Exhibit 10.26

SAREPTA THERAPEUTICS, INC.

EXECUTIVE INDUCEMENT STOCK OPTION AWARD AGREEMENT

Unless otherwise defined herein, capitalized terms used in this executive
inducement stock option agreement and the exhibits hereto (the “Award
Agreement”) shall have the definitions for such terms included in Exhibit B
hereto.

 

I. NOTICE OF STOCK OPTION GRANT

Executive Name: Arthur M. Krieg

You (“Executive”) have been granted an option (the “Option”) to purchase Shares
of common stock (“Common Stock”) of Sarepta Therapeutics, Inc. (the “Company”),
subject to the terms and conditions of this Award Agreement, including its
exhibits, as follows:

 

Grant Number      

275,000 Shares of Common Stock of the Company

Date of Grant      

January 13, 2014

Vesting Commencement Date      

January 13, 2014

Exercise Price per Share       $20.08 Total Number of Options Granted      

275,000

Total Exercise Price       $5,522,000 Type of Option:       Inducement Stock
Options under Nasdaq’s Rule 5635(c)(4), Nonstatutory Stock Option (“NSO”)
Term/Expiration Date:      

January 13, 2024

Vesting Schedule:

Subject to any acceleration provisions contained in this Award Agreement, this
Option may be exercised, in whole or in part, in accordance with the following
schedule:

Twenty-five percent of the Shares of Common Stock subject to the Option shall
vest on the one (1) year anniversary of the Vesting Commencement Date and 1/48th
of such shares subject to the Option shall vest each month thereafter on the
same day of the month as the Vesting Commencement Date (and if there is no
corresponding day, on the last day of the month), subject to Executive
continuing to be an employee of the Company through each such date.

Notwithstanding the foregoing, in the event of Executive’s termination as an
employee of the Company (“Employee”) as a result of death, the vesting of all of
the Shares of Common Stock subject to the Option shall be accelerated as to 100%
of such Shares of Common Stock as of the date of Executive’s death.

Termination Period:

This Option will be exercisable for three (3) months after Executive ceases to
be an Employee, unless such termination is due to Executive’s death or
Disability, in which case this Option will be exercisable for twelve (12) months
after Executive ceases to be an Employee. Notwithstanding the foregoing, in no
event may this Option be exercised after the Term/Expiration Date as provided
above and may be subject to earlier termination as provided in Section 13 of the
Terms and Conditions of Stock Option Grant attached Exhibit A hereto.

By Executive’s signature and the signature of the Company’s representative
below, Executive and the Company agree to the

--------------------------------------------------------------------------------

Option terms described in this Award Agreement, including the Terms and
Conditions of Stock Option Grant, attached hereto as Exhibit A, all of which are
made a part of this document. Executive has reviewed this Award Agreement and
its exhibits in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Award Agreement and fully understands all
provisions of this Award Agreement and its attached exhibits. Executive hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to this Award
Agreement, including its exhibits. Executive further agrees to notify the
Company upon any change in the residence address Executive provides to the
Company.

 

EXECUTIVE:     SAREPTA THERAPEUTICS, INC.

/s/ Arthur M. Krieg

   

/s/ Christopher Garabedian

Signature     By: Christopher Garabedian

Arthur M. Krieg

   

President and Chief Executive Officer

Print Name     Title

--------------------------------------------------------------------------------

EXHIBIT A

TERMS AND CONDITIONS OF STOCK OPTION GRANT

1. Grant of Option. The Company hereby grants to the Executive named in the
Notice of Grant attached as Part I of this Award Agreement (the “Executive”) an
option (the “Option”) to purchase the number of Shares, as set forth in the
Notice of Grant, at the exercise price per Share set forth in the Notice of
Grant (the “Exercise Price”), subject to all of the terms and conditions in this
Award Agreement.

This Option does not qualify as an “incentive stock option” under Section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”).

2. Vesting Schedule. Except as provided in Section 3, the Option awarded by this
Award Agreement will vest in accordance with the vesting provisions set forth in
the Notice of Grant. Shares scheduled to vest on a certain date or upon the
occurrence of a certain condition will not vest in Executive in accordance with
any of the provisions of this Award Agreement, unless Executive will have been
continuously an Employee from the Date of Grant until the date such vesting
occurs.

3. Administrator Discretion. The Administrator, in its discretion, may
accelerate the vesting of the balance, or some lesser portion of the balance, of
the unvested Option at any time, subject to the terms this Award Agreement. If
so accelerated, such Option will be considered as having vested as of the date
specified by the Executive.

4. Exercise of Option.

(a) Right to Exercise. This Option may be exercised only within the term set out
in the Notice of Grant, and may be exercised during such term only in accordance
with the terms of this Award Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an exercise
notice, in the form attached as Exhibit C (the “Exercise Notice”) or in a manner
and pursuant to such procedures as the Administrator may determine, which will
state the election to exercise the Option, the number of Shares in respect of
which the Option is being exercised (the “Exercised Shares”), and such other
representations and agreements as may be required by the Company. The Exercise
Notice will be completed by Executive and delivered to the Company. The Exercise
Notice will be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares together with any applicable tax withholding. This Option will
be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

5. Method of Payment. Payment of the aggregate Exercise Price will be by any of
the following, or a combination thereof, at the election of Executive.

(a) cash;

(b) check;

(c) consideration received by the Company under a formal cashless exercise
program adopted by the Company; or

(d) surrender of other Shares which have a Fair Market Value on the date of
surrender equal to the aggregate Exercise Price of the Exercised Shares,
provided that accepting such Shares, in the sole discretion of the
Administrator, will not result in any adverse accounting consequences to the
Company.

6. Withholding Taxes. Notwithstanding any contrary provision of this Award
Agreement, no certificate representing the Shares will be issued to Executive,
unless and until satisfactory arrangements (as determined by the Administrator)
will have been made by Executive with respect to the payment of income,
employment and other taxes which the Company determines must be withheld with
respect to such Shares. To the extent determined appropriate by the Company in
its discretion, it will have the right (but not the obligation) to satisfy any
tax withholding obligations by reducing the number of Shares otherwise
deliverable to Executive. If Executive fails to make satisfactory arrangements
for the payment of any required tax withholding obligations hereunder at the
time of the Option exercise, Executive acknowledges and agrees that the Company
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.

7. Rights as Shareholder. Neither Executive nor any person claiming under or
through Executive will have any of the rights or privileges of a shareholder of
the Company in respect of any Shares deliverable hereunder unless and until
certificates representing such Shares will have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
Executive. After such issuance, recordation and delivery, Executive will have
all the rights of a shareholder of the Company with respect to voting such
Shares and receipt of dividends and distributions on such Shares.

8. No Guarantee of Continued Service. EXECUTIVE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS AN AT WILL EMPLOYEE OF THE COMPANY (OR THE PARENT OR SUBSIDIARY
EMPLOYING OR RETAINING EXECUTIVE) AND

--------------------------------------------------------------------------------

NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER. EXECUTIVE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT,
THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH
HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
AS AN EMPLOYEE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT
INTERFERE IN ANY WAY WITH EXECUTIVE’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE
PARENT OR SUBSIDIARY EMPLOYING OR RETAINING EXECUTIVE) TO TERMINATE EXECUTIVE’S
RELATIONSHIP AS AN EMPLOYEE AT ANY TIME, WITH OR WITHOUT CAUSE.

9. Address for Notices. Any notice to be given to the Company under the terms of
this Award Agreement will be addressed to the Company at Sarepta Therapeutics,
Inc., 215 First Street, Suite 7, Cambridge, MA 02142, or at such other address
as the Company may hereafter designate in writing.

10. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Executive only by Executive.

11. Binding Agreement. Subject to the limitation on the transferability of this
grant contained herein, this Award Agreement will be binding upon and inure to
the benefit of the heirs, legatees, legal representatives, successors and
assigns of the parties hereto.

12. Additional Conditions to Issuance of Stock. If at any time the Company will
determine, in its discretion, that the listing, registration or qualification of
the Shares upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory authority is necessary or
desirable as a condition to the issuance of Shares to Executive (or his or her
estate), such issuance will not occur unless and until such listing,
registration, qualification, consent or approval will have been effected or
obtained free of any conditions not acceptable to the Company. The Company will
make all reasonable efforts to meet the requirements of any such state or
federal law or securities exchange and to obtain any such consent or approval of
any such governmental authority. Assuming such compliance, for income tax
purposes the Exercised Shares will be considered transferred to Executive on the
date the Option is exercised with respect to such Exercised Shares.

13. Termination. Adjustments; Dissolution or Liquidation; Merger or Change in
Control.

(a) Adjustments. In the event that any dividend or other distribution (whether
in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, will
adjust the number and class of Shares that may be delivered under this Award
Agreement and/or the number, class, and price of Shares covered by this Option.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify Executive as soon as
practicable prior to the effective date of such proposed transaction. To the
extent it has not been previously exercised, the Option will terminate
immediately prior to the consummation of such proposed action.

(c) Change in Control. In the event of a merger or Change in Control, the Option
will be treated as the Administrator determines without Executive’s consent,
including, without limitation, that (i) the Option will be assumed, or
substantially equivalent to the Option will be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof) with appropriate adjustments as
to the number and kind of shares and prices; (ii) upon written notice to the
Executive, that the Executive’s Option will terminate upon or immediately prior
to the consummation of such merger or Change in Control; (iii) outstanding
Shares under the Option will vest and become exercisable, realizable, or
payable, or restrictions applicable to the Option will lapse, in whole or in
part prior to or upon consummation of such merger or Change in Control, and, to
the extent the Administrator determines, terminate upon or immediately prior to
the effectiveness of such merger of Change in Control; (iv) (A) the termination
of the Option in exchange for an amount of cash and/or property, if any, equal
to the amount that would have been attained upon the exercise of such Option or
realization of the Executive’s rights as of the date of the occurrence of the
transaction (and, for the avoidance of doubt, if as of the date of the
occurrence of the transaction the Administrator determines in good faith that no
amount would have been attained upon the exercise of such Option or realization
of the Executive’s rights, then such Option may be terminated by the Company
without payment), or (B) the replacement of such Option with other rights or
property selected by the Administrator in its sole discretion; or (v) any
combination of the foregoing. In taking any of the actions permitted under this
subsection (c), the Administrator will not be obligated to treat all awards, all
awards held by the Executive, or all awards of the same type, similarly.

In the event that the successor corporation does not assume or substitute for
the Option (or portion thereof), the Participant will fully vest in and have the
right to exercise all of his or her outstanding Option (or portion thereof) that
is not assumed or substituted for. In addition, if the Option is not assumed or
substituted for in the event of a Change in Control, the Administrator will
notify the Participant in writing or electronically that the Option will be
fully vested and exercisable for a period of time determined by the
Administrator in its sole discretion, and the Option will terminate upon the
expiration of such period.

For the purposes of this subsection (c), the Option will be considered assumed
if, following the Change in Control, the Option is given the right to purchase
or receive, for each Share subject to the Option immediately prior to the Change
in Control, the

--------------------------------------------------------------------------------

consideration (whether stock, cash, or other securities or property) or the fair
market value of the consideration received in the merger or Change in Control by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change in Control
is not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option for each Share
subject to the Option (or in the case were the Option or a portion thereof is
settled in cash, the number of implied shares determined by dividing the value
of the Option by the per share consideration received by holders of Common Stock
in the Change in Control), to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.

14. Administrator Authority. The Administrator will have the power to interpret
this Award Agreement (including, but not limited to, the determination of
whether or not any Shares subject to the Option have vested). All actions taken
and all interpretations and determinations made by the Administrator in good
faith will be final and binding upon Executive, the Company and all other
interested persons. No member of the Administrator will be personally liable for
any action, determination or interpretation made in good faith with respect to
this Award Agreement.

15. Electronic Delivery. The Company may, in its sole discretion, decide to
deliver any documents related to Option by electronic means or request
Executive’s execution of such documents to be by electronic means. Executive
hereby consents to receive such documents by electronic delivery and agrees to
use any electronic system established and maintained by the Company or another
third party designated by the Company for purposes of administering the Option
and this Award Agreement.

16. Captions. Captions provided herein are for convenience only and are not to
serve as a basis for interpretation or construction of this Award Agreement.

17. Agreement Severable. In the event that any provision in this Award Agreement
will be held invalid or unenforceable, such provision will be severable from,
and such invalidity or unenforceability will not be construed to have any effect
on, the remaining provisions of this Award Agreement.

18. Modifications to the Agreement. This Award Agreement constitutes the entire
understanding of the parties on the subjects covered. Executive expressly
warrants that he or she is not accepting this Award Agreement in reliance on any
promises, representations, or inducements other than those contained herein.
Modifications to this Award Agreement can be made only in an express written
contract executed by a duly authorized officer of the Company. Notwithstanding
anything to the contrary in this Award Agreement, the Company reserves the right
to revise this Award Agreement as it deems necessary or advisable, in its sole
discretion and without the consent of Executive, to comply with Code
Section 409A or to otherwise avoid imposition of any additional tax or income
recognition under Code Section 409A in connection to this Option.

19. Reserved.

20. Governing Law. This Award Agreement will be governed by the laws of the
State of Delaware, without giving effect to the conflict of law principles
thereof. For purposes of litigating any dispute that arises under this Option or
this Award Agreement, the parties hereby submit to and consent to the
jurisdiction of the State of Delaware, and agree that such litigation will be
conducted in the state courts of Delaware, or the federal courts for the United
States for the District of Delaware, and no other courts, where this Option is
made and/or to be performed.

--------------------------------------------------------------------------------

EXHIBIT B

DEFINED TERMS

 

  (a) “Administrator” means the board of directors of the Company or the
Compensation Committee.

 

  (b) “Change in Control” means the occurrence of any of the following events:

 

  (i) Change in Ownership of the Company. A change in the ownership of the
Company which occurs on the date that any one person, or more than one person
acting as a group (“Person”), acquires ownership of the stock of the Company
that, together with the stock held by such Person, constitutes more than fifty
percent (50%) of the total voting power of the stock of the Company; provided,
however, that for purposes of this subsection (i), the acquisition of additional
stock by any one Person, who is considered to own more than fifty percent (50%)
of the total voting power of the stock of the Company will not be considered a
Change in Control; or

 

  (ii) Change in Effective Control of the Company. If the Company has a class of
securities registered pursuant to Section 12 of the Exchange Act, a change in
the effective control of the Company which occurs on the date that a majority of
members of the board of directors (the “Board”) of the Company is replaced
during any twelve (12) month period by a member of the Board whose appointment
or election is not endorsed by a majority of the members of the Board prior to
the date of the appointment or election. For purposes of this subsection (ii),
if any Person is considered to be in effective control of the Company, the
acquisition of additional control of the Company by the same Person will not be
considered a Change in Control; or

 

  (iii) Change in Ownership of a Substantial Portion of the Company’s Assets. A
change in the ownership of a substantial portion of the Company’s assets which
occurs on the date that any Person acquires (or has acquired during the twelve
(12) month period ending on the date of the most recent acquisition by such
person or persons) assets from the Company that have a total gross fair market
value equal to or more than fifty percent (50%) of the total gross fair market
value of all of the assets of the Company immediately prior to such acquisition
or acquisitions; provided, however, that for purposes of this subsection (iii),
the following will not constitute a change in the ownership of a substantial
portion of the Company’s assets: (A) a transfer to an entity that is controlled
by the Company’s shareholders immediately after the transfer, or (B) a transfer
of assets by the Company to: (1) a shareholder of the Company (immediately
before the asset transfer) in exchange for or with respect to the Company’s
stock, (2) an entity, fifty percent (50%) or more of the total value or voting
power of which is owned, directly or indirectly, by the Company, (3) a Person,
that owns, directly or indirectly, fifty percent (50%) or more of the total
value or voting power of all the outstanding stock of the Company, or (4) an
entity, at least fifty percent (50%) of the total value or voting power of which
is owned, directly or indirectly, by a Person described in this subsection
(iii)(B)(3). For purposes of this subsection (iii), gross fair market value
means the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.

For purposes of this definition, persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.

Further and for the avoidance of doubt, a transaction shall not constitute a
Change in Control if: (i) its sole purpose is to change the state of the
Company’s incorporation, or (ii) its sole purpose is to create a holding company
that shall be owned in substantially the same proportions by the persons who
held the Company’s securities immediately before such transaction.

 

  (c) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or Treasury Regulation

 

  (d) “Disability” means total and permanent disability as defined in
Section 22(e)(3) of the Code, provided that in the case of Awards other than
Incentive Stock Options, the Administrator in its discretion may determine
whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.

 

  (e) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

  (f) “Fair Market Value” means, as of any date, the value of Common Stock
determined as follows:

 

  (i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq Global Market,
the Nasdaq Global Select Market or the Nasdaq Capital Market, its Fair Market
Value shall be the closing sales price for such stock (or, if no closing sales
price was reported on that date, as applicable, on the last trading date such
closing sales price is reported) as quoted on such exchange or system on the day
of determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

 

  (ii) If the Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, its Fair Market Value shall be the mean
between the high bid and low asked prices for the Common Stock on the day of
determination (or, if no bids and asks were reported on that date, as
applicable, on the last trading date such bids and asks are reported); or

 

  (iii) In the absence of an established market for the Common Stock, the Fair
Market Value will be determined in good faith by the Administrator.

 

  (g) “Parent” means a “parent corporation,” whether now or hereafter existing,
as defined in Section 424(e) of the Code.

 

  (h) “Share(s)” means a share or shares of the Common Stock, as adjusted in
accordance with Section 13(a) of Exhibit A of the Award Agreement (Terms and
Conditions of Stock Option Grant”).

 

  (i) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter
existing, as defined in Section 424(f) of the Code.

--------------------------------------------------------------------------------

EXHIBIT C

SAREPTA THERAPEUTICS, INC.

EXERCISE NOTICE

Sarepta Therapeutics, Inc.

215 First Street

Suite 415

Cambridge, MA 02142

1. Exercise of Option. Effective as of today,             ,              , the
undersigned (“Purchaser”) hereby elects to purchase                 shares (the
“Shares”) of the Common Stock of Sarepta Therapeutics, Inc. (the “Company”)
under and pursuant to the Stock Option Award Agreement dated             
between the Purchaser and the Company (the “Award Agreement”). The purchase
price for the Shares will be $        , as required by the Award Agreement.

2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price of the Shares and any required tax withholding to be paid in
connection with the exercise of the Option.

3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Award Agreement and agrees to abide by and be
bound by their terms and conditions.

4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the Shares, no right to vote or receive dividends or any other
rights as a shareholder will exist with respect to the Shares subject to the
Option, notwithstanding the exercise of the Option. The Shares so acquired will
be issued to Purchaser as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date of issuance, except as provided in Section 13 of the Award
Agreement.

5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted with any tax consultants
Purchaser deems advisable in connection with the purchase or disposition of the
Shares and that Purchaser is not relying on the Company for any tax advice.

6. Entire Agreement; Governing Law. The Award Agreement is incorporated herein
by reference. This Exercise Notice and the Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser’s interest except by means of a writing signed by the
Company and Purchaser. This agreement is governed by the internal substantive
laws, but not the choice of law rules, of the State of Delaware.

 

Submitted by:       Accepted by: PURCHASER:       SAREPTA THERAPEUTICS, INC.

 

Signature

     

 

By

 

Print Name

     

 

Title

Residence Address:      

 

     

 

                 

 

Date Received