to those persons as to whom the use of a Form S-8 registration statement is permissible. Currently, there are approximately seventy-seven employees and four non-employee directors of the Company who aresubsidiaries were eligible to participate in the 2013 Plan. Eligibility for ISOs (as defined below) is limitedESPP.

Payroll Deductions. An employee will become a participant by completing and submitting, on or before the date prescribed by the Compensation Committee with respect to employeesa given Offering Period, a completed payroll deduction authorization and plan enrollment form or by following an electronic or other enrollment process as prescribed by the Compensation Committee. An eligible employee may authorize payroll deductions at the rate of any whole percentage of the employee’s salary, commissions, overtime, shift differentials, incentive-based cash bonuses or performance-based cash bonuses, and all or any portion of any item of compensation considered by the Company or of a “parent corporation” or “subsidiary corporation”to be part of the employee’s regular base earnings (excluding items not considered by the Company as those terms are defined in Section 424to be part of the U.S. Internal Revenue Codeemployee’s regular earnings). The rate of 1986,payroll deductions cannot be less than one percent and cannot exceed 10 percent (or such other percentages as in effect and amendedthe Compensation Committee may establish from time to time or any successor statute in effect (the “Internal Revenue Code”).before an enrollment period for a future Offering Period) of the employee’s eligible compensation on each payday during the Offering Period.

Securities SubjectUnder procedures and at times established by the Compensation Committee, a participant may withdraw from the ESPP during an Offering Period by completing and filing a new payroll deduction authorization and plan enrollment form with the Company or by following electronic or other procedures prescribed by the Compensation Committee. If a participant withdraws from the ESPP during an Offering Period, his or her accumulated payroll deductions will be refunded without


interest, his or her right to participate in the 2013 Plan. The numbercurrent Offering Period will be automatically terminated and no further payroll deductions for the purchase of shares of our Common Stock that could be issued and outstanding or subject to outstanding awards granted under the 2013 Plan is currently set at 4,600,000 shares. If this Proposal is approved, the share reservecommon stock will be fixed at 8,100,000 shares.made during the Offering Period.

A participant may not increase his or her rate of payroll deductions during a given Offering Period. A Participant may, however, decrease his or her rate of payroll deductions during a given Offering Period during such times specified by the Compensation Committee by filing a new payroll deduction authorization and plan enrollment form or by following electronic or other procedures prescribed by the Compensation Committee. To the extent consistentnecessary to comply with applicable legal requirements, shares of Common Stock issued under awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition will not reduce the number of shares available for awards under the 2013 Plan. The shares to be issued under the 2013 Plan will be made available either from authorized but unissued shares of our Common Stock or from previously issued shares of our Common Stock that we reacquire, including shares purchased on the open market.

Adjustments. The number and kind of shares of Common Stock or other securities available under the 2013 Plan in general, as well as the number and kind of shares of Common Stock or other securities subject to outstanding awards and the price per share of such awards, may be proportionately adjusted to reflect stock splits, stock dividends and other capital stock transactions.

Section 162(m)423 of the Internal Revenue Code Limitations. In general, Section 162(m)for a given calendar year, the Compensation Committee may reduce a participant’s payroll deductions rate to zero percent at any time during an Offering Period scheduled to end during such calendar year. Payroll deductions will re-commence at the rate provided in such Participant’s enrollment form at the beginning of the Internal Revenue Code imposesfirst Offering Period that is scheduled to end in the following calendar year, unless terminated by the participant.

Purchase Price and Amount of Stock Purchased. On the commencement date relating to each Offering Period, each eligible employee will be granted an option to purchase a $1 million limitnumber of whole shares of common stock (as may be adjusted under the ESPP) established by the Compensation Committee, which may be purchased with the payroll deductions accumulated on behalf of such employee during the amountpreceding Offering Period at the purchase price described below. However, no employee participating in the ESPP will be granted an option to purchase shares of compensationcommon stock under the ESPP if such option would permit his or her rights to purchase shares of common stock under all employee stock purchase plans of the Company to accrue at a rate that we may deductexceeds $25,000 of the fair market value of such shares of common stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any tax yeartime.

The purchase price under each option will be, with respect to our Chief Executive Officer and each of our other three most highly compensated officers (excludingan Offering Period, the lower of: (i) a Chief Financial Officer), including any compensation relating to an award granted under the 2013 Plan. The 2013 Plan is designed to allow us to grant awards that are not subject to the $1 million limit imposed by Section 162(m). However, the rules promulgated under Section 162(m) are complicated, and may change from time to time, sometimes with retroactive effect. As such, it cannot be guaranteed that any amounts intended to qualify as “performance based compensation” under Section 162(m) will so qualify. The maximum number of shares subject to awards that may be granted to any person in any calendar year and the maximum number of shares of stock subject to SARs (as defined further below) granted to any person in any calendar year will each be equal to 500,000 shares. The maximum amount payable to any person in any year under cash awards will be $250,000. Furthermore, if Section 162(m) would otherwise apply and if the amount of compensation a person would receive under an award is not based solely upon an increase in the value of the underlying shares of our Common Stock after the date of grant or award, the Administrator is authorized to condition the grant, vesting, or exercisability of such an award on the attainment of a pre-established objective performance goal. The 2013 Plan defines a pre-established objective performance goal to include one or more of the following performance criteria: (measured either absolutely or by reference to an index or indices and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof) sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; shareholder return; operating or gross margin; operating income; net income (before or after taxes); net operating income; net operating income after tax; pre- and after-tax income; pre-tax profit; cash flow, determined in the aggregate (or on a per share basis); operating cash flow; sales or revenue targets; increases in revenue or product revenue; expenses and cost reduction goals; improvement in or attainment of expense or working capital levels; economic value added (or an equivalent metric); debt reduction; implementation or completion of projects or processes; sales of particular products or services; customer acquisition, retention or satisfaction; acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings. To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m), the Administrator may provide in the case of any award intended to qualify for such exception that one or more of the performance criteria applicable to such award will be adjusted in an objectively determinable manner to reflect events (for example, but without limitation, acquisitions or dispositions) occurring during the performance period that affect the applicable performance criterion or criteria.



Non-Assignability of Awards. percentage (not less than 85%) (the “Awards are generally not transferable by a recipient during the life of the recipient. Awards are generally exercisable during the life of a recipient only by the recipient.

Shareholder Rights. No recipient or permitted transferee of an award under the 2013 Plan will have any rights as a shareholder with respect to any shares issuable or issued in connection with the award until we receive all amounts payable in connection with exercise of the award and performance by the recipient of all obligations under such award.

Award Types

Stock Options. Stock options granted under the 2013 Plan may be incentive stock options (“ISOsDesignated Percentage”), which are intended to qualify under the provisions of Section 422 of the Internal Revenue Code, or nonqualified stock options (“NSOs”), which do not so qualify.

The exercise price (or the base value from which appreciation is to be measured) of each award requiring exercise will be 100% (in the case of an ISO granted to a ten-percent shareholder, within the meaning of subsection (b)(6) of Section 422, 110%) of the fair market value of a share of common stock on the Commencement Date for a given Offering Period (the “Offering Price”); or (ii) the Designated Percentage of the fair market value of a share of common stock on the last trading day of the Offering Period on which the share of common stock is purchased. For a given Offering Period, the Designated Percentage will be established no later than the beginning of the enrollment period for such Offering Period. The Compensation Committee may change the Designated Percentage with respect to any future Offering Period, but not to below 85%, and the Compensation Committee may determine with respect to any prospective Offering Period that the purchase price will be the Designated Percentage of the fair market value of a share of common stock solely on the last trading day of the Offering Period on which the share of common stock is purchased. If the Compensation Committee does not establish the Designated Percentage prior to the beginning of the Enrollment Period for a given Offering Period, the Designated Percentage for such Offering Period shall be 85%. It is the current intention of the Compensation Committee to have purchases occur on each regular payroll date, with the Designated Percentage to be equal to 85% of the fair market value of a share of common stock on such purchase date.

Lock-up on ESPP Shares. If the Compensation Committee does not establish different rules, all shares of common stock purchased under the ESPP may not be sold prior to the earliest of: (i) the first anniversary of the applicable purchase date; (ii) the date on which the participating employee terminates service with the Company (or a participating subsidiary); or (iii) the consummation of a change in control of the Company. The purpose of this lock-up provision is to encourage participating employees to hold the shares acquired under the ESPP for long-term appreciation, rather than to simply sell the shares and use the purchase discount as an additional form of short-term compensation.

Transferability. Neither payroll deductions credited to a participant’s bookkeeping account nor any rights to exercise an option or to receive shares of common stock under the ESPP may be voluntarily or involuntarily assigned, transferred, pledged or otherwise disposed of in any way, and any attempted assignment, transfer, pledge or other disposition will be null and void and without effect. If a participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interests under the ESPP, other than as permitted by the Internal Revenue Code, such act will be treated as an election by the participant to discontinue participation in the ESPP.

ESPP Amendment and Termination. The Board or the Compensation Committee may, in its sole discretion, insofar as permitted by law, terminate or suspend the ESPP, or revise or amend it in any respect whatsoever, except that, without approval of the shareholders, no such revision or amendment will increase the number of shares of common stock subject to the award, determined as of the date of grant, or such higher amount as the Administrator may determineESPP, other than an adjustment in connection with the grant. To the extent the Company has a class of securities listedrecapitalization, or make other changes for trading on the Nasdaq Capital Market, no award, once granted, may be re-priced other than in accordance with the applicablewhich shareholder approval requirementsis required under applicable law. On a termination or suspension of the Nasdaq Capital Market. Fair market value will be determined byESPP, the Administrator consistent withBoard may in its discretion: (i) return without interest, the applicable requirements of Section 422 and Section 409A.

Where the exercise of an award ispayroll deductions credited to be accompanied by payment, payment of the exercise price will be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator and if legally permissible: (i) through the delivery of unrestricted shares of stock that have a fair market value equal to the exercise price, subjectparticipants' accounts to such minimum holding period requirements, if any, as the Administrator may prescribe;participants; or (ii) through a broker-assisted exercise program acceptable to the Administrator; (iii) by other means acceptable to the Administrator; or (iv) by any combination of the foregoing permissible forms of payment. The delivery of shares in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.

Options granted under the 2013 Plan vest, become exercisable and terminate as determined by the Administrator. All options granted under the 2013 Plan may be exercised at any time after they vest and before their expirationset an earlier purchase date or earlier termination; provided that no option may be exercised more than 10 years after the date of its grant; and provided further that the exercise period may be less than 10 years if required by the Internal Revenue Code. In the absence of a specific written agreement to the contrary, and in each case subject to earlier termination on the option’s original expiration date, options will generally terminate: three months after termination of the recipient’s employment with us; 12 months after death; and, immediately with respect to termination of employment for reasons which cause discredit on the participant as to justify immediate termination. Notwithstanding the foregoing, however, the Administrator may designate shorter or longer periods after termination of employment to exercise any option if provided foran Offering Period then in the instrument evidencing the grant of the options or if agreed upon in writing by the recipient. Options cease to vest upon termination of employment, but the Administrator may accelerate the vesting of any or all options that had not become exercisable on or prior to the date of such termination.progress.

Other Awards. In addition to options, the Administrator may also grant performance awards, restricted stock, stock appreciation rights (“SARs”), unrestricted stock, stock units, including restricted stock units, and other awards that are convertible into or otherwise based on stock. Performance awards entitle the recipient to a payment in cash or

New Plan Benefits

The actual number of shares of our Common Stock upon the satisfaction of certain performance criteria. Shares of restrictedcommon stock that may be grantedpurchased by any individual under the Administrator to recipients who mayESPP is not transferdeterminable in advance because the restricted shares untilnumber is generally calculated using the restrictions are removed or expire. The Administrator may also approve stock payments of our Common Stock to any eligible personcontributed amount and may also grant Common Stock or other awards to recipients of options, SARs or other awards denominated in shares of Common Stock. For all such awards, the Administrator will generally determine the relevant criteria, terms and restrictions.purchase price.

Certain Material U.S. Federal Income Tax ConsiderationsInformation

The following information is a general summary of certainsome of the current federal income tax considerations with respect to the receipt and exercise of awards granted by us is based upon federal income tax rules in effect asconsequences of the date of this proxy statementESPP to both U.S. based participants and does not purport to bethe Company. Tax laws may change, and actual tax consequences will depend on a complete statement of the law in this area. Furthermore, the discussion below does not address the tax considerations regarding the receipt and exercise of awards under foreign,participant's individual circumstances as well as state and local tax laws, and suchlaws. We encourage all participants to seek tax laws may not correspondadvice when they participate in the ESPP. The ESPP is intended to the federal income tax treatment described herein. The exact federal income tax treatment of transactions under the 2013 Plan will vary depending upon the specific facts and circumstances involved and participants are advised to consult their personal tax advisors


with regard to all considerations arising with respect to the grant or exercise of awards and the disposition of any acquired shares.

Incentive Stock Options. The 2013 Plan provides for the grant of stock options that qualify as ISOs as defined inan "employee stock purchase plan" under Section 422423 of the Internal Revenue Code. Except as discussed below, a recipient of an ISO generally is not subject to ordinary income tax on the grant or the exercise of an ISO if the recipient exercises the option while the recipient is our employee (or an employee of any parent or subsidiary corporation) or within three months following termination of the recipient’s employment (or within one year, if termination was due to a permanent and total disability).

Tax Treatment of U.S. Participants. Participants will not recognize income when they enroll in the ESPP or when they purchase shares. All tax consequences are deferred until the participant disposes of the shares. If the recipientparticipant does not dispose of the ISO sells the shares acquired upon the exercise of the option at any time within one year after the purchase date we issue such shares to the recipient or within two years after the offering date, we grantor if the ISOparticipant dies while owning the shares, the participant will generally recognize ordinary income when disposing of the shares equal to the recipient (a “disqualifying disposition”), then:
if the recipient’s sales price exceedsdifference between the purchase price paid for the shares upon exercise of the ISO, the recipient will recognize capital gain equal to the excess, if any, of the sales price overand the fair market value of the shares on the date of exercise,disposition, or 15% (or such lesser discount as the Committee may establish) of the fair market value of the shares on the offering date, whichever is less. Any additional gain will be taxed as long-term capital gain. If the shares are sold for less than the purchase price, there is no ordinary income, but the participant will have a long-term capital loss for the difference between the purchase price and the sale price. If a participant disposes of the shares within one year after the purchase date or two years after the offering date, the participant will recognizegenerally have ordinary income equal to the excess, if any, ofdifference between the lesser ofpurchase price and the sales price orfair market value on the purchase date. The difference between the fair market value of the shares on the date of exercise over the purchase price paid for the shares upon exercise of the ISO; or
if the recipient’s sales price is less than the purchase price paid for the shares upon exercise of the ISO, the recipient will recognize a capital loss equal to the excess of the purchase price paid for the shares upon exercise of the ISO over the sales price of the shares.

If the recipient sells shares acquired upon exercise of an ISO at any time after the recipient has held the shares for at least one year after the date we issue such shares to the recipient pursuant to the recipient’s exercise of the ISOdisposition and at least two years after the date we grant the recipient the ISO, then the recipient will recognize long-term capital gain or loss equal to the difference between the sales price and the purchase price paid for the shares upon exercise of the ISO.

The amount by which the fair market value of shares the recipient acquires upon exercise of an ISO (determined as of the date of exercise) exceedson the purchase price paid for the shares upon exercise of the ISOdate will be included as a positive adjustment in the calculation of the recipient’s “alternative minimum taxable income” in the year of exercise. In computing the alternative minimum taxable income, the tax basis of a share acquired on exercise of the ISO is increased by the amount of the adjustment taken into account with respect for that share for alternative minimum tax purposes in the year the ISO is exercised.

In the case of a disqualifying disposition of shares by a recipient that results in the recognition of ordinary income, we will be entitled to an income tax deduction equal to the amount of such ordinary income includible in income by the option holder subject to Section 162(m) of the Code, provided that the amount constitutes an ordinary and necessary business expense, and either the employee includes that amount in income or we timely satisfy our reporting requirements with respect to that amount.

If the recipient holds the shares for the requisite period described above, and therefore solely recognizes capital gain upon the sale of such shares, we will not be entitled to any income tax deduction.

Nonqualified Stock Options. The grant of an NSO to a recipient is generally not a taxable event for the recipient if the stock option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date. Upon the exercise of an NSO, the recipient will generally recognize ordinary income equal to the excess of the fair market value of the shares the recipient acquires upon exercise (determined as of the date of exercise) over the purchase price paid for the shares upon exercise of the NSO. Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation, we generally will be entitled to an income tax deduction as a compensation expense equal to the amount of such ordinary income realized by the option holder. Provided the shares are held as a capital asset, the recipient’s subsequent sale of the shares generally will give rise to capital gain or loss equal to the difference between the sale price and the sum of the purchase price paid for the shares plus the ordinary income recognized with respect to the shares, and such capital gain or loss will be taxable as long term or short term capital gain or loss depending upon the recipient’s holding period after exercise.loss.

Stock Appreciation Rights. Where the stock appreciation rights are granted with a strike price equal to the fair market valueTax Treatment of the underlying stock on the grant date, the holder ofCompany. When a SAR will recognizeparticipant recognizes ordinary income equal toby disposing of shares before the value we pay (whether in cash, stockone-year or a combination thereof) pursuant totwo-year holding period ends, the SAR on the date the holder receives payment. WeCompany will generally be entitled to an incomea tax deduction in an amount equal to the ordinary income recognized by the holder.



Stock Purchase Rights - Restricted Stock. Under the 2013 Plan, we are authorized to grant rights to purchase shares of restricted Common Stock subject to a right to repurchase such stock at the price paid by the participant if the participant’s employment relationship with us terminates prior to the lapse of such repurchase right. In general, there will be no tax consequences to a participant upon the grant of a right to purchase such restricted stock or upon purchase of such restricted stock. Instead, the participant will be taxed at ordinary income rates at the time our repurchase rights expire or are removed on an amount equal to the excess of the fair market value of the stock at that time over the amount the participant paid to acquire such stock. A participant who acquires restricted stock, however, may make an election under Section 83(b) of the Internal Revenue Code with respect to such stock. If such an election is made within 30 calendar days after the participant’s acquisition of the stock, the participant is taxed at ordinary income rates in the year in which the participant acquires the restricted stock. The ordinary income the participant must recognize is equal to the excess of the fair market value of the stock at the time of the participant’s acquisition of the stock (determined without regard to the restrictions) over the amount that the participant paid to acquire such stock. If a participant makes a timely election under Section 83(b) of the Internal Revenue Code with respect to restricted stock, the participant generally will not be required to report any additional income with respect to such restricted stock until he or she disposes of such stock, at which time he or she will generally recognize capital gain or loss (provided the shares are held as a capital asset) equal to the difference between the sales price and the fair market value of the stock at the time of the participant’s acquisition of the stock (determined without regard to the restrictions). In the event that a participant forfeits (as a result of a repurchase) restricted stock with respect to which an election under Section 83(b) of the Internal Revenue Code has been made, the participant ordinarily will not be entitled to recognize any loss for federal income tax purposes (except to the extent the amount realized by the participant at the time of such forfeiture is less than the participant’s purchase price for such stock). We generally will be entitled to a deduction equal to the amount of ordinary income, if any, recognized by a participant.

Other Awards. In addition to the awards described above, the 2013 Plan authorizes certain other types of awards that may include payments in cash, our Common Stock or a combination of cash and our Common Stock. The tax consequences of such awards will depend upon the specific terms of such awards. Generally, however, a participant who receives an award payable in cash will recognize ordinary income, and we will be entitled to a deduction, with respect to such award at the earliest time at which the participant has an unrestricted right to receive the amount of the cash payment. In general, the sale or grant of stock to a participant under the 2013 Plan will be a taxable event at the time of the sale or grant if such stock at that time is not subject to a substantial risk of forfeiture or is transferable within the meaning of Section 83 of the Internal Revenue Code in the hands of the participant. For such purposes, stock is ordinarily considered to be transferable if it can be transferred to another person who takes the stock free of any substantial risk of forfeiture. In such case, the participant will recognize ordinary income, and we will be entitled to a deduction, equal to the excess of the fair market value of such stock on the date of the sale or grant over the amount, if any, that the participant paid for such stock. Stock that, at the time of receipt by a participant, is subject to restrictions that constitute a substantial risk of forfeiture and that is not transferable within the meaning of Section 83 of the Internal Revenue Code generally will be taxed under the rules applicable to restricted stock as described above.income.

Withholding. In the event that an optionee or other recipient of an award under the 2013 Plan is our employee, we generally will be required to withhold applicable federal income taxes with respect to any ordinary income recognized by such optionee or other award recipient in connection with stock options or other awards under the 2013 Plan.

Certain Additional Rules Applicable to Awards. The terms of awards granted under the 2013 Plan may provide for accelerated vesting in connection with a change in control. In that event, and depending upon the individual circumstances of the recipient, certain amounts with respect to such awards may constitute “excess parachute payments” under the “golden parachute” provisions of the Internal Revenue Code. Under these provisions, a participant will be subject to a 20% excise tax on any “excess parachute payments” and we will be denied any deduction with respect to such payment.

We generally are entitled to a deduction equal to the ordinary income recognized by a recipient in connection with an award. However, our deduction (including the deduction related to ordinary income recognized by a recipient) for compensation paid to our Chief Executive Officer and each of our other three most highly compensated officers (other than our Chief Financial Officer) may be limited to $1 million per person annually. Depending on the nature of the award, all or a portion of the ordinary income attributable to certain awards granted under the 2013 Plan may be included in the compensation subject to such deduction limitation.

Interest of Certain Persons in Matters to Be Acted Upon

Each of our current directors, executive officers and employees is eligible to receive awards under the 2013 Plan. The Administrator has the discretion to determine which eligible persons will receive awards under the 2013 Plan. As a result, future participation in the 2013 Plan by executive officers, directors and other employees is not determinable.



New Plan Benefits

The Compensation Committee will have full discretion to determine the number and amount of awards to be granted to employees under the 2013 Plan, subject to the terms of the plan. Therefore, the future benefits or amounts that would be received by the executive officers, directors, and employees, under the 2013 Plan are not determinable at this time. However, the following table sets forth the options issued under the 2013 Plan that have been granted related to the fiscal year ended December 31, 2016 to the following persons or groups: (i) each of our Named Executive Officers, (ii) our current executive officers as a group, (iii) all current directors who are not employees as a group, and (iv) all employees who are not executive officers.
NamePositionNumber of Securities Underlying Options Granted
George F. Tidmarsh, M.D., Ph.D.President, Chief Executive Officer and Secretary214,700
Lakhmir S. Chawla, M.D.Chief Medical Officer64,100
Dennis M. MulroyChief Financial Officer64,100
Jennifer A. CarverChief Operating Officer64,100
All current executive officers as a group471,100
All directors who are not employees as a group40,000
All employees, other than executive officers, as a group1,157,875

Vote Required

The approval of a majority of the votes cast affirmatively or negatively is required to approve this Proposal.proposal. Further, approval of this Proposal alsoproposal requires the affirmative vote of a majority of the shares necessary to constitute a quorum for the Annual Meeting. As a result, broker non-votes and abstentions will be disregarded in determining whether the affirmative votes cast represent a majority of the total number of votes cast on this Proposal.proposal. However, a large number of abstentionsbroker non-votes or broker non-votesabstentions could prevent approval of this Proposalproposal under the majority-of-the-quorum requirement.

Recommendation of the Board of Directors

The Board of Directors unanimously recommends athat you vote “FOR” the approval of the foregoing resolution. Proxies will be so voted unless shareholders specify otherwise in their proxies.Company’s 2018 Employee Stock Purchase Plan.




CORPORATE GOVERNANCE

Our business affairs are managed under the direction of our Board, which is currently composed of five5 directors. Consistent with NASDAQNasdaq listing requirements, our Board hasmakes an annual determination of the independence of our directors. This determination is made in conjunction with each annual meeting of shareholders. In connection with the 2018 Annual Meeting of Shareholders, the Board had determined that as of the Record Date, Ms. Douglass, Mr. Johnson and Mr. Rosen are “independent” within the meaning of NASDAQNasdaq Marketplace Rules 5605(b) and 5605(a)(2).

During the year ended December 31, 2016,2017, the Board met or took action by unanimous written consent six6 times (including regularly scheduled and special meetings), and each director attended at least 75% of the aggregate of: (i) the total number of meetings of the Board held during the period for which he or she has been a director; and (ii) the total number of meetings held by all committees of our Board on which he or she served during the periods that he or she served.

Committees of the Board of Directors

Our Board has three standing committees: an audit committee;committee (the “Audit Committee”); a compensation committee;committee (the “Compensation Committee”); and a corporate governance and nominating committee. All committee members have been determined to be independent.(the “Corporate Governance and Nominating Committee”). The committees operate under written charters that are available for viewing on our website at www.ljpc.com, under “Investor Relations.”

Audit Committee. It is the responsibility of the Audit Committee to oversee our accounting and financial reporting processes and the audits of our consolidated financial statements. In addition, the Audit Committee assists the Board in its oversight of our compliance with legal and regulatory requirements. The specific duties of the Audit Committee include: monitoring the integrity of our financial process and systems of internal controls regarding finance, accounting and legal compliance; selecting our independent auditor; monitoring the independence and performance of our independent auditor; and providing an avenue of communication among the independent auditor, our management and our Board. The Audit Committee has the authority to conduct any investigation it feels appropriate to fulfill its responsibilities, and it has direct access to all of our employees and to the independent auditor. The Audit Committee also has the ability to retain, at our expense and without further approval of the Board, special legal, accounting or other consultants or experts that it deems necessary in the performance of its duties. The Audit Committee met or took action by unanimous written consent four4 times in 2016.2017. The Audit Committee is comprised of three members: Craig Johnson, Laura Douglass and Robert Rosen and Laura Douglass.Rosen. Craig Johnson is the chairChairman of the Audit Committee and is deemed to be the audit committee'sAudit Committee's financial expert. As of the Record Date, eachEach member of the Audit Committee metmeets the requirements for independence under the listing standards of the NASDAQNasdaq Capital Market and the Securities and Exchange Commissions (the “SEC”) rules and regulations, as well as met the requirements for financial literacy and sophistication under the applicable listing standards.

Compensation Committee. It is the responsibility of the Compensation Committee to assist the Board in discharging the Board’s responsibilities regarding the compensation of our employees and directors. The specific duties of the Compensation Committee include: making recommendations to the Board regarding the corporate goals and objectives relevant to executive compensation; evaluating our executive officers’ performance in light of such goals and objectives; recommending compensation levels to the Board based uponon such evaluations; administering our incentive compensation plans, including our equity-based incentive plans; making recommendations to the Board regarding our overall compensation structure, policies and programs; and reviewing the Company’s compensation disclosures. Additional information regarding the processes and procedures of the Compensation Committee is provided below under the caption “Executive Compensation.” The Compensation Committee met or took action by unanimous written consent five5 times in 2016.2017. The Compensation Committee is comprised of two members: Craig Johnson and Laura Douglass. Craig Johnson is the chairChairman of the Compensation Committee. As of the Record Date, eachEach member of the Compensation Committee metmeets the requirements for independence under the listing standards of the NASDAQNasdaq Capital Market and the SEC rules and regulations.

Corporate Governance and Nominating Committee. It is the responsibility of the Corporate Governance and Nominating Committee to assist the Board: to identify qualified individuals to become directors of the Board; to determine the composition of the Board and its committees; and to monitor and assess the effectiveness of the Board and its committees. In addition, the Corporate Governance and Nominating Committee assists the Board in its oversight of our compliance with legal and regulatory requirements. The specific duties of the Corporate Governance and Nominating Committee include: identifying, screening and recommending to the Board candidates for election to the Board; reviewing director candidates recommended by our shareholders; assisting in recruiting qualified director candidates to serve on the Board; monitoring the independence of current directors and nominees; and monitoring and assessing the relationship between the Board and our management with respect to the Board’s ability to function independently of management. The Corporate Governance and Nominating Committee met or took action by unanimous written consent one time in 2016.2017. The Corporate Governance and Nominating


Committee is comprised of two members: Laura Douglass and Robert Rosen. As of the Record Date, eachEach member of the Corporate Governance and Nominating Committee metmeets the requirements for independence under the listing standards of the NASDAQNasdaq Capital Market.



Corporate Governance Guidelines

We have adopted a set of Corporate Governance Guidelines that describe a number of our corporate governance practices. The Corporate Governance Guidelines are available for viewing on our website at www.ljpc.com, under “Investor Relations.”

Code of Ethics; Corporate Website

We have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to all of our directors, officers and employees, including our principal executive officer, principal financial and accounting officer or persons performing similar functions. Our Code of Ethics is postedavailable for viewing on our corporate governance website located at www.ljpc.com, under “Investor Relations”.Relations.” We intend to disclose future amendments to certain provisions of the Code of Ethics, and waivers of the Code of Ethics granted to executive officers and directors, on theour website within four4 business days following the date of the amendment or waiver. The corporateOur website may also be used to communicate other material developments to our shareholders from time to time, such as press releases, corporate presentations and presentations delivered at investor conferences. Shareholders are encouraged to regularly review the corporateour website for any such updates.

Communications with the Board of Directors

Our shareholders may communicate with our Board, or a particular director, by sending a letter addressed to the Board, or a particular director, to: c/o Corporate Secretary, La Jolla Pharmaceutical Company, 10182 Telesis4550 Towne Centre Court, 6th Floor, San Diego, California, 92121. All communications will be compiled by our Corporate Secretary and forwarded to the Board, or the director, accordingly.

Compensation Committee Interlocks and Insider Participation

During 2016, Dr. Tidmarsh was an employee of the Company. None of our executive officers served as a member of the Compensation Committee or as a director of another entity where such entity’s executive officers served on our Compensation Committee or Board.

Board Leadership Structure; Risk Management

The role of our Chairman of the Board is separate from theour Chief Executive Officer. The Board has determined that its structure is appropriate at this time given the Company’s specific characteristics and circumstances, including the Board’s commitment to independent Board and Committee leadership, and to fulfill the Board’s duties effectively and efficiently so that our business receives the undivided attention of the Chief Executive Officer.

Our Board is responsible for oversight of our risk management policies and procedures. We are exposed to a number of risks, including financial risks, strategic and operational risks and risks relating to regulatory and legal compliance. The Board will regularly discuss with management our major risk exposures and the steps management has taken to monitor and control such exposures, including the guidelines and policies to govern the process by which risk assessment and risk management are undertaken, and highlighting any new risks that may have arisen since they last met.

The Board oversees the management of risk exposure and risk mitigation in various areas including: (i) risks relating to our employment policies and executive compensation plans and arrangements; (ii) financial risks and taking appropriate actions to help ensure quality financial reporting and appropriately conservative investment practices; and (iii) risks associated with the independence of the Board and potential conflicts of interest. The Audit Committee reviews policies with respect to risk assessment and risk management and consults with outside resources as appropriate on other matters that could have a significant impact on the Company’s consolidated financial statements. The Audit Committee also reviews policies with respect to financial risk and makes recommendations to the Board. The Board’s administration of its risk oversight function has not affected the Board’s leadership structure, which separates the roles of our Chairman of the Board and our Chief Executive Officer.



Director Nominations

Our Corporate Governance and Nominating Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. In the event that vacancies are anticipated or otherwise arise, the Corporate Governance and Nominating Committee may utilize a variety of methods for identifying and evaluating director candidates. Candidates may come to the attention of the Corporate Governance and Nominating Committee through current directors, professional search firms, shareholders or other persons. Once the Corporate Governance and


Nominating Committee has identified a prospective nominee, it will evaluate the prospective nominee in the context of the then-current constitution of the Board and will consider a variety of other factors, including the prospective nominee’snominee's business, biotechnology,industry, finance and financial reporting experience, andas well as attributes that would be expected to contribute to an effective Board. The Corporate Governance and Nominating Committee seeks to identify nominees who possess a wide range of experience, skills and areas of expertise, knowledge and business judgment. Our Corporate Governance and Nominating Committee thus considers a broad range of factors relating to the qualifications and background of nominees, which may include diversity, which is not only limited to race, gender or national origin, but also includes diversity of experience and skills. We have no formal policy regarding Board diversity. Our Corporate Governance and Nominating Committee’s priority in selecting directors is the identification of persons who will further the interests of our shareholders through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among directors, and professional and personal experiences and expertise relevant to our growth strategy. Successful nominees must have a history of superior performance or accomplishments in their professional undertakings and should have the highest personal and professional ethics and values. The Corporate Governance and Nominating Committee does not evaluate shareholder nominees differently than any other nominee.

Pursuant to procedures set forth in the Company’s Bylaws, as amended and restated (the “Bylaws”), our Corporate Governance and Nominating Committee will consider shareholder nominations for directors if we receive timely written notice, in proper form, of the intent to make a nomination at a meeting of shareholders. To be timely, the notice must be received within the time frame discussed in our Bylaws. To be in proper form, the notice must, among other matters, include each director nominee’s written consent to serve as a director if elected, a description of all arrangements or understandings between the nominating shareholder and each director nominee and information about the nominating shareholder and each director nominee. A copy of our Bylaws will be provided uponon written request to our Corporate Secretary.

Director Attendance at Annual Meetings

Our Board has adopted a policy that encourages our directors to attend our annual shareholder meeting.meeting each year. We held our 2016 annual shareholder meeting2017 Annual Meeting of Shareholders on August 23, 2016,September 1, 2017, and threeall five of the Company’s directors were presentattended in person for such meeting.

Report of the Audit Committee

The Audit Committee oversees our financial reporting process. Management has the primary responsibility for the consolidated financial statements and the reporting process, including our system of internal control over financial reporting. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 20162017 with management, including a discussion of the quality, not merely the acceptability, of the accounting and financial reporting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.

The Audit Committee reviewed our audited consolidated financial statements with our independent auditor, which is responsible for expressing an opinion on the conformity of those audited consolidated financial statements with accounting principlesU.S. generally accepted in the United States,accounting principles, including a discussion of such matters as are required to be discussed under auditing standardsU.S. generally accepted in the United States.auditing standards. In addition, the Audit Committee has discussed with the independent auditor its independence from us and our management, including as set forth in Auditing Standard 1301: Communications with Audit Committees (formerly known as Auditing Standard No. 16). The Audit Committee has also considered the compatibility of the independent auditor’s provision of non-audit services to us with the auditor’s independence.

The Audit Committee discussed with our independent auditor the overall scope and plan for its audit. The Audit Committee met with the independent auditor, with and without management present, to discuss the results of its examinations, its evaluations of our internal controls and the overall quality of our financial reporting.



Based uponon the reviews and discussions referred to above, the Audit Committee recommended that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 20162017 for filing with the SEC. This report is provided by the following directors, who perform the functions of the Audit Committee:

Craig A. Johnson, ChairChairman of Audit Committee
Robert H. Rosen
Laura L. Douglass




Section 16(a) Beneficial Ownership Reporting Compliance

Under the securities lawsSection 16(a) of the United States,Exchange Act requires our directors and officers and persons who own more than 10% of our equity securities are required to report their initial beneficial ownership of our equity securities, and any subsequent changes in thatsuch beneficial ownership, to the SEC. Specific due dates for these reports have been established, and we are required to disclose any known late filings during the year ended December 31, 2016.2017. To our knowledge, based solely uponon our review of the copies of such reports required to be furnished to us during the year ended December 31, 2016,2017, all of these reports were timely filed.



EXECUTIVE OFFICERS

Our executive officers and their respective ages as of July 1, 20172018 are set forth below, as well as biographies for officers other than Dr. Tidmarsh, whose biography is set forth under Proposal 1.
Name Age Position
George F. Tidmarsh, M.D., Ph.D. 5758
 President, Chief Executive Officer, Secretary and Director
Lakhmir S. Chawla, M.D. 4647
 Chief Medical Officer
Dennis M. Mulroy 6263
 Chief Financial Officer
Jennifer A. Carver 6364
 Chief Operating Officer
James M. Rolke 4849
 Chief Scientific Officer

Dr. Lakhmir “Mink” S. Chawla, M.D. has been the Chief Medical Officer of the Company since July 2015. Dr. Chawla has more than 20 years of medical experience with particular expertise in critical care and nephrology. Dr. Chawla has been an active investigator in the field of critical care nephrology since 2002. Previously,From 2008 to 2015, Dr. Chawla was an Associate Professor of Medicine at the George Washington University, from 2008 to 2015, where he had dual appointments in the Department of Anesthesiology and Critical Care Medicine and in the Department of Medicine, Division of Renal Diseases and Hypertension. From 2014 to 2015, Dr. Chawla was also the Chief of the Division of Intensive Care Medicine at the Washington D.C. Veterans Affairs Medical Center from 2014 to 2015.Center. During his tenure at the George Washington University, Dr. Chawla was the designer and lead investigator of a pilot study called the ATHOS (Angiotensin II for the Treatment of High Output Shock) trial, which served as the basis for the Company’s ongoing ATHOS 3completed ATHOS-3 clinical study. Dr. Chawla received an M.D. from the New Jersey Medical School.

Dennis M. Mulroyhas been the Chief Financial Officer of the Company since April 2015. Mr. Mulroy has more than 25 years of financial management experience, including leadership positions in publicly traded biotechnology, life sciences,medical service and medical device companies. PriorFrom 2005 to joining La Jolla,2015, Mr. Mulroy served as Chief Financial Officer of Taxus Cardium Pharmaceuticals Group Inc. since 2005. Prior to joining Taxus Cardium, Mr. Mulroy served as Chief Financial Officer of Molecular Imaging, Inc. and SeraCare Life Sciences, Inc., and held financial management positions of increasing responsibility at several other companies. Mr. Mulroy began his career as a Certified Public Accountant with Ernst & Young LLP in San Diego. Mr. Mulroy received a B.S. degree in business administration, with an emphasis in accounting, from the University of San Diego.

Jennifer A. Carver has been the Chief Operating Officer of the Company since January 2017. Ms. Carver has more than 20 years of cross-functional leadership experience in pharmaceutical drug development and the healthcare industry. Prior to her appointment as Chief Operating Officer, Ms. Carver held a number of operational roles of increasing responsibility since joining the Company in February 2014, most recently as Senior Vice President, Operations of the Company. Ms. Carver has more than 20 years of cross-functional leadership experience in pharmaceutical drug development and the healthcare industry. PriorOperations. From 2012 to joining La Jolla,2014, Ms. Carver was Senior Director of Project Management at Spectrum Pharmaceuticals, Inc., leading the NDA and launch activities for Beleodaq®, an FDA-approved, anti-cancer agent, fromagent. From 2001 to 2012, to 2014. Previously, she held various roles at Allos Therapeutics, Inc. from 2001 to 2012,, including Project Manager for Folotyn®, an FDA-approved, anti-cancer agent, and led integration activities following the acquisition of Allos by Spectrum Pharmaceuticals in 2012. Ms. Carver received a B.S.N. and M.B.A. from the University of Colorado.

James M. Rolke has been the Chief Scientific Officer of the Company since January 2017. Mr. Rolke has over 25 years of research and development experience in the biotechnology industry. Prior to his appointment as Chief Scientific Officer, Mr. Rolke held various positions of increasing responsibility since joining the Company in January 2012, most recently as Vice President of Research &and Development. Mr. Rolke has over 25 years of research and development experience in the biotechnology industry. PriorFrom 2009 to joining La Jolla,2012, Mr. Rolke was Chief Technology Officer at Pluromed, Inc. (acquired by Sanofi) from. From 2007 to 2009, to 2012. Previously, Mr. Rolke served as Director of Operations at Prospect Therapeutics, Inc. from 2007 to 2009, and held research and development positions of increasing responsibility at several other companies. Mr. Rolke received a B.S. degree in chemistry from Keene State College.






EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

The following Compensation Discussion and Analysis describes the material elements of compensation earned by our four5 executive officers servingwho served during 2016,2017, which includedincludes the Chief Executive Officer, Chief Medical Officer, Chief Financial Officer, Chief Operating Officer and Chief OperatingScientific Officer (who held the title of Senior Vice President Operationsof Research & Development during 2016) who are, collectively referred to herein as the Company’s Named Executive Officers. In January 2017, James Rolke was promoted to the position of Chief Scientific Officer. In that capacity, Mr. Rolke is deemed an executive officer. However, because Mr. Rolke was not serving as an executive officer at any time during 2016, Mr. Rolke is not included as a Named Executive Officer for the year ended December 31, 2016.

Compensation Philosophy and Objectives

Our goal is to provide a competitive total compensation package with significant emphasis on pay for performance. Accordingly, we favor equity and discretionary awards over guaranteed cash compensation in order to drive accomplishments that enhance shareholder value and align the interests of our executive officers and our shareholders. This means that our executive officers will not realize the total potential value of their compensation package unless performance goals, which are directly tied to our corporate performance, are achieved. The Compensation Committee believes that our executive compensation program is appropriately designed and reasonable in light of the executive compensation programs of our peer group companies and responsible in that it is appropriately designed to incentivize our management team to achieve our short-term and long-term corporate objectives, while effectively managing business risks and challenges.

Based on the foregoing objectives, executive compensation is based on three primary components: base salary, annual incentive bonuses and equity awards. The Compensation Committee believes that cash compensation in the form of base salary and an annual incentive target bonus provides our executive officers with short-term rewards for success in operations, and that long-term compensation throughin the form of equity awards (which consists mainly of stock options) aligns the objectives of managementour executive officers with those of our shareholders with respect to long-term performance and success. In addition, our executive officers receive benefits that are generally available to all of our employees. Our compensation-setting process includes reviewing the targeted overall compensation for each executive officer and then allocating that compensation between base salary, andannual incentive compensation (annual performance-based cash bonuses and equity incentive awards),awards, based appropriately on industry and salary survey data for public companies of a similar market capitalization, size and stage of clinical development.

With respect to equity awards, these awards typically vest and become exercisable over a period of four years, consisting of an initial one-year cliff-vest, followed by monthly or quarterly vesting. However, we have also used performance-based vesting conditions and the combination of performanceperformance-based and time-based vesting conditions for certain awards. We believe that long-term value creation, contrasted with short-term gain, presents the best opportunity for employees to profit from these awards. In circumstances where performance-based equity awards have been granted, the events that trigger vesting are generally estimated to be achieved at least one year from the grant date, although shorter performance goals may be used in some cases. The Company has not historically used claw-back provisions or imposed holding periods for vested awards, although the Compensation Committee may consider whether such mechanisms might be appropriate in the future to mitigate risk.

Risk Management and Mitigation

In reviewing the compensation structure in fiscal 2016,for 2017, we also considered how the Company’s compensation policies may affect the Company’s risk profile and whether compensation policies and practices may encourage risk-taking by employees. More specifically, we considered the general design philosophy of the Company’s policies for employees whose conduct would be most affected by incentives established by compensation policies. In considering these issues, we concluded that the use of performance-basedannual incentive bonuses and long-term equity awards did not appear to create undue risks for the Company or encourage excessive risk-taking behavior on the part of our executive officers.employees.



Roles in Determining Compensation

Compensation Committee

The Compensation Committee has the responsibility of reviewing the appropriateness of the total compensation paid to our executive officers. The Compensation Committee oversaw and approved all compensation arrangements and actions for


our key employees in 2016,2017, including the Named Executive Officers. The Compensation Committee has delegated to the Chief Executive Officer certain administrative responsibilities under the Company’s equity compensation plan,2013 Equity Incentive Plan, allowing the Chief Executive Officer to set base salaries and annual incentive bonus targets, as well as make equity award grants and set base salary and annual incentive targets, in each case within predetermined guidelines established by the Compensation Committee and limited to non-officer employees of the Company.

Compensation Consultant

In 2016,2017, the Compensation Committee engaged the services of Marsh & McLennan Agency, LLC (formerly known as Barney & Barney, LLCBarney) (“B&BMMA”), an independenta national insurance firm that provides compensation consulting services. The directive for B&BMMA was to assist the Compensation Committee in its review of executive and director compensation practices, including the competitiveness of pay levels, executive compensation design and review and analysis of competitive data with respect to the Company’s peers in the industry. The Compensation Committee has the final authority to engage and terminate the services for consultants it may engage.of compensation consultants. The decision to engage B&BMMA was not made, or recommended, by the Company’s management. B&BMMA also provides insurance brokerage services to the Company outside of its services to the Compensation Committee. The Compensation Committee, after a review of the factors set forth in Section 10C-1 of the Securities Exchange Act of 1934, has determined that B&BMMA is independent, and the insurance brokerage work and compensation consulting work performed by B&B didMMA do not present any conflicts of interest.

Say-on-Pay

On June 5, 2013 and August 23, 2016, the Company provided shareholders a “say-on-pay” advisory vote on its executive compensation under Section 14A of the Securities Exchange Act of 1934, as amended.1934. At the Company’s 2013 and 2016 annual meetingAnnual Meetings of shareholders,Shareholders, shareholders expressed support for the compensation of our Named Executive Officers, with a majority of the votes cast for approval of the “say-on-pay” advisory vote. The Compensation Committee carefully evaluated the results of these advisory votes. The Compensation Committee also considersconsidered many other factors in evaluating the Company’sCompany's executive compensation programs as discussed in this Compensation Discussion and Analysis, including the Compensation Committee’sCommittee's assessment of the interaction of our compensation programs with our corporate business objectives, evaluations of our programs by external consultants and review of peer group and survey data, each of which is evaluated in the context of the Compensation Committee’s fiduciary duty to act as the directors determine to be in shareholders’ best interests. While each of these factors bore on the Compensation Committee’s decisions regarding our Named Executive Officers’ compensation, the Compensation Committee did not make any changes to our executive compensation program and policies as a result of the “say-on-pay” advisory votes. The Company also provided shareholders a “say-on-frequency” advisory vote on June 5, 2013. As previously disclosed, in light of the results of such shareholder vote, the Board adopted a resolution to hold a “say-on-pay” vote once every three years. The next “say-on-pay” vote will be held at the Company’s 2019 annual meetingAnnual Meeting of shareholders,Shareholders, at which time the Company will also submit a new say-on-frequency“say-on-frequency” vote for consideration.

Base Salary

Executive baseBase salaries for executives are based on job responsibilities, accountability and the experience of the individual. For 2016,2017, the Compensation Committee sought to implementimplemented a policy of targeting base salaries for executives, including the Chief Executive Officer, at or near the 50th percentile of salaries of executives with similar roles at similar organizations, based on broad comparative data. In its assessment of executive compensation levels, B&BMMA provided information thatwhich indicated that, using the Company’s identified peer group, executive cash compensation was slightly below the 50th percentile.

During its review of base salaries for executives and other key employees, the Compensation Committee primarily considered:
market data provided by MMA and publicly available industry surveys and B&B to ensure competitive compensation;
compensation data for public companies of a similar market capitalization, size and stage of clinical development;
individual performance of the executive for the prior year, including achievements and overall contribution to the Company’s growth and business success; and
internal review of the executive’s overall compensation relative to other executives at a similar level.



The Compensation Committee considers these factors in the aggregate, without assigning weight to any specific factor, and not every factor was considered for each executive officer.

Salary levels are typically considered annually as part of our performance review process as well as uponon promotion or other changes in job responsibilities. Merit increases are awarded based on the Compensation Committee’s subjective overall review of an executive’s performance of his or her job responsibilities. In addition, base salaries are reviewed annually to assure comparability with market practices. Market adjustments generally are reserved for those employees whose base salaries are substantiallyfall below market. In June 2016, the compensation committee reassessed the base salaries paid to the Executive Officers and based on a review of peer data, approved increases of 4.2% for Dr. Chawla, 6.1% for Mr. Mulroy, and 13.3% for Ms. Carver. Dr. Tidmarsh’s base salary remained unchanged. In the evaluation of performance for 2016,2017, the Compensation Committee approved an increase of 2.5%3% in the


base salaries for Dr. Tidmarsh, Dr. Chawla, Mr. Mulroy, and Ms. Carver. Ms. Carver was promoted to Chief Operating Officer and Mr. Rolke. Ms. Carver and Mr. Rolke also received an additional promotion increasesalary adjustment of 6%. and 3%, respectively. These increases were effective commencing with the first pay period in 2017.2018.

Annual Incentive Bonus

Annual Incentive Bonus

The annual performance-based cashincentive bonus for the Named Executive Officers is determined based uponon corporate performance and also individual achievements and performance, as warranted. The Compensation Committee, consistent with the overall corporate philosophy of keeping cash compensation for executives at or near the 50th percentile when compared to executives with similar roles at similar organizations, reviewed the target bonus potential payout for the Named Executive Officers together with other generally available market comparative data. The target bonus is set at an incentive level based on the executive’s accountability and potential impact on the Company’s performance. Accordingly, the more control and accountability that an executive has over the Company’s performance, the greater the percentage of that executive’s total compensation is dependent on an annual performance-based cash bonus awards.incentive bonus. The targeted annual incentive bonus payout for 2016 set at the beginning of the year2017 was 50%60% of base salary for Dr. Tidmarsh and 35%40% of base salary for each of Dr. Chawla, Mr. Mulroy, Ms. Carver and Mr. Rolke. Based on individual achievement and performance in 2017, Ms. Carver.Carver’s target bonus percentage was increased from 40% to 47%. In determining the annual performance-based cashincentive bonus opportunity for executives, the executive’s annual base salary is multiplied by his or her target bonus percentage. The resulting amount is then multiplied by the corporate performance percentage approved by the Compensation Committee, which is dependent on the achievement of corporate performance goals, and also potentially adjusted upwards or downwards for individual executives based on their individual contribution toward the corporate results during the relevant year and prorated for their time employed in 2016.year. For 2016,2017, the Compensation Committee determined that our Named Executive Officers had achieved 90%125% of their corporate performance goals and individual contribution toward the corporate results. Key factors in determining the 20162017 level of achievement included full enrollmentthe early U.S. Food and Drug Administration (the “FDA”) approval of the LJPC-501 study, reporting positive phase 1 results for the LJPC-401 study, and the agreement with the European Medical Agency on the designGIAPREZA, initiation of a pivotal trialphase 2 study of LJPC-401 for LJPC-401. Performance-based cashthe treatment of beta thalassemia patients suffering from iron overload and the initiation of a phase 2 study for LJPC-401in patients with hereditary hemochromatosis. Annual incentive bonus payouts made to the Named Executive Officers in January 2017 for their performance in 20162017 are shown in the Non-Equity“Non-Equity Incentive Plan Compensation” column of the “Summary Compensation column in the Summary Compensation Table.Table” below.

For annual performance-based cashincentive bonuses for our executive officers, in any given year, a minimum overall goal achievement of greater than or equal to 50% is required for an executive officer to earn any performance-based cashannual incentive bonus. The target bonus can be earned if a goal achievement of 100% is obtained; for extraordinary performance in corporate goal achievement, up to 150% of the target bonus for that goal could be awarded. Accordingly, for the Named Executive Officers, there is the potential to receive up to 150% of their overall bonus target. The Compensation Committee retains broad discretion to modify our target goals at any time, including the methodology for calculating the specific bonus amounts. The Compensation Committee may also, in its sole discretion, determine to either increase annual incentive bonus payouts for extraordinary achievement or to reduce payout if economic and business conditions warrant.

Equity CompensationAwards

The executive equity incentive compensationaward program is designed to promote high performance and achievement of corporate goals by employees on a long-term basis, encourage the growth of shareholder value and allow employees to participate in the long-term success of the Company. As of December 31, 2016,2017, the Company had approximately 102200 employees and four4 non-employee directors who arewere eligible to receive equity awards. Under the Company’s 2013 Equity Incentive Plan, the Board (or a committee thereof, including the Compensation Committee) may grant stock options, shares of common stock, restricted stock units, stock appreciation rights and performance awards. In granting these awards, the Board (or a committee thereof, including the Compensation Committee) may establish any conditions or restrictions it deems appropriate.

To date, ourThe Company has generally granted equity awards to our executive officers and other employees in the form of stock options. These awardsstock options will provide compensation only to the extent that the Company’s stock price appreciates over that time.


The Compensation Committee has provided the management teamexecutive officers with an equity stake in the business, which we believe aligns the long-term interests of the management team with our shareholders. Because a financial gain from stock options is only possible if the price of the Common StockCompany’s shares of common stock has increased, the Company believes that option grants motivate our executives and other employees to deliver superior performance and focus on behaviors and initiatives that lead to long-term value creation, which benefits all of the Company’s shareholders. The Company typically grants time-based vesting stock options, but has also granted performance-based stock and option awardsoptions to our Chief Executive Officer and also certain other executives uponon occasion.

Stock option award levels are based on option grant guidelines approved by the Board or the Compensation Committee and vary among employees based on their level within the Company and their individual performance. Annual


awards of stock options to executives are made as part of the annual review of executive performance, which typically occurs around year end. Newly hired or promoted executives receive their award of stock options on their date of hire/hire or promotion, respectively, or at the next regularly scheduled Compensation Committee or Board meeting following their hire or promotion date. The Compensation Committee targets stock option award levels for executives, including the Chief Executive Officer, at or near the 75th percentile of long-term incentive awards of executives with similar roles at similar organizations, based on broad comparative data. The resulting amount is then multiplied by the corporate performance percentage approved by the Compensation Committee, which is dependent on the achievement of corporate performance goals, and also potentially adjusted upwards or downwards for individual executives based on their individual contribution toward the corporate results during the relevant year and prorated for their time employed in 2016.during 2017. The Compensation Committee, in line with the Company’s philosophy to encourage long-term value creation, elected to emphasize the equity portion of each executive’s overall total compensation. The grant of options by the Company is unrelated to any anticipated major announcements made by the Company and, therefore, is thus not influenced by any material, non-public information that may exist at the time of grant.

Following an annual review of compensation, as well as individual and corporate performance that was completed in early December 2016,2017, Dr. Tidmarsh, Dr. Chawla, Mr. Mulroy, and Ms. Carver and Mr. Rolke were each granted an option to purchase up to 214,700, 64,100, 64,100183,000, 49,000, 49,000, 49,000 and 64,10049,000 shares, respectively, of Common Stockcommon stock at a price equal to the fair market value of Common Stockthe common stock on the grant date, which was January 4,December 11, 2017. Later in December, the Company received news from the FDA that their New Drug Application for GIAPREZA was approved two months ahead of its Prescription Drug User Fee Act date. Based on this new information the Compensation Committee awarded Dr. Tidmarsh, Dr. Chawla, Mr. Mulroy, Ms. Carver and Mr. Rolke each an additional option to purchase up to 25,000, 6,700, 6,700, 6,700 and 6,700 shares, respectively, of common stock at a price equal to the fair value of the shares of common stock on the grant date, which was December 27, 2017. These stock options shall vest and become exercisable with respect to one-quarter25% of the underlying shares on the firstone-year anniversary of the grant date, and the remaining shares are to vest and become exercisable ratably each month thereafteron a monthly basis over the next three years, such that these options are fully vested and exercisable on the fourth anniversary of the grant date, subject to the recipient’s continued service with the Company through each such vesting date. These options were granted and governed in all respects under the Company’s 2013 Equity Incentive Plan.

Employee Benefit Program

We have not historically provided special benefits or perquisites to our Named Executive Officers and did not do so in 2016.2017. The Named Executive Officers are eligible to participate in all of the Company’s health, welfare, paid time-off and 401(k) retirement savings benefit programs on the same terms as are available to other employees. These benefit programs are designed to enable the Company to attract and retain its workforce in a competitive marketplace. Health, welfare and paid time-off benefits ensure that the Company has a productive and focused workforce through reliable and competitive health and other benefits. The retirement savings plan helps employees save and prepare financially for retirement.

The Company’s retirement savings plan (“(the “401(k) Plan”) is a tax-qualified retirement savings plan, pursuant to which all employees, including the Named Executive Officers, are able to contribute the lesser of 50% of their annual compensation (as defined) or the limit prescribed by the Internal Revenue Service to the 401(k) Plan on a before-tax basis. The Company matches employee contributions to the 401(k) Plan based on each participant’s contribution during the plan year, up to 3.5% of each participant’s annual compensation.

Employment and Separation Arrangements

From time to time, we have provided executive officers with certain termination and change in control benefits. Where implemented, the Compensation Committee or Board has approved thesesuch termination and change in control benefits in order to maintain market-competitive compensation practices and to mitigate some of the risk that exists for executives working in a biopharmaceutical company at our current stage of development and where the possibility exists that we may be acquired if our business efforts succeed. These arrangements are intended to retain highly skilled executives who have, or who may seek, alternatives that may appear to them to be less risky in terms of the potential loss of their position following a merger or sale, particularly where the services of these executive officers may not be required by the acquirer.



A summary of the terms of the arrangements we have with our Named Executive Officers and the potential value of payments uponon termination or change in control is provided in an amendment to the annual report on Form 10-Kbelow under the headingscaptions “Employment and Separation Agreements” and “Payments Upon“Potential Payments on Termination or Change in Control.”



Competitive Market Review

In 2016,2017, the Compensation Committee retained B&BMMA to assist the committee in identifying a selected peer group of companies within the biotechnology/biopharmaceutical industry and with similar identified characteristics to our Company to be used to assess compensation levels for the top senior management positions. B&BMMA was involved with the process of selecting an appropriate peer group for our Company and in collecting and analyzing compensation data of the companies within our peer group. In addition, for some positions, we reviewed other broader market surveys within our industry. While we do not establish compensation levels based solely on comparative data, pay practices at other companies are an important factor that is considered in assessing the reasonableness of compensation and ensuring that our compensation practices are competitive in the marketplace. In compiling the peer group for 2016,2017, the factors that were identified as providing well-defined comparatives to the Company were market capitalization ($400600 million to $1$1.5 billion), current stage of clinical development or business activity (product(s) in Phase 2 and Phase 3 studies and/or close to potential commercialization) and number of employees (< 150) 300). While the Compensation Committee reviewed compensation data pertaining to these companies, it determined that elements such as the Company’s diversity of clinical development activities and the level of executive experience should be significant factors in assessing compensation levels, and certain factors such as number of employees or market capitalization might allow for easy categorization, but were not necessarily the most significant factors in determining the relative need by the Company to recruit highly skilled executives. The 2021 companies in the peer group identified by B&BMMA for 20162017 are listed below.
AgenusAcceleron Pharma Inc.Ardelyx,Akebia Therapeutics, Inc.
Array BioPharma Inc.Cytokinetics, IncorporatedBlueprint MedicinesDynavax Technologies Corporation
Corcept Therapeutics IncorporatedEnanta Pharmaceuticals, Inc.Epizyme, Inc.
Epizyme,Esperion Therapeutics, Inc.Flexion Therapeutics, Inc.
Heron Therapeutics, Inc.Ignyta, Inc.
Insmed IncorporatedKeryx Biopharmaceuticals, Inc.
Momenta Pharmaceuticals, Inc.Otonomy, Inc.Omeros Corporation
Raptor Pharmaceuticals Corp.Revance Therapeutics, Inc.Sangamo Therapeutics, Inc.
Sucampo Pharmaceuticals, Inc.Synergy Pharmaceuticals Inc.
TG Therapeutics, Inc.
Vanda Pharmaceuticals Inc.
Xencor, Inc.
Ziopharm Oncology, Inc.

Tax Considerations

Deductibility of Executive Compensation. In making compensation decisions affecting our executive officers, the Board or the Compensation Committee may, among other considerations, also give consideration to our ability to deduct, under applicable federal corporate income tax laws, compensation payments made to executives. Specifically, the Compensation Committee or the Board may consider the requirements and impact of Section 162(m) of the Internal Revenue Code, which limits the tax deductibility to us of compensation in excess of $1.0 million in any year for certain executive officers, except for qualified “performance-based compensation” under the Section 162(m) rules. Although the Compensation Committee or the Board may consider the Section 162(m) rules as a factor in determining compensation, these considerations will not necessarily limit compensation to amounts deductible under Section 162(m). In addition, the rules promulgated under Section 162(m) are complicated, and may change from time to time, sometimes with retroactive effect. As such, it cannot be guaranteed that any amounts intended to qualify as exempt “performance-based compensation” under Section 162(m) will so qualify.

Minimum Stock Ownership Requirements

There are no minimum stock ownership guidelines for our executives or employees, although senior members of our management team are encouraged, and expected, to have a significant direct interest in the value of our Common Stockshares of common stock through the receipt of equity awards and/or open market purchases, as the case may be. We strive to design our compensation program to stress long-term ownership in Company equity as the means of best aligning the interests of our executives with those of our shareholders.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee have ever been an employee or officer of the Company. Additionally, for the year ended December 31, 2017, none of our executive officers served as a member of the Compensation Committee of another entity where such entity’s executive officers served as a director or a member of our Compensation Committee.



Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on this review and discussion, the Compensation Committee recommended that the foregoing Compensation Discussion and Analysis be included in this proxy statement.amendment to the Annual Report on Form 10-K.

Submitted by the Compensation Committee

Craig A. Johnson, Chairman    
Laura L. Douglass


















































Summary Compensation Table

The following tables and descriptive materials set forthtable presents summary information concerningregarding the total compensation awarded to, earned by or paid to each of the Named Executive Officers for services rendered to us by ourfor the years ended December 31, 2017, 2016 and 2015 (or such shorter period of time that the officers below served in the capacity of a Named Executive Officers during 2016, 2015 and 2014.Officer).
Name and Principal Position Year Salary 
Options
Awards(1)
 
Non-Equity
Incentive Plan
Compensation(2)
 
All Other
Compensation(3)
 Total
George F. Tidmarsh, M.D., Ph.D., President, Chief Executive Officer and Secretary 2016 $557,000
 $3,827,488
 $251,000
 $18,148
 $4,653,636
  2015 $525,000
 $14,871,700
 $223,000
 $18,228
 $15,637,928
  2014 $470,000
 $1,936,979
 $235,000
 $63,930
 $2,705,909
Lakhmir S. Chawla, M.D., Chief Medical Officer(4)
 2016 $411,500
 $1,142,585
 $132,000
 $40,938
 $1,727,023
  2015 $190,000
 $5,190,689
 $119,000
 $52,588
 $5,552,277
Dennis M. Mulroy, Chief Financial Officer(5)
 2016 $340,000
 $1,142,714
 $110,000
 $17,984
 $1,610,698
  2015 $236,513
 $2,172,844
 $72,000
 $9,376
 $2,490,733
Jennifer A. Carver, Chief Operating Officer(6)
 2016 $320,000
 $1,142,714
 $107,000
 $55,381
 $1,625,095

Name and Principal Position Year Salary 
Option
Awards(1)
 
Non-Equity
Incentive Plan
Compensation(2)
 
All Other
Compensation(3)
 Total
George F. Tidmarsh, M.D., Ph.D. 2017 $571,000
 $5,433,528
 $428,000
 $18,115
 $6,450,643
 President, Chief Executive Officer and Secretary 2016 $557,000
 $3,827,488
 $251,000
 $18,148
 $4,653,636
  2015 $525,000
 $14,871,700
 $223,000
 $18,228
 $15,637,928
Lakhmir S. Chawla, M.D. 2017 $431,000
 $1,455,057
 $216,000
 $73,497
 $2,175,554
Chief Medical Officer(4)
 2016 $411,500
 $1,142,585
 $132,000
 $40,938
 $1,727,023
  2015 $190,000
 $5,190,689
 $119,000
 $52,588
 $5,552,277
Dennis M. Mulroy 2017 $359,000
 $1,455,057
 $180,000
 $19,979
 $2,014,036
Chief Financial Officer(5)
 2016 $340,000
 $1,142,714
 $110,000
 $17,984
 $1,610,698
  2015 $236,513
 $2,172,844
 $72,000
 $9,376
 $2,490,733
Jennifer A. Carver 2017 $370,000
 $1,455,057
 $216,000
 $51,159
 $2,092,216
Chief Operating Officer(6)
 2016 $320,000
 $1,142,714
 $107,000
 $55,381
 $1,625,095
James M. Rolke 2017 $350,000
 $1,455,057
 $175,000
 $16,613
 $1,996,670
Chief Scientific Officer(7)
            
1.
This column represents the net aggregate grant dategrant-date fair value, computed in accordance with Financial Accounting Standards Board (FASB)(“FASB”) Accounting Standard Codification (ASC)(“ASC”) Topic 718, for all stock options and other equity awards granted. The 2017 Options Awards include options awarded in December 2017 for 2017 performance. The 2016 optionsOptions Awards include options awarded in January 2017 for 2016 performance. The 2015 options,Options Awards, include options awarded in February 2015 for 2014 performance, options awarded in December 2015 for 2015 performance, new hire options awarded in 2015 and other options awarded in 2015. The assumptions used in calculating the fair value of the stock options and awards can be found under Note 6 to the Financial Statementsconsolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016.2017. These amounts reflect the net grant dateaggregate grant-date fair value for these stock options and awards and do not necessarily correspond to the actual value that will be realized by the Named Executive Officer.
2.The amounts listed represent cash awards earned for the year under the Company’s annual incentive bonus program.
3.The amounts in the column represent the Company’s contribution to the 401(k) plan and life issuance premiums paid by the Company for the Named Executive Officers. In 2017, Dr. Chawla received a housing allowance for Dr. Chawla and travel and housing expenses for Ms. Carver. For 2016, the amounts include (a) the Company’s contribution to the 401(k) plan for Dr. Tidmarsh, Dr. Chawla, Mr. Mulroy and Ms. Carver in the amount of $15,826, $15,128, $14,420$60,000, and $7,023, respectively (b) life insurance premiums paid by the CompanyMs. Carver received $31,123 for Dr. Tidmarsh,travel and housing expenses. In 2016, Dr. Chawla Mr. Mulroy and Ms. Carverreceived a housing allowance in the amount of $2,322, $810, $3,564$25,000 and $3,564, respectively (c) $25,000 housing allowance for Dr. Chawla and (d)Ms. Carver received $44,794 for travel and housing expenses. In 2015, Dr. Chawla received relocation expenses for Ms. Carver.covered by the Company in the amount of $47,500.
For 2015, the amounts include the Company contributions to the 401(k) plans for Dr. Tidmarsh, Dr. Chawla and Mr. Mulroy in the amount of $15,806, $4,750 and $7,000, respectively, and life insurance premiums paid by the Company for Dr. Tidmarsh, Dr. Chawla and Mr. Mulroy in the amount of $2,422, $338 and $2,376, respectively. In addition, Dr. Chawla received relocation expenses covered by the Company in the amount of $47,500.


4.Dr. Chawla joined the Company in July 2015 with an initial annual salary of $380,000.
5.Mr. Mulroy joined the Company in April 2015 with an initial annual salary of $320,000.
6.Ms. Carver became a Named Executive Officer of the Company in January 2016 with an initial annual salary of $300,000.
7.Mr. Rolke became a Named Executive Officer of the Company in January 2017 with an initial annual salary of $350,000.



CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of our median employee’s annual total compensation to the annual total compensation of our Chief Executive Officer (the “CEO Pay Ratio”). Annual total compensation consists of base salary, incentive bonuses, grant-date fair value of equity awards and all other compensation earned. For the year ended December 31, 2017:
the annual total compensation of the median employee was $382,505; and
the annual total compensation of George F. Tidmarsh, M.D., Ph.D, our Chief Executive Officer, was $6,450,643.

The CEO Pay Ratio was 17:1. In accordance with Item 402(u) of Regulation S-K, we identified the median employee by listing all employees as of December 31, 2017. Employees on leave-of-absence were excluded from the list, and salaries and bonuses were annualized for those employees that were not employed for the full year of 2017. The median amount was selected from the annualized list. For simplicity, the value of the Company's contribution to the 401(k) plan, life insurance premiums paid by the Company and medical benefits provided were excluded, as all employees including the Chief Executive Officer are offered the same benefits.

The aggregate grant-date fair value of stock options was computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 718 for all stock options granted. The assumptions used in calculating the fair value of the stock options granted are disclosed in Note 6 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017. These amounts reflect the net aggregate grant-date fair value for these stock options and do not correspond to the actual value that will be realized by the median employee or the Chief Executive Officer.

The CEO Pay Ratio of the companies in our peer group as disclosed for the most recent fiscal year are set forth in the table below. The average CEO Pay Ratio for our peer group listed below is 18:1.
Peer CompanyReported CEO Pay Ratio
Momenta Pharmaceuticals, Inc.30:1
Xencor, Inc.28:1
Dynavax Technologies Corporation23:1
Vanda Pharmaceuticals Inc.21:1
Insmed Incorporated19:1
Synergy Pharmaceuticals Inc.18:1
La Jolla Pharmaceutical Company17:1
Cytokinetics, Incorporated16:1
Heron Therapeutics, Inc.13:1
Esperion Therapeutics, Inc.12:1
Sangamo Therapeutics, Inc.11:1
Acceleron Pharma Inc.8:1


Grants of Plan-Based Awards Table

The following table sets forth certain information regarding grants of plan-based awards for performance in calendar year 2016.during 2017.
 Name 
Grant
Date
 
All Other Option Awards: Number of Securities Underlying Options(#)(1)
 Exercise Price of Option Awards ($/Sh) 
Grant Date Fair Value of Option Awards(2)
 
 George F. Tidmarsh, M.D., Ph.D. 1/4/2017 214,700 $19.19
 $3,827,488
 Lakhmir S. Chawla, M.D. 1/4/2017 64,100 $19.19
 $1,142,585
 Dennis M. Mulroy 1/4/2017 64,100 $19.19
 $1,142,585
 Jennifer A. Carver 1/4/2017 64,100 $19.19
 $1,142,585
Name 
Grant
Date
 
All Other Option
Awards: Number of
Securities Underlying
Options (#)(1)
 
Exercise Price of
Option Awards
($/Sh)
 
Grant Date
Fair Value of
Option Awards(2)
George F. Tidmarsh, M.D., Ph.D. 12/11/2017 183,000 $28.10
 $4,693,099
  12/27/2017 25,000 $32.47
 $740,429
Lakhmir S. Chawla, M.D. 12/11/2017 49,000 $28.10
 $1,256,622
  12/27/2017 6,700 $32.47
 $198,435
Dennis M. Mulroy 12/11/2017 49,000 $28.10
 $1,256,622
  12/27/2017 6,700 $32.47
 $198,435
Jennifer A. Carver 12/11/2017 49,000 $28.10
 $1,256,622
  12/27/2017 6,700 $32.47
 $198,435
James M. Rolke 12/11/2017 49,000 $28.10
 $1,256,622
  12/27/2017 6,700 $32.47
 $198,435
1.TheseStock options were awarded inon January 4, 2017 for performance2016 performance. As these stock options were previously disclosed in calendar year 2016.the Definitive Proxy Statement on Schedule 14A filed on July 31, 2017, they have been excluded from this table.
2.This column reflects the aggregate grant dategrant-date fair value of equity awardsstock options granted in 2017 and calculated in accordance with FASB ASC Topic 718. The assumptions used in calculating the fair value of the stock options and awards can be found under Note 6 to the Financial Statementsconsolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016.2017.



Outstanding Equity Awards at 2016 Year End2017 Year-End

The following table presents, for each of the Named Executive Officers, information regarding outstanding stock options as of December 31, 2017.
 Option Awards Stock Awards Option Awards
Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable 
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options(2)
 
Option
Exercise
Price ($)
 
Option
Expiration
Date(1)
 Number of Unearned Shares, Units or Other Rights that have not Vested (#) Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested($) 
Number of Securities
Underlying Unexercised
Options (#) Exercisable
 
Number of Securities
Underlying Unexercised
Options (#) Unexercisable
 
Option
Exercise
Price ($)
 
Option
Expiration
Date(1)
George F. Tidmarsh, M.D., Ph.D. 113,128
 67,872
(3)— $10.84
 4/3/2024 — — 158,376
 22,624
(2)$10.84
 4/3/2024
 131,250
 168,750
(3)— $19.69
 2/23/2025 — — 206,250
 93,750
(2)$19.69
 2/23/2025
 — — 30,000
(2)$35.58
 8/31/2025 — — 30,000
(3)—
 $35.58
 8/31/2025
 72,251
 216,749
(4)— $28.24
 12/21/2025 — — 144,500
 144,500
(4)$28.24
 12/21/2025
 — 214,700
(4)— $19.19
 1/4/2027 — — —
 214,700
(4)$19.19
 1/4/2027
 — — — — — 542,679
 $9,513,163
 —
 183,000
(4)$28.10
 12/11/2027
 —
 25,000
(4)$32.47
 12/27/2027
Lakhmir S. Chawla, M.D. 41,250
 18,750
(5)— $17.34
 2/6/2025 — — 56,250
 3,750
(5)$17.34
 2/6/2025
 20,000
 40,000
(6)— $35.58
 8/31/2025 — — 35,000
 25,000
(6)$35.58
 8/31/2025
 — — 30,000
(2)$35.58
 8/31/2025 — — 30,000
(3)—
 $35.58
 8/31/2025
 14,676
 44,024
(4)— $28.24
 12/21/2025 — — 29,350
 29,350
(4)$28.24
 12/21/2025
 — 64,100
(4)— $19.19
 1/4/2027 — — —
 64,100
(4)$19.19
 1/4/2027
 —
 49,000
(4)$28.10
 12/11/2027
 —
 6,700
(4)$32.47
 12/27/2027
Dennis M. Mulroy 25,000
 35,000
(4)— $18.23
 4/6/2025 — — 40,000
 20,000
(4)$18.23
 4/6/2025
 20,750
 20,750
(4)$28.24
 12/21/2025
 —
 64,100
(4)$19.19
 1/4/2027
 10,376
 31,124
(4)— $28.24
 12/21/2025 — — —
 49,000
(4)$28.10
 12/11/2027
 — 64,100
(4)— $19.19
 1/4/2017 — — —
 6,700
(4)$32.47
 12/27/2027
Jennifer A. Carver 12,375
 5,625
(3)— $7.26
 2/7/2024 — — 16,875
 1,125
(2)$7.26
 2/7/2024
 6,250
 3,750
(3)— $7.69
 5/22/2024 — — 8,750
 1,250
(2)$7.69
 5/22/2024
 6,250
 5,750
(4)— $19.8
 1/9/2025 — — 9,250
 2,750
(4)$19.80
 1/9/2025
 10,776
 12,724
(4)— $19.69
 2/23/2025 — — 16,654
 6,846
(4)$19.69
 2/23/2025
 — — 15,000
(2)$35.58
 8/31/2025 — — 15,000
(3)—
 $35.58
 8/31/2025
 12,751
 38,249
(4)— $28.24
 12/21/2025 — — 25,500
 25,500
(4)$28.24
 12/21/2025
 — 64,100
(4)— $19.19
 1/4/2027 — — —
 64,100
(4)$19.19
 1/4/2027
 —
 49,000
(4)$28.10
 12/11/2027
 —
 6,700
(4)$32.47
 12/27/2027
James M. Rolke 19,076
 2,724
(2)$10.84
 4/3/2024
 16,654
 6,846
(4)$19.69
 2/23/2025
 17,000
 17,000
(4)$28.24
 12/21/2025
 —
 64,100
(4)$19.19
 1/4/2027
 —
 49,000
(4)$28.10
 12/11/2027
 —
 6,700
(4)$32.47
 12/27/2027
1.All stock options expire ten10 years from the date of grant.grant date.
2.Equity incentive plan awards consist of performance-based stock options. The number of shares issuable were vested at 75% based on the achievement of patient enrollment related to the Phase 3 clinical trial for the LJPC-501 program, by certain target dates.
3.The stock option vests and becomes exercisable with respect to 25% of the underlying shares on the one-year anniversary of the grant date and then vests and becomes exercisable ratably on a quarterly basis over the next three years.
3.These awards consist of performance-based stock options.
4.The stock option vests and becomes exercisable with respect to 25% of the underlying shares on the one-year anniversary of the grant date and then vests and becomes exercisable ratably on a monthly basis over the next three years.


5.The stock option vests and becomes exercisable with respect to 25% of the underlying shares on the grant date of grant and then vests and becomes exercisable ratably on a quarterly basis over the next three years.
6.The stock option vests and becomes exercisable with respect to the underlying shares ratably on a monthly basis over four years afterfrom the grant date.



Option Exercises and Stock Vested in 2016
 Stock Awards Stock Awards
Name Number of Shares
Acquired on Vesting (#)		 
Value Realized
on Vesting ($)
 
Number of Shares
Acquired on Vesting (#)
 
Value Realized
on Vesting ($)
George F. Tidmarsh, M.D., Ph.D. 500,000
 $1,452,120
 542,679
 11,629,611
Lakhmir S. Chawla, M.D. —
 —
 —
 —
Dennis M. Mulroy —
 —
 —
 —
Jennifer A. Carver —
 —
 —
 —
James M. Rolke —
 —

Pension Benefits

We do not maintain any pension benefits.

Non-qualified Defined Contribution and Other Non-qualified Deferred Compensation Plans
    
We do not maintain a non-qualified defined benefit pension plancontribution or aother non-qualified deferred compensation plan.



Potential Payments uponon Termination or Change in Control
    
The following table sets forth information regarding potential payments that would have been made to our Named Executive Officers uponon various termination or change in controlchange-in-control events, assuming such events occurred as of December 31, 2016.2017. Because none of our Named Executive Officers have employment agreements that provide for severance or benefit continuation payments on a termination without cause or a resignation for good reason or change in control, no such potential payments are reported in the table below.


Name 
Without Cause or
With Good Reason
 Without Cause or With Good Reason Within Three Months Before or 12 Months After a Change in Control 
Without Cause or
With Good Reason
 
Without Cause or With
Good Reason Within Three Months Before
or 12 Months After a Change in Control
(in thousands)
George F. Tidmarsh, M.D., Ph.D.        
Severance(1)
 $—
 $—
 $—
 $—
Benefit continuation —
 —
 —
 —
Accelerated vesting of stock awards(2)
 —
 454,064
Accelerated vesting of stock options(2)
 —
 5,759
Total $—
 $454,064
 $—
 $5,759
Lakhmir S. Chawla, M.D.        
Severance(1)
 $—
 $—
 $—
 $—
Benefit continuation —
 —
 —
 —
Accelerated vesting of stock awards(2)
 —
 3,563
Accelerated vesting of stock options(2)
   1,204
Total $—
 $3,563
 $—
 $1,204
Dennis M. Mulroy        
Severance(1)
 $—
 $—
 $—
 $—
Benefit continuation —
 —
 —
 —
Accelerated vesting of stock awards(2)
 —
 —
Accelerated vesting of stock options(2)
 —
 1,393
Total $—
 $—
 $—
 $1,393
Jennifer A. Carver        
Severance(1)
 $—
 $—
 $—
 $—
Benefit continuation —
 —
 —
 —
Accelerated vesting of stock awards(2)
 —
 94,669
Accelerated vesting of stock options(2)
 —
 1,311
Total $—
 $94,669
 $—
 $1,311
James M. Rolke    
Severance(1)
 $—
 $—
Benefit continuation —
 —
Accelerated vesting of stock options(2)
 —
 1,243
Total $—
 $1,243
1.The executive officers'officers’ employment offer letters do not provide for severance benefits uponon termination, with or without a change ofin control. However, pursuant to the terms of the stock options, and equity awards, the executive officers are entitled to accelerated vesting of their equity awards in certain circumstances, as set forth in this table.
2.Represents the value of in-the-money,“in-the-money,” unvested equity awards that would have accelerated if the Named Executive Officers were terminated as a result of a change in control on December 31, 2016,2017, based on the closing price of our Common Stocka share of $17.53common stock of $32.18 on the last trading day of 2017, which was December 31, 2016.29, 2017.

Director Compensation

Retainers and Fees for 20162017. . Directors who are also our employees receive no extra compensation for their service on the Board. In 2016,2017, our non-employee directors received an annual fee of $60,000, which is paid quarterly. The Chairman of the Board, Mr. Tang, has elected to waive all cash compensation for his service as a director.

Option Grants for 20162017. . Each of our non-employee directors is eligible to receive, uponon becoming a non-employee director, a one-time grant of a non-qualified stock option under the Company’s 2013 Equity Incentive Plan in an amount to be


determined by the Board at an exercise price equal to the fair market value of a share of Common Stockcommon stock on the date of grant.grant date. These non-employee director options have a term of 10 years and vest with respect to 1/3rdone-third of the underlying shares on the one-year anniversary of the grant and with respect to the remainder of the underlying shares on a quarterly basis for two years thereafter. Each non-employee director receives an additional grant annually of a non-qualified stock option in an amount to be determined by the Board. These non-employee director options have a term of 10 years and vest fully on the one-year anniversary of the grant.grant date. The exercise price for these additional non-employee director options is the fair market value of our Common Stockthe common stock on the date of their grant.grant date. All outstanding non-employee director options vest in full immediately prior to any change in control. Each non-employee director is also eligible to receive additional options under the Company’s 2013 Equity Incentive Plan at the discretion of the Board. These options vest and become exercisable pursuant to the Company’s 2013 Equity Incentive Plan and the terms of the option grant.



For their service in 2016, each non-employee director was awarded, in January 2017 an option to purchase up to 10,000 shares of Common Stock at $19.19 per share, a price per share equal to the fair value of our Common Stock on the date of grant. The table below sets forth the total compensation paid to our non-employee directors for 2016.2017.
Name 
Fees Earned or
Paid in Cash
 
Stock
Awards
 
Options
Awarded(1)(2)
 Total 
Fees Earned or
Paid in Cash
 
Option
Awards(2)
 Total
Kevin C. Tang(1)
 —
 — $175,362
 $175,362
 —
 $217,635
 $217,635
Laura L. Douglass $60,000
 — $175,362
 $235,362
 $60,000
 $217,635
 $277,635
Craig A. Johnson $60,000
 — $175,362
 $235,362
 $60,000
 $217,635
 $277,635
Robert H. Rosen $60,000
 — $175,362
 $235,362
 $60,000
 $217,635
 $277,635
1.Mr. Tang has elected to waive all cash compensation for his service as a director.
2.Included in this table isThis column reflects the estimatedaggregate grant-date fair value of awards madestock options granted in 2017 and calculated in accordance with FASB ASC Topic 718. The amounts do not include options awarded in January 2017 relating to 2016 service.services. On January 4, 2017, each non-employee director was awarded an option to purchase up to 10,000 shares of common stock at $19.19 per share, a price per share equal to the fair value of the common stock on the grant date. This column includes the options awarded in December 2017 relating to 2017 services. In December 2017, each non-employee director was awarded an option to purchase up to 10,000 shares of common stock at $28.10 per share, a price per share equal to the fair value of the common stock on the grant date.

Certain Relationships and Related-PartyRelated Party Transactions

Pursuant to our Code of Ethics, our executive officers, directors and employees must disclose transactions involving actual or apparent conflicts of interest, such as related-partyrelated party transactions, to the Chairperson of the Audit Committee. Additionally, the Audit Committee is responsible for review and approval of all related-partyrelated party transactions in which any officer, director or shareholder has a direct or indirect interest and would be required to be disclosed under Item 404(a) of SEC Regulation S-K, and has written policies and procedures for reviewing, approving or ratifying any transaction required to be reported under Item 404(a) of SEC Regulation S-K. In reviewing related-partyrelated party transactions, the Audit Committee evaluates any transaction in which a “related person” (as defined in Item 404(a) of SEC Regulation S-K) was, or is to be, a participant and the amount involved exceeds $120,000, and in which the related person had, or will have, a direct or indirect material interest. The Audit Committee also will consider whether the proposed terms are at least as favorable to the Company as could be obtained from unaffiliated third parties and will confirm that there is a bona fide business purpose for the transaction.

During the year ended December 31, 2015, the Company entered into a services agreement with a third party that is controlled by investment funds affiliated with the Chairman of the Company’s Board. Pursuant to the services agreement, the Company provides certain services to this related party, including, but not limited to, research and development and clinical trial design and management for the project undertaken. In exchange for providing such services, the Company receives payments at a negotiated, arms-length rate that has been reviewed and approved by the Company’s Audit Committee. As a result, the consideration received by the Company for its services is considered to be2017, there were no less favorable to the Company than comparable terms that the Company could obtain from an unaffiliated third party in an arms-length transaction. The services agreement may be canceled by either party upon 60-days’ written notice to the other party.

During the year ended December 31, 2016, the Company recognized approximately $616,000 of contract revenue for services and costs provided under the services agreement.

In addition,transactions between the Company and any “related person” where the Company’s Chief Executive Officer hold a non-voting profit interestamount involved exceeded $120,000, other than compensation arrangements described elsewhere in the related party, which provides the potential to receive a portion of the future distributions of profits, if any, that may be distributed by the third party entity.this Proxy Statement.



Equity Compensation Plan Information

The following table provides information as of December 31, 20162017 with respect to shares of our Common Stockcommon stock that may be issued under our equity compensation plans.
Plan Category Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) Number of Securities to Be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) (c)
Equity compensation plans approved by security holders 2,567,462
(1)$21.14
 1,960,200
 5,977,302
(1) 
$24.25
 1,875,732
Equity compensation plans not approved by security holders 60,000
 $18.23
 —
 60,000 $18.23
 —
Total 2,627,462
 $21.07
 1,960,200
 6,037,302 $24.19
 1,875,732
1.Outstanding options to purchase shares of our Common Stockcommon stock under the La Jolla Pharmaceutical CompanyCompany’s 2013 Equity Incentive Plan.



SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of our Common Stockshares of common stock as of July 1, 2017,2018, based on information available to us and filings with the SEC by:
Each of our directors;
Each of our Named Executive Officers;
All of our current directors and executive officers as a group; and
Each persons or group of affiliated persons known by us to be a beneficial owner of more than 5% of our Common Stock.shares of common stock.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose. Under these rules, shares of common stock issuable under stock options that are exercisable within 60 days of July 1, 20172018 are deemed outstanding for the purpose of computing the percentage ownership of the person holding the options, but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.



Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each shareholder named in the following table possesses sole voting and investment power over his, her or its shares of Common Stock,common stock, except for those jointly owned with that person’s spouse. Percentage of beneficial ownership of Common Stockcommon stock is based on 22,123,45626,218,522 shares of Common Stockcommon stock outstanding as of July 1, 2017.2018. Unless otherwise noted below, the address of each person listed on the table is c/o La Jolla Pharmaceutical Company, 10182 Telesis4550 Towne Centre Court, 6th Floor, San Diego, California 92121.
Name and Address 
Shares of Common Stock Owned(1)
 Shares with Right to Acquire Within 60 Days Total Beneficial Ownership Percentage of Common Stock 
Shares of
Common Stock Owned(1)
 
Shares with
Right to Acquire
Within 60 Days
 
Total
Beneficial
Ownership
 
Percentage of
Common Stock
Greater than 5% Shareholders                
Tang Capital Partners, LP(2)
 3,440,419
 —
 3,440,419
 15.55%
FMR LLC(3)
 2,738,101
 —
 2,738,101
 12.38%
Broadfin Capital, LLC(4)
 1,510,316
 —
 1,510,316
 6.83%
RTW Investments, LLC(5)
 1,086,037
 263,029
 1,349,066
 6.03%
Perceptive Advisors LLC(6)
 1,319,274
 —
 1,319,274
 5.96%
Janus Capital Management LLC(7)
 1,140,139
 —
 1,140,139
 5.15%
        
Perceptive Advisors LLC(2)
 4,313,611
 —
 4,313,611
 16.45%
Tang Capital Partners, LP(3)
 4,138,893
 —
 4,138,893
 15.79%
FMR LLC(4)
 3,599,248
 —
 3,599,248
 13.73%
Jennison Associates LLC(5)
 2,220,482
 —
 2,220,482
 8.47%
Consonance Capital Management LP(6)
 2,079,311
 —
 2,079,311
 7.93%
Broadfin Capital LLC(7)
 1,333,239
 —
 1,333,239
 5.09%
RTW Investments, LLC(8)
 1,063,170
 263,029
 1,326,199
 5.01%
                
Directors and Executive Officers                
Kevin C. Tang(2)
 3,440,419
 38,000
 3,478,419
 15.70%
Kevin C. Tang(3)
 4,138,893
 48,000
 4,186,893
 15.94%
George F. Tidmarsh, M.D., Ph.D. 1,376,086
 484,981
 1,861,067
 8.04% 1,302,686
 751,152
 2,053,838
 7.62%
Lakhmir S. Chawla, M.D. 2,085
 135,708
 137,793
 * 2,085
 198,256
 200,341
 *
Laura L. Douglass —
 56,250
 56,250
 * 500
 56,500
 57,000
 *
Craig A. Johnson —
 56,250
 56,250
 * —
 67,000
 67,000
 *
Robert H. Rosen —
 38,000
 38,000
 * —
 48,000
 48,000
 *
Dennis M. Mulroy 500
 52,292
 52,792
 * 500
 103,040
 103,540
 *
Jennifer A. Carver 3,500
 83,071
 86,571
 * 5,500
 134,189
 139,689
 *
James M. Rolke 73,328
 46,577
 119,905
 * 73,328
 90,406
 163,734
 *
All Directors and Executive Officers as a group 4,895,918
 991,129
 5,887,047
 25.47% 5,523,492
 1,496,543
 7,020,035
 25.33%

* Represents beneficial ownership of less than one percent (1%).percent.
1.Shares of Common Stockcommon stock beneficially owned are based uponon the Company’s review of Statement of Beneficial Ownership Filings on Schedules 13D, 13D/A, 13G and 13G/A;A, Form 4s filed since those schedules; and unless otherwise indicated, does not include any shares purchased as part of the Common Stockcommon stock offering in March 2017.2018. Shares of Common Stockcommon stock owned can vary since the date of such filings.


2.Based on a Quarterly Holdings Report on Form 13F filed with the SEC on May, 15, 2018 by Perceptive Advisors, LLC, which serves as the investment manager for Perceptive Life Sciences Master Fund, Ltd. Joseph Edelman serves as the managing member of Perceptive Advisors, LLC, which reports having sole voting and dispositive power with respect to the 4,313,611 shares reported as beneficially held. The address of the forgoing entities and persons is 51 Astor Place, 10th Floor, New York, NY 10003.
3.
Based uponon a Schedule 13D/A filed with the SEC on March 6, 2017.20, 2018. The Schedule 13D/A was filed jointly filed by Tang Capital Partners, LP, Tang Capital Management, LLC and Kevin C. Tang. Tang Capital Partners, LP shares voting and dispositive power over such shares with Tang Capital Management, LLC and Kevin Tang. The shares of Common Stockcommon stock owned and beneficially owned by Mr. Tang include shares of Common Stockcommon stock owned by Tang Capital Partners, LP and other shares of Common Stockcommon stock for which Mr. Tang shares voting and/or dispositive power. Mr. Tang has sole voting and dispositive power over 38,00048,000 shares underlying stock options exercisable within 60 days of July 1, 2017.2018. The beneficial ownership for Tang Capital Partners, LP and Mr. Tang excludes approximately 6,067,784 shares of Common Stockcommon stock that are potentially issuable uponon conversion of shares of the Company’s Series C-12 Convertible Preferred Stock. Mr. Tang’s beneficial ownership excludes an additional approximately 270,716 shares of Common Stockcommon stock that are potentially issuable uponon conversion of shares of the Company’s Series C-12 Convertible Preferred Stock. The shares of Series C-12 Convertible Preferred Stock have a limit on the ability of the holder to convert, to the extent that the holder would beneficially own greater than 9.999% of shares of the Common StockCompany’s common stock following such conversion, provided that the holder has the ability to waive, increase or decrease this limitation on conversion uponon providing the Company with 61 days of prior written notice. The beneficial ownership for Tang Capital Partners, LP, includes 149,254 shares of Common Stock purchased in the Common Stock offering in March 2017. Mr. Tang disclaims beneficial ownership of all shares reported herein except to the extent of his pecuniary interest therein. The address of the foregoing entities and person is 4747 Executive Drive, Suite 510, San Diego, CA 92121. Mr. Tang is the Chairman of the Board.
3.4.Based uponon a Schedule 13G/A filed with the SEC on February 14, 2017.13, 2018. The Schedule 13G/A was filed jointly by FMR LLC, Abigail P. Johnson and Select Biotechnology Portfolio.Portfolio (collectively, “FMR”). FMR LLC reports it has no sole voting power with respect to 1,207,898 shares and sole dispositive power with respect to 3,321,786 shares. The address of the entities and persons is 245 Summer Street, Boston, MA 02210.


has sole dispositive power with respect to 2,738,101 shares. The address of the entities and persons is 245 Summer Street, Boston, MA 02210.
4.5.Based uponon a Schedule 13G filed with the SEC on February 10, 2017.5, 2018. Jennison Associates LLC reports it has sole voting power and has no sole dispositive power with respect to 2,220,482 shares. The address of the entities and persons is 466 Lexington Avenue, New York, NY 10017. Jennison Associates LLC is a subsidiary of Prudential Financial, Inc. Prudential Financial Inc. filed a Schedule 13G/A with the SEC on January 16, 2018. The Schedule 13G/A was filed jointly by The Prudential Insurance Company of America, Jennison Associates LLC and Quantitative Management Associates LLC, beneficial owners of 185,699, 2,220,482 and 1,190 shares, respectively.
6.Based on a Schedule 13G filed with the SEC on February 14, 2018. The Schedule 13G was filed jointly by Consonance Capital Management LP, Consonance Capital Opportunity Fund Management LP, Mitchell Blutt and Consonance Capman GP LLC. Consonance Capital Management LP share voting and dispositive power over such shares. The address of the entities and persons is 1370 Avenue of the Americas, Floor 33, New York, NY 10019.
7.
Based on Schedule 13G/A filed with the SEC on January 11, 2018. The Schedule 13G/A was filed jointly by Broadfin Capital, LLC, Broadfin Healthcare Master Fund, Ltd. and Kevin Kotler. Broadfin Capital, LLC, Broadfin Healthcare Master Fund, Ltd. and Kevin Kotler share voting and dispositive power over such shares. The address of the forgoing entities and person is 300 Park Avenue, 25th25th Floor, New York, NY 10022.
5.8.
Based uponon a Schedule 13G filed with the SEC on February 22, 2017.14, 2018. The Schedule 13G was filed jointly filed by RTW Investments, LP, RTW Master Fund, Ltd. and Roderick Wong. RTW Investments, LP share voting and dispositive power over such shares. The beneficial ownership for RTW Investments, LLC includes approximately 263,029 shares of Common Stockcommon stock that are potentially issuable uponon conversion of shares of the Company’s Series C-12 Convertible Preferred Stock. The address of the foregoing entities and person is 250 West 55th Street, 16th Floor, Suite A, New York, NY 10019.
6.Based upon a Schedule 13G filed with the SEC on February 14, 2017. The Schedule 13G was jointly filed by Perceptive Advisors LLC, Joseph Edelman and Perceptive Life Sciences master Fund, Ltd. Perceptive Advisors LLC and Joseph Edelman share voting and dispositive power over such shares. The address of the forgoing entities and person is 51 Astor Place, 10th Floor, New York, NY 10003.
7.Based upon a Schedule 13G filed with the SEC on February 13, 2017. Janus Capital Management LLC has sole voting and sole dispositive power over such shares. The address of the forgoing entities and person is 151 Detroit Street, Denver, CO 80206.



OTHER INFORMATION

Other Business

We know of no other business to be presented at the Annual Meeting. If any other business were to properly come before the Annual Meeting, it is intended that the shares represented by proxies would be voted with respect thereto in accordance with the best judgment of the persons named in the accompanying form of proxy.proxy card or voting instruction form.

Shareholder Proposals

Shareholders who wish to have proposals considered for inclusion in the proxy statementProxy Statement and form of proxy for our 20182019 Annual Meeting, including director nominees, for directors, must cause their proposals to be received in writing by our Secretary at the address set forth on the first page of this proxy statement4550 Towne Centre Court, San Diego, California, 92121 no later than March 31, 2018,2019, provided that if the Company moves the date of the 20182019 Annual Meeting of Shareholders by more than 30 days from the anniversary date of the Annual Meeting, then the deadline for submission of proposals will be a “reasonable time” before the Company begins to print and send its proxy materials for the 20182019 Annual Meeting of Shareholders (as defined in Rule 14a-8 under the Securities Exchange Act of 1934). Any proposal should be addressed to our Secretary and may be included in next year’s proxy materials only if such proposal complies with our Bylaws, as discussed above, and the rules and regulations promulgated by the SEC. Nothing in this section shall be deemed to require us to include in our proxy statement or our proxy relating to any annual meetingProxy Statement any shareholder proposal or nomination that does not meet all of the requirements for inclusion established by the SEC.

Further, our Bylaws require that a shareholder give our Secretary timely written notice of any proposal or nomination of a director. To be timely, such written notice must be received by our Secretary not less than 90 days nor more than 120 days prior to a scheduled annual meeting of shareholders, or if less than 95 days’ notice or prior public disclosure of the date of the scheduled annual meeting of shareholders is given or made, such written notice must be received by our Secretary not later than the close of business on the seventh day following the earlier of the date of the first public announcement of the date of such meeting or the date on which such notice of the scheduled meeting was mailed.

Any notice to our Secretary regarding a shareholder proposal must include, as to each matter the shareholder proposes to bring before the meeting:Annual Meeting: (i) a brief description of the business desired to be brought before the meetingAnnual Meeting and the reasons for conducting such business at the meeting;Annual Meeting ; (ii) the name and address, as they appear on our books, of the shareholder proposing such business and any shareholders known by such shareholder to be supporting such proposal; (iii) the class and number of shares of our stock that are beneficially owned by the shareholder and by any other shareholder known by such shareholder to be supporting such matter on the date of such shareholder notice; and (iv) any material interest of the shareholder in such business.

Any notice to our Secretary regarding a nomination for the election of a director must include: (i) the name and address of the shareholder who intends to make the nomination; (ii) the name and address of the person or persons to be nominated; (iii) the class and number of shares of our stock that are beneficially owned by the shareholder; (iv) a representation that such shareholder intends to appear in person or by proxy at the annual meeting and nominate the person or persons specified in the notice; (v) a description of all arrangements or understandings between the shareholder and each director nominee and any other person or persons (naming such persons) pursuant to which the nomination or nominations are to be made by the shareholder; (vi) such other information regarding each director nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had the director nominee been nominated, or intended to be nominated, by the Board; and (vi) the consent of each director nominee to serve as a director if so elected.

Incorporation by Reference

The reportReport of the audit committeeAudit Committee shall not be deemed to be soliciting material or to be filed with the SEC under the Securities Act of 1933 or the Securities Exchange Act of 1934 or incorporated by reference in any document so filed.

Householding

The Company may satisfy SEC rules regarding delivery of proxy materials, including the proxy statement, annual reportProxy Statement, Annual Report, and noticeNotice to shareholders,Shareholders, by delivering a single noticeNotice to shareholdersShareholders and, if applicable, a single set of proxy materials to an address shared by two or more Company shareholders. Some banks, brokers and other intermediaries may be participating in this practice of “householding” proxy statements and annual reports. This rule benefits both the Company and


its shareholders, as it reduces the volume of duplicate information received at a shareholder’s house and helps reduce the Company’s expenses. Each shareholder, however, will continue to receive individual proxy cards or voting instruction forms.



Shareholders who have previously received a single set of disclosure documents may request their own copy this year or in future years by contacting their bank, broker or other nominee record holder. The Company will also deliver a separate copy of this proxy statementProxy Statement to any shareholder uponon written request to La Jolla Pharmaceutical Company, 10182 Telesis4550 Towne Centre Court, 6th Floor, San Diego, California 92121, Attn: George Tidmarsh, or uponon oral request by calling (858) 207-4264.

Similarly, shareholders who have previously received multiple copies of disclosure documents may write to the address or call the phone number listed above to request delivery of a single copy of these materials in the future.

Availability of Additional Information

Along with this proxy statement,Proxy Statement, we have provided each shareholder entitled to vote a copy of our Annual Report on Form 10-K for ourthe year ended December 31, 2016,2017, including all amendments thereto. We will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2016,2017, including all amendments thereto, upon the written or oral request of any shareholder or beneficial owner of our Common Stock.common stock. Written requests should be directed to the following address: Investor Relations, La Jolla Pharmaceutical Company, 10182 Telesis4550 Towne Centre Court, 6th Floor, San Diego, California 92121. Telephonic requests should be directed to (858) 207-4264.

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20549-2521. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-732-0330. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. You may also find the materials we file with the SEC on the “Investor Relations” section of our website at www.ljpc.com. Information on our website is not incorporated by reference into, or made a part of, this proxy statement.Proxy Statement.


BY ORDER OF THE BOARD OF DIRECTORS
 
/s/ George F. Tidmarsh
George F. Tidmarsh, M.D., Ph.D.
President, Chief Executive Officer and Secretary

July 31, 2017August 22, 2018
San Diego, California



Appendix A

2013 Equity Incentive2018 Employee Stock Purchase Plan

LA JOLLA PHARMACEUTICAL COMPANY
AMENDED AND RESTATED
2013 EQUITY INCENTIVE2018 EMPLOYEE STOCK PURCHASE PLAN

1. DEFINED TERMS

Exhibit APurpose., which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.

2. PURPOSE

The purpose of the 2018 Employee Stock Purchase Plan, has been establishedincluding any sub-plans or appendices hereto (the “Plan”), is to advance the interestsprovide an opportunity for Employees of La Jolla Pharmaceutical Company, a California corporation (the “Company”) and its Participating Subsidiaries to purchase Common Stock of the Company by providing for the grantand thereby to Participants of Stock-based and otherhave an additional incentive Awards.

3. ADMINISTRATION

The Administrator has discretionary authority, subject onlyto contribute to the express provisionsprosperity of the Company. It is the intention of the Company that the Plan to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive(excluding any sub-plans thereof except as expressly provided in the terms and conditions of any Award; prescribe forms, rules and procedures; and otherwise do all things necessary to carry out the purposessuch sub-plan) qualify as an “Employee Stock Purchase Plan” under Section 423 of the Plan. In the caseU.S. Internal Revenue Code of any Award intended to be eligible for the performance-based compensation exception under Section 162(m)1986, as amended (the “Code”), the Administrator will exercise its discretion consistent with qualifying the Award for that exception. Determinations of the Administrator made under the Plan will be conclusive and will bind all parties.

4. LIMITS ON AWARDS UNDER THE PLAN

(a) Number of Shares. The maximum number of shares of Stock that may be delivered upon satisfaction of Awards under the Plan shall be 8,100,000 sharesadministered in accordance with this intent. In addition, the Plan authorizes the grant of Stock (the “Reserve”). The limits set forthoptions pursuant to sub-plans or special rules adopted by the Committee designed to achieve desired tax or other objectives in this Section 4(a) shall be construed to comply with Section 422. Without limiting the generalityparticular locations outside of the foregoing, no more than 8,100,000 shares of Stock may be issuedUnited States or to achieve other business objectives in satisfactionthe determination of the exercise or surrender of ISOs granted under the Plan. To the extent consistentCommittee, which sub-plans shall not be required to comply with the requirements of Section 422 and with other applicable423 of the Code or all of the specific provisions of the Plan, including but not limited to terms relating to eligibility, Offering Periods or Purchase Price.

2.Definitions.

(a)“Applicable Law” means the legal requirements (includingrelating to the administration of an employee stock purchase plan under applicable U.S. state corporate laws, U.S. federal and applicable state securities laws, the Code, any stock exchange requirements), Stock issued under awardsrules or regulations and the applicable laws of an acquired company that are converted, replaced,any other country or adjustedjurisdiction, as such laws, rules, regulations and requirements shall be in connection with the acquisition shall not reduce the number of shares available for Awards under the Plan.place from time to time.

(b)Type of Shares. Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company. No fractional shares of Stock will be delivered under the Plan.

(c) Section 162(m) Limits. The maximum number of shares subject to Awards that may be granted to any person in any calendar year and the maximum number of shares of Stock subject to SARs granted to any person in any calendar year will each be equal to 500,000 shares of Stock, provided that such limit is established solely for 162(m) purposes and that the excess portion of any award(s) granted above such limit shall not be deductible for purposes of Section 162(m). The maximum amount payable to any person in any year under Cash Awards will be $250,000. The foregoing provisions will be construed in a manner consistent with Section 162(m).

5. ELIGIBILITY AND PARTICIPATION

The Administrator will select Participants from among those key Employees and directors of, and consultants and advisors to, the Company or its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its Affiliates; provided, that, subject to such express exceptions, if any, as the Administrator may establish, eligibility shall be further limited to those persons as to whom the use of a Form S-8 registration statement is permissible. Eligibility for ISOs is limited to employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code.



6. RULES APPLICABLE TO AWARDS

(a) All Awards

(1) Award Provisions. The Administrator will determine the terms of all Awards, subject to the limitations provided herein. By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant agrees to the terms of the Award and the Plan. Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.

(2) Term of Plan. No Awards may be made after September 24, 2023, although previously granted Awards may continue beyond that date in accordance with their terms.

(3) Transferability. Neither ISOs nor, except as the Administrator otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3), other Awards may be transferred other than by will or by the laws of descent and distribution, and during a Participant’s lifetime ISOs (and, except as the Administrator otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3), other Awards requiring exercise) may be exercised only by the Participant. The Administrator may permit Awards, other than ISOs, to be transferred by gift, subject to such limitations as the Administrator may impose.

(4) Vesting, Etc. The Administrator may determine the time or times at which an Award will vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable. Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration. Unless the Administrator expressly provides otherwise, however, the following rules will apply:

(A) Immediately upon the cessation of the Participant’s Employment and except as provided in (B) and (C) below, each Award requiring exercise that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate, and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited.

(B) Subject to (C) and (D) below, all Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon terminate.

(C) All Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the Participant’s death, to the extent then exercisable, will remain exercisable for the lesser of (i) the one year period ending with the first anniversary of the Participant’s death or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon terminate.

(D) All Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation of Employment if the Administrator, in its sole discretion, determines that such cessation of Employment has resulted for reasons which cast such discredit on the Participant as to justify immediate termination of the Award.

(5) Taxes. The delivery, vesting or retention of Stock under an Award is conditioned upon full satisfaction by the Participant of all tax withholding requirements with respect to the Award. The Administrator will prescribe such rules for the withholding of taxes as it deems necessary. The Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements (but not in excess of the minimum withholding required by law).

(6) Dividend Equivalents, Etc. The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award. Any entitlement to dividend equivalents or similar entitlements shall be established and administered consistent either with exemption from, or compliance with, the requirements of Section 409A.



(7) Rights Limited. Nothing in the Plan will be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a shareholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Employment for any reason, even if the termination is in violation of an obligation of the Company or any Affiliate to the Participant.

(8) Section 162(m). This Section 6(a)(8) applies to any Performance Award intended to qualify as performance-based for the purposes of Section 162(m) other than a Stock Option or SAR. In the case of any Performance Award to which this Section 6(a)(8) applies, the Plan and such Award will be construed to the maximum extent permitted by law in a manner consistent with qualifying the Award for such exception. With respect to such Performance Awards, the Administrator will pre-establish, in writing, one or more specific Performance Criteria no later than 90 days after the commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the Award as performance-based under Section 162(m)). Prior to grant, vesting or payment of the Performance Award, as the case may be, the Administrator will certify whether the applicable Performance Criteria have been attained and such determination will be final and conclusive. No Performance Award to which this Section 6(a)(8) applies may be granted after the first meeting of the shareholders of the Company held in the fifth year following the year in which the shareholders last approved the list of possible performance measures specified in the definition of “Performance Criteria” until the listed performance measures set forth in the definition of “Performance Criteria” (as originally approved or as subsequently amended) have been resubmitted to and reapproved by the shareholders of the Company in accordance with the requirements of Section 162(m) of the Code, unless such grant is made contingent upon such approval.

(9) Coordination with Other Plans. Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or its Affiliates. For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or its Affiliates may be settled in Stock (including, without limitation, Unrestricted Stock) if the Administrator so determines, in which case the shares delivered shall be treated as awarded under the Plan (and shall reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 4). In any case where an award is made under another plan or program of the Company or its Affiliates and such award is intended to qualify for the performance-based compensation exception under Section 162(m), and such award is settled by the delivery of Stock or another Award under the Plan, the applicable Section 162(m) limitations under both the other plan or program and under the Plan shall be applied to the Plan as necessary (as determined by the Administrator) to preserve the availability of the Section 162(m) performance-based compensation exception with respect thereto.

(10) Section 409A. Each Award shall contain such terms as the Administrator determines, and shall be construed and administered, such that the Award either (i) qualifies for an exemption from the requirements of Section 409A, or (ii) satisfies such requirements.

(11) Certain Requirements of Corporate Law. Awards shall be granted and administered consistent with the requirements of applicable California law relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case, as determined by the Administrator.

(b) Awards Requiring Exercise

(1) Time And Manner Of Exercise. Unless the Administrator expressly provides otherwise, an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator), which may be an electronic notice, signed (including electronic signature in form acceptable to the Administrator) by the appropriate person and accompanied by any payment required under the Award. If the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.

(2) Exercise Price. The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise shall be 100% (in the case of an ISO granted to a ten-percent shareholder within the meaning of subsection (b)(6) of Section 422, 110%) of the fair market value of the Stock subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant. To the extent the Company has a class of securities listed for trading on the NASDAQ Stock Market, no Award, once granted, may be re-priced other than in accordance with the applicable shareholder approval requirements of NASDAQ. Fair market value shall be determined by the Administrator consistent with the applicable requirements of Section 422 and Section 409A.



(3) Payment Of Exercise Price. Where the exercise of an Award is to be accompanied by payment, payment of the exercise price shall be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of unrestricted shares of Stock that have a fair market value equal to the exercise price, subject to such minimum holding period requirements, if any, as the Administrator may prescribe, (ii) through a broker-assisted exercise program acceptable to the Administrator, (iii) by other means acceptable to the Administrator, or (iv) by any combination of the foregoing permissible forms of payment. The delivery of shares in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.

(4) Maximum Term. Awards requiring exercise will have a maximum term not to exceed ten (10) years from the date of grant (five (5) years from the date of grant in the case of an ISO granted to a ten-percent shareholder described in Section 6(b)(2)).

7. EFFECT OF CERTAIN TRANSACTIONS

(a) Mergers, etc. Except as otherwise provided in an Award, the following provisions shall apply in the event of a Covered Transaction:

(1) Assumption or Substitution. If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may provide for the assumption of some or all outstanding Awards or for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.

(2) Cash-Out of Awards. If the Covered Transaction is one in which holders of Stock will receive a payment (whether cash, non-cash or a combination of the foregoing) upon consummation, then subject to Section 7(a)(5) the Administrator may provide for payment (a “cash-outBoard”), with respect to some or all Awards or any portion thereof, equal in means the case of each affected Award or portion thereof to the excess, if any, of (A) the fair market value of one share of Stock (as determined by the Administrator in its reasonable discretion) times the number of shares of Stock subject to the Award or such portion, over (B) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of an SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Administrator determines; provided, that the Administrator shall not exercise its discretion under this Section 7(a)(2) with respect to an Award or portion thereof providing for “nonqualified deferred compensation” subject to Section 409A in a manner that would constitute an extension or acceleration of, or other change in, payment terms if such change would be inconsistent with the applicable requirements of Section 409A.

(3) Other Actions. If the Covered Transaction (whether or not there is an acquiring or surviving entity) is one in which there is no assumption, substitution or cash-out, all outstanding Awards requiring exercise will cease to be exercisable and all Awards providing for the future delivery of Stock (including Stock Units and Performance Awards to the extent consisting of Stock Units) shall expire, in each case after such payment or other consideration, if any, as the Administrator deems equitable in the circumstances, as of the effective time of the Covered Transaction.

(4) Termination of Awards Upon Consummation of Covered Transaction. Each Award will terminate upon consummation of the Covered Transaction, other than the following: (i) Awards assumed pursuant to Section 7(a)(1) above; (ii) Awards converted pursuant to the proviso in Section 7(a)(3) into an ongoing right to receive payment other than Stock; and (iii) outstanding shares of Restricted Stock (which shall be treated in the same manner as other shares of Stock, subject to Section 7(a)(5)).

(5) Additional Limitations. Any share of Stock, cash or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction. For purposes of the immediately preceding sentence, a cash-out under Section 7(a)(2) above or the acceleration of exercisability of an Award under Section 7(a)(3) above shall not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition. In the case of Restricted Stock that does not vest in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.



(b) Changes in and Distributions With Respect to Stock

(1) Basic Adjustment Provisions. In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure, the Administrator shall make appropriate adjustments to the maximum number of shares specified in Section 4(a) that may be delivered under the Plan and to the maximum share limits described in Section 4(c), and shall also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change.

(2) Certain Other Adjustments. The Administrator may also make adjustments of the type described in Section 7(b)(1) to take into account distributions to shareholders other than those provided for in Section 7(a) and Section 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder, having due regard for the qualification of ISOs under Section 422, the requirements of Section 409A, and for the performance-based compensation rules of Section 162(m), where applicable.

(3) Continuing Application of Plan Terms. References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7.

8. LEGAL CONDITIONS ON DELIVERY OF STOCK

The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if the outstanding Stock is, at the time of delivery, listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.

9. AMENDMENT AND TERMINATION

The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided, that except as otherwise expressly provided in the Plan, the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time of the Award. Any amendments to the Plan shall be conditioned upon shareholder approval only to the extent, if any, such approval is required by law (including the Code and applicable stock exchange requirements), as determined by the Administrator.

10. OTHER COMPENSATION ARRANGEMENTS

The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to award a person bonuses or other compensation in addition to Awards under the Plan.

11. MISCELLANEOUS

(a) Waiver of Jury Trial. By accepting an Award under the Plan, each Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury. By accepting an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers.



(b) Limitation of Liability. Notwithstanding anything to the contrary in the Plan, neither the Company, nor any Affiliate, nor the Administrator, nor any person acting on behalf of the Company, any Affiliate, or the Administrator, shall be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award; provided, that nothing in this Section 11(b) shall limit the ability of the Administrator or the Company, in its discretion, to provide by separate express written agreement with a Participant for a gross-up payment or other payment in connection with any such acceleration of income or additional tax.

12. ESTABLISHMENT OF SUB-PLANS

The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Board will establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Administrator’s discretion under the Plan as the Board deems necessary or desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board deems necessary or desirable. All supplements adopted by the Board will be deemed to be part of the Plan, but each supplement will apply only to Participants within the affected jurisdiction and the Company will not be required to provide copies of any supplement to Participants in any jurisdiction that is not affected.

13. GOVERNING LAW

Except as otherwise provided by the express terms of an Award agreement or under a sub-plan described in Section 12, the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of our based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof will be governed by and construed in accordance with the domestic substantive laws of the State of California without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.



EXHIBIT A
Definition of Terms

The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:

“Administrator”: The Board, except that the Board may delegate (i) to one or more of its members (or one or more other members of the Board) such of its duties, powers and responsibilities as it may determine; and (ii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, the term “Administrator” shall include the person or persons so delegated to the extent of such delegation.

“Affiliate”: Any corporation or other entity that stands in a relationship to the Company that would result in the Company and such corporation or other entity being treated as one employer under Section 414(b) and Section 414(c) of the Code.

“Award”: Any or a combination of the following:
(i) Stock Options.
(ii) SARs.
(iii) Restricted Stock.
(iv) Unrestricted Stock.
(v) Stock Units, including Restricted Stock Units.
(vi) Performance Awards.
(vii) Cash Awards.
(viii) Awards (other than Awards described in (i) through (vii) above) that are convertible into or otherwise based on Stock.

“Board”: The Board of Directors of the Company.

“Cash Award”:(c) An Award denominated in cash.

“Code”: The U.S.Code” means the Internal Revenue Code of 1986, as amended from time to time, amended and in effect, or any successor statute as from time to time in effect.the rulings and regulations issued thereunder.

“Company”:(d) La Jolla Pharmaceutical Company,“Commencement Date” means, with respect to a California corporation.given Offering Period, the first Trading Day during such Offering Period.

“Covered Transaction”: (e)Any of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which“Committee” means the Company is not the surviving corporation or which results in the acquisition of all or substantially allCompensation Committee of the Company’s then outstanding Common Stock by a single personBoard (or any successor committee) or entitythe officer, officers or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company. Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determinedcommittee as designated by the Administrator),Board to administer the Covered Transaction shall be deemed to have occurred upon consummation of the tender offer.Plan in accordance with Section 15.

“Employee”:(f) Any person who is employed“Common Stock” means the common stock of the Company, par value $0.0001 per share, or any securities into which such Common Stock may be converted.

(g)“Compensation” means the total compensation paid by the Company or an Affiliate.



“Employment”: A Participant’s employment or other service relationship with the Company and its Affiliates. Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to the Company or its Affiliates. If a Participant’s employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant’s Employment will be deemed to have terminated when the entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates. Notwithstanding the foregoing and the definition of “Affiliate” above, in construing the provisions of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section 409A) upon a termination or cessation of Employment, references to termination or cessation of employment, separation from service, retirement or similar or correlative terms shall be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations. The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred. Any such written election shall be deemed a part of the Plan.

“ISO”: A Stock Option intended to be an “incentive stock option” within the meaning of Section 422. Each option granted pursuant to the Plan will be treated as providing by its terms that it is to be a non-incentive stock option unless, as of the date of grant, it is expressly designated as an ISO.

“Participant”: A person who is granted an Award under the Plan.

“Performance Award”: An Award subject to Performance Criteria. The Committee in its discretion may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify.

“Performance Criteria”: Specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m), a Performance Criterion will mean an objectively determinable measure of performance relating to any or any combination of the following (measured either absolutely or by reference to an index or indicesEmployee with respect to an Offering Period, including salary, commissions, overtime, shift differentials, performance-based cash bonuses and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation,any item of compensation considered by the Company to be part of the Employee's regular earnings, but excluding items not considered by the Company to be part of the Employee's regular earnings. Items excluded from the definition of “Compensation” include but are not limited to such items as relocation bonuses, expense reimbursements, certain bonuses paid in connection with mergers and acquisitions, author incentives, recruitment and referral bonuses, foreign service premiums, differentials and allowances, imputed income pursuant to Section 79 of the Code, income realized as a result of participation in any stock option, restricted stock, restricted stock unit, stock purchase or amortization, whethersimilar equity plan maintained by the Company or nota Participating Subsidiary and tuition and other reimbursements. The Committee shall have the authority to determine and approve all forms of pay to be included in the definition of Compensation and may change the definition on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; shareholder return; operating or gross margin; operating income; net income (before or after taxes); net operating income; net operating income after tax; pre-and after-tax income; pre-tax profit; cash flow (determined in the aggregate or on a per share basis); operating cash flow; sales or revenue targets; increases in revenue or product revenue; expenses and cost reduction goals; improvement in or attainment of expense or working capital levels; economic value added (or an equivalent metric); debt reduction; implementation or completion of projects or processes; sales of particular products or services; customer acquisition, retention or satisfaction; acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; or recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings. A Performance Criterion and any targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss. To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m), the Administrator may provide in the case of any Award intended to qualify for such exception that one or more of the Performance Criteria applicable to such Award will be adjusted in an objectively determinable manner to reflect events (for example, but without limitation, acquisitions or dispositions) occurring during the performance period that affect the applicable Performance Criterion or Criteria.prospective basis.

“Plan”:(h) La Jolla Pharmaceutical Company 2013 Equity Incentive“Effective Date” means July [_], 2018, the date on which the Plan as from time to time amended and in effect.was adopted by the Board.

(i)“Restricted Stock”: Stock subject to restrictions requiring that it be redelivered or offered for sale toEmployee” means an individual classified as an employee (within the meaning of Code Section 3401(c) and the regulations thereunder) by the Company if specified conditions are not satisfied.

“Restricted Stock Unit”: A Stock Unit that is, or as to whicha Participating Subsidiary on the delivery of StockCompany’s or cash in lieu of Stock is, subject tosuch Participating Subsidiary’s payroll records during the satisfaction of specified performance or other vesting conditions.



“SAR”: A right entitlingrelevant participation period. Notwithstanding the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value) equal to the excess of the fair market value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured.foregoing, no

“Section 409A”: Section 409A of the Code.

“Section 422”: Section 422 of the Code.

“Section 162(m)”: Section 162(m) of the Code.

“Stock”: Common Stock of the Company, par value $0.001 per share.

“Stock Option”: An option entitling the holder to acquire shares of Stock upon payment of the exercise price.

“Stock Unit”: An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future.

“Unrestricted Stock”: Stock not subject to any restrictions under the terms of the Award.



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lajolla2018proxycard002.jpgemployee of the Company or a Participating Subsidiary shall be included within the definition of “Employee” if such person's customary employment is for less than 20 hours per week or for less than 5 months per year. Individuals classified as independent contractors, consultants or advisers are not considered “Employees.”

(j)“Enrollment Period” means, with respect to a given Offering Period, that period established by the Committee prior to the commencement of such Offering Period during which Employees may elect to participate in order to purchase Common Stock at the end of that Offering Period in accordance with the terms of this Plan.

(k)“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any reference to a section of the Exchange Act shall include any successor provision of the Exchange Act.

(l)“Fair Market Value” means as of any date, the value of the Common Stock determined as follows: (i) if the Common Stock is listed on any established stock exchange, system or market, its Fair Market Value shall be the closing price for the Common Stock as quoted on such exchange, system or market as reported in the Wall Street Journal or such other source as the Committee deems reliable (or, if no sale of Common Stock is reported for such date, on the next preceding date on which any sale shall have been reported); and (ii) in the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Committee by the reasonable application of a reasonable valuation method, taking into account factors consistent with Treas. Reg. § 409A-1(b)(5)(iv)(B) as the Committee deems appropriate.

(m)“Offering Period” means a period of no more than 27 months at the end of which an option granted pursuant to the Plan shall be exercised. The Plan shall be implemented by a series of Offering Periods with terms established by the Committee in accordance with the Plan. Once established, the duration and timing of Offering Periods may be changed or modified by the Committee as permitted by the Plan. If the Committee does not establish different rules with respect to an Offering Period, then the duration of an Offering Period shall be 6 months and there shall be no overlapping Offering Periods.

(n)“Offering Price” means the Fair Market Value of a share of Common Stock on the Commencement Date for a given Offering Period.

(o)“Participant” means a participant in the Plan as described in Section 5 of the Plan.

(p)“Participating Subsidiary” means a Subsidiary that has been designated by the Committee in its sole discretion as eligible to participate in the Plan with respect to its Employees.

(q)“Purchase Date” means the last Trading Day of each Offering Period.

(r)“Purchase Price” shall have the meaning set out in Section 8(b).

(s)“Securities Act” means the U.S. Securities Act of 1933, as amended, as amended from time to time, and any reference to a section of the Securities Act shall include any successor provision of the Securities Act.

(t)“Shareholder” means a record holder of shares entitled to vote such shares of Common Stock under the Company's bylaws.

(u)“Subsidiary” means any business entity (including a limited liability company, corporation or a partnership) in which the Company owns (either directly or indirectly through one or more other Subsidiaries) 50% or more of the total combined voting power of all classes of outstanding equity interests.

(v)“Trading Day” means a day on which U.S. national stock exchanges are open for trading and the Common Stock is being publicly traded on one or more of such markets.

3.Eligibility.

(a)    Any Employee of the Company or any Participating Subsidiary at the beginning of an Enrollment Period for a given Offering Period shall be eligible to participate in the Plan with respect to such Offering Period and future Offering Periods, provided that the Committee may establish administrative rules requiring that employment commence some minimum period (not to exceed 90 days) prior to an Enrollment Period and/or that customary employment exceed a specified number of hours or period during a calendar year to be eligible to participate with



respect to the associated Offering Period. The Committee may also determine that a designated group of highly compensated Employees is ineligible to participate in the Plan so long as the excluded category fits within the definition of “highly compensated employee” in Code Section 414(q). If the Committee does not establish different rules with respect to an Offering Period, the minimum period of employment that must be completed prior to the beginning of an Enrollment Period shall be 5 working days.

(b)    No Employee may participate in the Plan if immediately after an option is granted the Employee owns or is considered to own (within the meaning of Code Section 424(d)) shares of Common Stock, including Common Stock which the Employee may purchase by conversion of convertible securities or under outstanding options granted by the Company or its Subsidiaries, possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or of any of its Subsidiaries. All Employees who participate in the Plan shall have the same rights and privileges under the Plan, except for differences that may be mandated by local law and that are consistent with Code Section 423(b)(5); provided that individuals participating in a sub-plan adopted pursuant to Section 16 which is not designed to qualify under Code section 423 need not have the same rights and privileges as Employees participating in the Code section 423 Plan.

4.Offering Periods.

The Plan shall be implemented by a series of Offering Periods, which shall possess terms specified by the Committee in accordance with the terms of the Plan. Offering Periods shall continue until the Plan is terminated pursuant to Section 14 hereof. Once established, the Committee shall have the authority to change the frequency and/or duration of Offering Periods (including the Commencement Dates thereof) with respect to future Offering Periods if such change is announced prior to the scheduled occurrence of the Enrollment Period for the first Offering Period to be affected thereafter. If the Committee does not establish different rules with respect to an Offering Period, then the duration of an Offering Period shall be 6 months and there shall be no overlapping Offering Periods.

5.Participation.

(a)    An Employee who is eligible to participate in the Plan in accordance with its terms at the beginning of an Enrollment Period for an Offering Period and elects to participate in such Offering Period shall automatically receive an option in accordance with Section 8(a). Such an Employee shall become a Participant by completing and submitting, on or before the date prescribed by the Committee with respect to a given Offering Period, a completed payroll deduction authorization and Plan enrollment form provided by the Company or its Participating Subsidiaries or by following an electronic or other enrollment process as prescribed by the Committee. An eligible Employee may authorize payroll deductions at the rate of any whole percentage of the Employee’s Compensation, not to be less than 1% and not to exceed 10% of the Employee’s Compensation (or such other percentages as the Committee may establish from time to time before an Enrollment Period for a future Offering Period) on each payday during the Offering Period. All payroll deductions will be held in a general corporate account or a trust account. No interest shall be paid or credited to the Participant with respect to such payroll deductions. The Company shall maintain or cause to be maintained a separate bookkeeping account for each Participant under the Plan and the amount of each Participant’s payroll deductions shall be credited to such account. A Participant may not make any additional payments into such account, unless payroll deductions are prohibited under Applicable Law, in which case the provisions of Section 5(b) of the Plan shall apply.

(b)    Notwithstanding any other provisions of the Plan to the contrary, in locations where local law prohibits payroll deductions, an eligible Employee may elect to participate through contributions to his or her account under the Plan in a form acceptable to the Committee. In such event, any such Employees shall be deemed to be participating in a sub-plan, unless the Committee otherwise expressly provides that such Employees shall be treated as participating in the Plan.

(c)    Under procedures and at times established by the Committee, a Participant may withdraw from the Plan during an Offering Period, by completing and filing a new payroll deduction authorization and Plan enrollment form with the Company or by following electronic or other procedures prescribed by the Committee. If a Participant withdraws from the Plan during an Offering Period, his or her accumulated payroll deductions will be refunded to the Participant without interest, his or her right to participate in the current Offering Period will be automatically terminated and no further payroll deductions for the purchase of Common Stock will be made during the Offering Period. Any Participant who wishes to withdraw from the Plan during an Offering Period, must complete the withdrawal procedures prescribed by the Committee, subject to any rules established by the Committee, or changes to



such rules, pertaining to the timing of withdrawals, limiting the frequency with which Participants may withdraw and re-enroll in the Plan, or imposing a waiting period on Participants wishing to re-enroll following withdrawal.

(d)    A Participant may not increase his or her rate of contribution through payroll deductions or otherwise during a given Offering Period. A Participant may decrease his or her rate of contribution through payroll deductions during a given Offering Period during such times specified by the Committee by filing a new payroll deduction authorization and Plan enrollment form or by following electronic or other procedures prescribed by the Committee. If a Participant has not followed such procedures to change the rate of contribution, the rate of contribution shall continue at the originally elected rate throughout the Offering Period and future Offering Periods. Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code for a given calendar year, the Committee may reduce a Participant’s payroll deductions to 0% at any time during an Offering Period scheduled to end during such calendar year. Payroll deductions shall re-commence at the rate provided in such Participant’s enrollment form at the beginning of the first Offering Period, which is scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 5(c).

6.Termination of Employment.

In the event any Participant terminates employment with the Company and its Participating Subsidiaries for any reason (including death) prior to the expiration of an Offering Period, the Participant’s participation in the Plan shall terminate and all amounts credited to the Participant’s account shall be paid to the Participant or, in the case of death, to the Participant’s heirs or estate, without interest. Whether a termination of employment has occurred shall be determined by the Committee. If a Participant’s termination of employment occurs within a certain period of time as specified by the Committee (not to exceed 30 days) prior to the Purchase Date of the Offering Period then in progress, his or her option for the purchase of shares of Common Stock will be exercised on such Purchase Date in accordance with Section 9 as if such Participant were still employed by the Company. If the Committee does not establish different rules with respect to an Offering Period, then if a Participant’s termination of employment occurs on or after the 5th working day preceding the Purchase Date of an Offering Period, then his or her option for the purchase of shares of Common Stock will be exercised on such Purchase Date in accordance with Section 9 as if such Participant were still employed by the Company. Following the purchase of shares on such Purchase Date, the Participant’s participation in the Plan shall terminate and all amounts credited to the Participant’s account shall be paid to the Participant or, in the case of death, to the Participant’s heirs or estate, without interest. The Committee may also establish rules regarding when leaves of absence or changes of employment status will be considered to be a termination of employment, including rules regarding transfer of employment among Participating Subsidiaries, Subsidiaries and the Company, and the Committee may establish termination-of-employment procedures for this Plan that are independent of similar rules established under other benefit plans of the Company and its Subsidiaries; provided that such procedures are not in conflict with the requirements of Section 423 of the Code.

7.Stock.

Subject to adjustment as set forth in Section 11, the aggregate number of shares of Common Stock which may be issued pursuant to the Plan shall initially be 750,000 shares (the “Share Reserve”). Notwithstanding the foregoing, subject to adjustment as set forth in Section 11, the maximum number of shares of Common Stock that may be issued to any Employee in a given Offering Period shall be 5,000 shares of Common Stock. The Committee may change this limitation at any time on a prospective basis to apply to future Offering Periods. If, on a given Purchase Date, the number of shares with respect to which options are to be exercised exceeds either maximum, the Committee shall make, as applicable, such adjustment or pro rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable.

8.Offering.

(a)    On the Commencement Date relating to each Offering Period, each eligible Employee, whether or not such Employee has elected to participate as provided in Section 5(a), shall be granted an option to purchase a number of whole shares of Common Stock (as adjusted as set forth in Section 11) established by the Committee, which may be purchased with the payroll deductions accumulated on behalf of such Employee during each Offering Period at the purchase price specified in Section 8(b) below, subject to the additional limitation that no Employee participating in the Plan shall be granted an option to purchase Common Stock under the Plan if such option would permit his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate which exceeds U.S. $25,000 of the Fair Market Value of such Common Stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time. For purposes of the Plan, an option is “granted” on a Participant’s Commencement Date. An



option will expire upon the earliest to occur of (i) the termination of a Participant’s participation in the Plan or such Offering Period and (ii) the termination of the Offering Period. This Section 8(a) shall be interpreted so as to comply with Code Section 423(b)(8).

(b)    The Purchase Price under each option shall be with respect to an Offering Period the lower of (i) a percentage (not less than 85%) (“Designated Percentage”) of the Offering Price, or (ii) the Designated Percentage of the Fair Market Value of a share of Common Stock on the Purchase Date on which the Common Stock is purchased; provided that the Purchase Price may be adjusted by the Committee pursuant to Sections 11 or 12 in accordance with Section 424(a) of the Code. For a given Offering Period, the Designated Percentage shall be established no later than the beginning of the Enrollment Period for such Offering Period. The Committee may change the Designated Percentage with respect to any future Offering Period, but not to below 85%, and the Committee may determine with respect to any prospective Offering Period that the Purchase Price shall be the Designated Percentage of the Fair Market Value of a share of the Common Stock solely on the Purchase Date. If the Committee does not establish the Designated Percentage prior to the beginning of the Enrollment Period for a given Offering Period, the Designated Percentage for such Offering Period shall be 85%.

9.Purchase of Stock.

Unless a Participant withdraws from the Plan as provided in Section 5(c), terminates employment prior to the end of an Offering Period as provided in Section 6, or except as provided in Sections 7, 12 or 14(b), upon the expiration of each Offering Period, a Participant’s option shall be exercised automatically for the purchase of that number of whole shares of Common Stock which the accumulated payroll deductions credited to the Participant’s account at that time shall purchase at the applicable price specified in Section 8(b) in accordance with the terms of the Plan, including Section 7. Notwithstanding the foregoing, the Company or its Participating Subsidiary may make such provisions and take such action as it deems necessary or appropriate for the withholding of taxes and/or social insurance and/or other amounts which the Company or its Participating Subsidiary determines is required by Applicable Law. Each Participant, however, shall be responsible for payment of all individual tax liabilities arising under the Plan. The shares of Common Stock purchased upon exercise of an option hereunder shall be considered for tax purposes to be sold to the Participant on the Purchase Date. A Participant’s option to purchase shares of Common Stock hereunder is exercisable only by him or her.

10.Payment and Delivery.

As soon as practicable after the exercise of an option, the Company shall deliver or cause to have delivered to the Participant a record of the Common Stock purchased and the balance of any amount of payroll deductions credited to the Participant’s account not used for the purchase of Common Stock, except as specified below. The Committee may permit or require that shares be deposited directly with a broker designated by the Committee or to a designated agent of the Company, and the Committee may utilize electronic or automated methods of share transfer. The Committee may require that shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares. If the Committee does not establish different rules with respect to an Offering Period, all shares of Common Stock purchased on each Purchase Date may not be sold prior to the earliest of: (i) the first anniversary of the applicable Purchase Date; (ii) the date on which a Participant terminates service with the Company or a Participating Subsidiary, or (iii) the consummation of a Covered Transaction (as defined in the 2013 Equity Incentive Plan). The Company or its Participating Subsidiary shall retain the amount of payroll deductions used to purchase Common Stock as full payment for the Common Stock and the Common Stock shall then be fully paid and non-assessable. No Participant shall have any voting, dividend, or other Shareholder rights with respect to shares subject to any option granted under the Plan until the shares subject to the option have been purchased and delivered to the Participant as provided in this Section 10. The Committee may in its discretion direct the Company to retain in a Participant’s account for the subsequent Offering Period any payroll deductions which are not sufficient to purchase a whole share of Common Stock or return such amount to the Participant. Any other amounts left over in a Participant’s account after a Purchase Date shall be returned to the Participant. If the Committee does not establish different rules with respect to an Offering Period, then all amounts left over in a Participant’s account after a Purchase Date shall be returned to the Participant.

11.Recapitalization.

Subject to any required action by the Shareholders of the Company, if there is any change in the outstanding shares of Common Stock or other securities of the Company because of a merger, consolidation, spin-off, reorganization, recapitalization, dividend in property other than cash, extraordinary dividend whether in cash and/or other property, stock split, reverse stock split, stock dividend, liquidating dividend, combination or reclassification of the Common Stock or other securities (including any such change in the number of shares of Common Stock or other securities effected in connection with



a change in domicile of the Company), or any other increase or decrease in the number of shares of Common Stock or other securities effected without receipt of consideration by the Company, provided that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration,” the type and number of securities covered by each option under the Plan which has not yet been exercised and the type and number of securities which have been authorized and remain available for issuance under the Plan, as well as the maximum number of securities which may be purchased by a Participant in an Offering Period, and the price per share covered by each option under the Plan which has not yet been exercised, shall be appropriately and proportionally adjusted by the Board, and the Board shall take any further actions which, in the exercise of its discretion, may be necessary or appropriate under the circumstances. The Board’s determinations under this Section 11 shall be conclusive and binding on all parties.

12.Merger, Liquidation and Other Corporate Transactions.

(a)    In the event of a proposed liquidation or dissolution of the Company, the Offering Period will terminate immediately prior to the consummation of such proposed transaction, unless otherwise provided by the Board in its sole discretion, and all outstanding options shall automatically terminate and the amounts of all payroll deductions will be refunded without interest to the Participants.

(b)    In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger or consolidation or similar combination of the Company with or into another entity, then in the sole discretion of the Board, (1) each option shall be assumed or an equivalent option shall be substituted by the successor corporation or parent or subsidiary of such successor entity, (2) on a date established by the Board on or before the date of consummation of such merger, consolidation, combination or sale, such date shall be treated as a Purchase Date, and all outstanding options shall be exercised on such date, (3) all outstanding options shall terminate and the accumulated payroll deductions will be refunded without interest to the Participants, or (4) outstanding options shall continue unchanged.

13.Transferability.

Neither payroll deductions credited to a Participant’s bookkeeping account nor any rights to exercise an option or to receive shares of Common Stock under the Plan may be voluntarily or involuntarily assigned, transferred, pledged, or otherwise disposed of in any way, and any attempted assignment, transfer, pledge, or other disposition shall be null and void and without effect. If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interests under the Plan, other than as permitted by the Code, such act shall be treated as an election by the Participant to discontinue participation in the Plan pursuant to Section 5(c).

14.Amendment or Termination of the Plan.

(a)    The Plan shall continue from the Effective Date until the time that the Plan is terminated in accordance with Section 14(b).

(b)    The Board or the Committee may, in its sole discretion, insofar as permitted by law, terminate or suspend the Plan, or revise or amend it in any respect whatsoever, except that, without approval of the Shareholders, no such revision or amendment shall increase the number of shares subject to the Plan, other than an adjustment under Section 11 of the Plan, or make other changes for which Shareholder approval is required under Applicable Law. Upon a termination or suspension of the Plan, the Board may in its discretion (i) return without interest the payroll deductions credited to Participants’ accounts to such Participants or (ii) set an earlier Purchase Date with respect to an Offering Period then in progress.

15.Administration.

(a)    The Board has appointed the Committee to administer the Plan, who will serve for such period of time as the Board may specify and whom the Board may remove at any time. The Committee will have the authority and responsibility for the day-to-day administration of the Plan, the authority and responsibility specifically provided in this Plan and any additional duty, responsibility and authority delegated to the Committee by the Board, which may include any of the functions assigned to the Board in this Plan. The Committee may delegate to a sub-committee and/or to an officer or officers or employees of the Company the day-to-day administration of the Plan. The Committee shall have full power and authority to adopt, amend and rescind any rules and regulations which it deems desirable and appropriate for the proper administration of the Plan, to construe and interpret the provisions and supervise the administration of the Plan, to make factual determinations relevant to Plan entitlements and to take all action in



connection with administration of the Plan as it deems necessary or advisable, consistent with the delegation from the Board. Decisions of the Committee shall be final and binding upon all Participants. Any decision reduced to writing and signed by a majority of the members of the Committee shall be fully effective as if it had been made at a meeting of the Committee duly held.

(b)    In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Company, members of the Board and of the Committee and their delegates 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 under the Plan, 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 such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within 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.

16.Committee Rules for Foreign Jurisdictions.

The Committee may adopt rules or 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 Committee is specifically authorized to adopt rules and procedures regarding handling of payroll deductions or other contributions by Participants, payment of interest, conversion of local currency, data privacy security, payroll tax, withholding procedures and handling of stock certificates which vary with local requirements; however, if such varying provisions are not in accordance with the provisions of Section 423(b) of the Code, including but not limited to the requirement of Section 423(b)(5) of the Code that all options granted under the Plan shall have the same rights and privileges unless otherwise provided under the Code and the regulations promulgated thereunder, then the individuals affected by such varying provisions shall be deemed to be participating under a sub-plan and not in the Plan. The Committee may also adopt sub-plans applicable to particular Subsidiaries or locations, which sub-plans may be designed to be outside the scope of Code section 423 and shall be deemed to be outside the scope of Code section 423 unless the terms of the sub-plan provide to the contrary. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Section 7, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan. The Committee shall not be required to obtain the approval of the Shareholders prior to the adoption, amendment or termination of any sub-plan unless required by the laws of the foreign jurisdiction in which Employees participating in the sub-plan are located.

17.Securities Laws Requirements.

(a)    No option granted under the Plan may be exercised to any extent unless the shares to be issued upon such exercise under the Plan are covered by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, applicable state and foreign securities laws and the requirements of any stock exchange upon which the Shares may then be listed, subject to the approval of counsel for the Company with respect to such compliance. If on a Purchase Date in any Offering Period hereunder, the Plan is not so registered or in such compliance, options granted under the Plan which are not in material compliance shall not be exercised on such Purchase Date, and the Purchase Date shall be delayed until the Plan is subject to such an effective registration statement and such compliance, except that the Purchase Date shall not be delayed more than 12 months and the Purchase Date shall in no event be more than 27 months from the Commencement Date relating to such Offering Period. If, on the Purchase Date of any offering hereunder, as delayed to the maximum extent permissible, the Plan is not registered and in such compliance, options granted under the Plan which are not in material compliance shall not be exercised and all payroll deductions accumulated during the Offering Period (reduced to the extent, if any, that such deductions have been used to acquire shares of Common Stock) shall be returned to the Participants, without interest. The provisions of this Section 17 shall comply with the requirements of Section 423(b)(5) of the Code to the extent applicable.

(b)    As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.




18.Government Regulations.

This Plan and the Company's obligation to sell and deliver shares of its stock under the Plan shall be subject to the approval of any governmental authority required in connection with the Plan or the authorization, issuance, sale or delivery of stock hereunder.

19.No Enlargement of Employee Rights.

Nothing contained in this Plan shall be deemed to give any Employee or other individual the right to be retained in the employ or service of the Company or any Participating Subsidiary or to interfere with the right of the Company or Participating Subsidiary to discharge any Employee or other individual at any time, for any reason or no reason, with or without notice.

20.Governing Law.

This Plan shall be governed by applicable laws of the State of California and applicable federal law.

21.Effective Date.

This Plan shall be effective on the Effective Date, subject to approval of the Shareholders of the Company within 12 months before or after its date of adoption by the Board.

22.Reports.

Individual accounts shall be maintained for each Participant in the Plan. Statements of account shall be made available to Participants at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares of Common Stock purchased and the remaining cash balance, if any.

23.Designation of Beneficiary for Owned Shares.

With respect to shares of Common Stock purchased by the Participant pursuant to the Plan and held in an account maintained by the Company or its assignee on the Participant’s behalf, the Participant may be permitted to file a written designation of beneficiary, who is to receive any shares and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to the end of an Offering Period but prior to delivery to him or her of such shares and cash. In addition, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death prior to the Purchase Date of an Offering Period. If a Participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective, to the extent required by local law. The Participant (and if required under the preceding sentence, his or her spouse) may change such designation of beneficiary at any time by written notice. Subject to local legal requirements, in the event of a Participant’s death, the Company or its assignee shall deliver any shares of Common Stock and/or cash to the designated beneficiary. Subject to local law, in the event of the death of a Participant and in the absence of a beneficiary validly designated who is living at the time of such Participant’s death, the Company shall deliver such shares of Common Stock and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company in its sole discretion, may deliver (or cause its assignee to deliver) such shares of Common Stock and/or cash to the spouse, or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may determine. The provisions of this Section 23 shall in no event require the Company to violate local law, and the Company shall be entitled to take whatever action it reasonably concludes is desirable or appropriate in order to transfer the assets allocated to a deceased Participant’s account in compliance with local law.

24.Additional Restrictions of Rule 16b-3.

The terms and conditions of options granted hereunder to, and the purchase of shares of Common Stock by, persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of Rule 16b-3. This Plan shall be deemed to contain, and such options shall contain, and the shares of Common Stock issued upon exercise thereof shall be subject to, such additional conditions and restrictions, if any, as may be required by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.




25.Notices.

All notices or other communications by a Participant to the Company or the Committee under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company or the Committee at the location, or by the person, designated by the Company for the receipt thereof.




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