Exhibit 10.1

 

OCERA THERAPEUTICS, INC.
THIRD AMENDED AND RESTATED

2011 STOCK OPTION AND INCENTIVE PLAN

 

SECTION 1.         GENERAL PURPOSE OF THE PLAN; DEFINITIONS

 

The name of the plan is the Ocera Therapeutics, Inc. Third Amended and Restated
2011 Stock Option and Incentive Plan (the “Plan”).  The purpose of the Plan is
to encourage and enable the officers, employees, Non-Employee Directors and
other key persons (including Consultants) of Ocera Therapeutics, Inc. (the
“Company”) and its Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company.  It is anticipated that providing such
persons with a direct stake in the Company’s welfare will assure a closer
identification of their interests with those of the Company and its
stockholders, thereby stimulating their efforts on the Company’s behalf and
strengthening their desire to remain with the Company.

 

The following terms shall be defined as set forth below:

 

“Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

 

“Administrator” means either the Board or the compensation committee of the
Board or a similar committee performing the functions of the compensation
committee and which is comprised of not less than two Non-Employee Directors who
are independent.

 

“Award” or “Awards,” except where referring to a particular category of grant
under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock
Awards, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards
and Dividend Equivalent Rights.

 

“Award Certificate” means a written or electronic document setting forth the
terms and provisions applicable to an Award granted under the Plan.  Each Award
Certificate is subject to the terms and conditions of the Plan.

 

“Board” means the Board of Directors of the Company.

 

“Cash-Based Award” means an Award entitling the recipient to receive a
cash-denominated payment.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
Code, and related rules, regulations and interpretations.

 

“Consultant” means any natural person that provides bona fide services to the
Company, and such services are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities.

 

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“Covered Employee” means an employee who is a “Covered Employee” within the
meaning of Section 162(m) of the Code.

 

“Dividend Equivalent Right” means an Award entitling the grantee to receive
credits based on cash dividends that would have been paid on the shares of Stock
specified in the Dividend Equivalent Right (or other award to which it relates)
if such shares had been issued to and held by the grantee.

 

“Effective Date” means the date on which the Plan is approved by stockholders as
set forth in Section 21.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

 

“Fair Market Value” of the Stock on any given date means the fair market value
of the Stock determined in good faith by the Administrator; provided, however,
that if the Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ Global Market
or another national securities exchange, the determination shall be made by
reference to market quotations.  If there are no market quotations for such
date, the determination shall be made by reference to the last date preceding
such date for which there are market quotations.

 

“Incentive Stock Option” means any Stock Option designated and qualified as an
“incentive stock option” as defined in Section 422 of the Code.

 

“Non-Employee Director” means a member of the Board who is not also an employee
of the Company or any Subsidiary.

 

“Non-Qualified Stock Option” means any Stock Option that is not an Incentive
Stock Option.

 

“Option” or “Stock Option” means any option to purchase shares of Stock granted
pursuant to Section 5.

 

“Performance-Based Award” means any Restricted Stock Award, Restricted Stock
Units, Performance Share Award or Cash-Based Award granted to a Covered Employee
that is intended to qualify as “performance-based compensation” under
Section 162(m) of the Code and the regulations promulgated thereunder.

 

“Performance Criteria” means the criteria that the Administrator selects for
purposes of establishing the Performance Goal or Performance Goals for an
individual for a Performance Cycle.  The Performance Criteria (which shall be
applicable to the organizational level specified by the Administrator,
including, but not limited to, the Company or a unit, division, group, or
Subsidiary of the Company) that will be used to establish Performance Goals are
limited to the following:  revenues, expense levels, cash flow, clinical,
regulatory, business development and financing milestones and developments,
earnings before interest, taxes, depreciation and amortization, net income
(loss) (either before or after interest, taxes, depreciation and/or
amortization), changes in the market price of the Stock, economic value-added,
funds from

 

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operations or similar measure, sales or revenue, acquisitions or strategic
transactions, operating income (loss), cash flow (including, but not limited to,
operating cash flow and free cash flow), return on capital, assets, equity, or
investment, stockholder returns, return on sales, gross or net profit levels,
productivity, expense, margins, operating efficiency, customer satisfaction,
working capital, earnings (loss) per share of Stock, sales or market shares and
number of customers, any of which may be measured either in absolute terms or as
compared to any incremental increase or as compared to results of a peer group.

 

“Performance Cycle” means one or more periods of time, which may be of varying
and overlapping durations, as the Administrator may select, over which the
attainment of one or more Performance Criteria will be measured for the purpose
of determining a grantee’s right to and the payment of a Restricted Stock Award,
Restricted Stock Units, Performance Share Award, or Cash-Based Award, the
vesting and/or payment of which is subject to the attainment of one or more
Performance Goals.  Each such period shall not be less than 12 months.

 

“Performance Goals” means, for a Performance Cycle, the specific goals
established in writing by the Administrator for a Performance Cycle based upon
the Performance Criteria.

 

“Performance Share Award” means an Award entitling the recipient to acquire
shares of Stock upon the attainment of specified Performance Goals.

 

“Restricted Stock Award” means an Award entitling the recipient to acquire, at
such purchase price (which may be zero) as determined by the Administrator,
shares of Stock subject to such restrictions and conditions as the Administrator
may determine at the time of grant.

 

“Restricted Stock Units” means an Award of stock units subject to such
restrictions and conditions as the Administrator may determine at the time of
grant.

 

“Sale Event” shall mean (i) the sale of all or substantially all of the assets
of the Company on a consolidated basis to an unrelated person or entity, (ii) a
merger, reorganization or consolidation pursuant to which the holders of the
Company’s outstanding voting power immediately prior to such transaction do not
own a majority of the outstanding voting power of the resulting or successor
entity (or its ultimate parent, if applicable) immediately upon completion of
such transaction, (iii) the sale of all of the Stock of the Company to an
unrelated person or entity, or (iv) any other transaction in which the owners of
the Company’s outstanding voting power prior to such transaction do not own at
least a majority of the outstanding voting power of the Company or any successor
entity immediately upon completion of the transaction other than as a result of
the acquisition of securities directly from the Company.

 

“Sale Price” means the value as determined by the Administrator of the
consideration payable, or otherwise to be received by stockholders, per share of
Stock pursuant to a Sale Event.

 

“Section 409A” means Section 409A of the Code and the regulations and other
guidance promulgated thereunder.

 

“Stock” means the Common Stock, par value $0.00001 per share, of the Company,
subject to adjustments pursuant to Section 3.

 

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“Stock Appreciation Right” means an Award entitling the recipient to receive
shares of Stock having a value equal to the excess of the Fair Market Value of
the Stock on the date of exercise over the exercise price of the Stock
Appreciation Right multiplied by the number of shares of Stock with respect to
which the Stock Appreciation Right shall have been exercised.

 

“Subsidiary” means any corporation or other entity (other than the Company) in
which the Company has at least a 50 percent interest, either directly or
indirectly.

 

“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of
the attribution rules of Section 424(d) of the Code) more than 10 percent of the
combined voting power of all classes of stock of the Company or any parent or
subsidiary corporation.

 

“Unrestricted Stock Award” means an Award of shares of Stock free of any
restrictions.

 

SECTION 2.                            ADMINISTRATION OF PLAN; ADMINISTRATOR
AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

 

(a)                                 Administration of Plan.  The Plan shall be
administered by the Administrator.

 

(b)                                 Powers of Administrator.  The Administrator
shall have the power and authority to grant Awards consistent with the terms of
the Plan, including the power and authority:

 

(i)                                     to select the individuals to whom Awards
may from time to time be granted;

 

(ii)                                  to determine the time or times of grant,
and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units,
Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards and
Dividend Equivalent Rights, or any combination of the foregoing, granted to any
one or more grantees;

 

(iii)                               to determine the number of shares of Stock
to be covered by any Award;

 

(iv)                              to determine and modify from time to time the
terms and conditions, including restrictions, not inconsistent with the terms of
the Plan, of any Award, which terms and conditions may differ among individual
Awards and grantees, and to approve the forms of Award Certificates;

 

(v)                                 to accelerate at any time the exercisability
or vesting of all or any portion of any Award;

 

(vi)                              subject to the provisions of Section 5(b), to
extend at any time the period in which Stock Options may be exercised; and

 

(vii)                           at any time to adopt, alter and repeal such
rules, guidelines and practices for administration of the Plan and for its own
acts and proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written instruments); to
make all determinations it deems advisable for the administration of the Plan;
to

 

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decide all disputes arising in connection with the Plan; and to otherwise
supervise the administration of the Plan.

 

All decisions and interpretations of the Administrator shall be binding on all
persons, including the Company and Plan grantees.

 

(c)                                  Delegation of Authority to Grant Awards. 
Subject to applicable law, the Administrator, in its discretion, may delegate to
the Chief Executive Officer of the Company all or part of the Administrator’s
authority and duties with respect to the granting of Awards to individuals who
are (i) not subject to the reporting and other provisions of Section 16 of the
Exchange Act and (ii) not Covered Employees.  Any such delegation by the
Administrator shall include a limitation as to the amount of Stock underlying
Awards that may be granted during the period of the delegation and shall contain
guidelines as to the determination of the exercise price and the vesting
criteria.  The Administrator may revoke or amend the terms of a delegation at
any time but such action shall not invalidate any prior actions of the
Administrator’s delegate or delegates that were consistent with the terms of the
Plan.

 

(d)                                 Award Certificate.  Awards under the Plan
shall be evidenced by Award Certificates that set forth the terms, conditions
and limitations for each Award which may include, without limitation, the term
of an Award and the provisions applicable in the event employment or service
terminates.

 

(e)                                  Indemnification.  Neither the Board nor the
Administrator, nor any member of either or any delegate thereof, shall be liable
for any act, omission, interpretation, construction or determination made in
good faith in connection with the Plan, and the members of the Board and the
Administrator (and any delegate thereof) shall be entitled in all cases to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including, without limitation, reasonable attorneys’ fees)
arising or resulting therefrom to the fullest extent permitted by law and/or
under the Company’s articles or bylaws or any directors’ and officers’ liability
insurance coverage which may be in effect from time to time and/or any
indemnification agreement between such individual and the Company.

 

(f)                                   Foreign Award Recipients.  Notwithstanding
any provision of the Plan to the contrary, in order to comply with the laws in
other countries in which the Company and its Subsidiaries operate or have
employees or other individuals eligible for Awards, the Administrator, in its
sole discretion, shall have the power and authority to:  (i) determine which
Subsidiaries shall be covered by the Plan; (ii) determine which individuals
outside the United States are eligible to participate in the Plan; (iii) modify
the terms and conditions of any Award granted to individuals outside the United
States to comply with applicable foreign laws; (iv) establish subplans and
modify exercise procedures and other terms and procedures, to the extent the
Administrator determines such actions to be necessary or advisable (and such
subplans and/or modifications shall be attached to this Plan as appendices);
provided, however, that no such subplans and/or modifications shall increase the
share limitations contained in Section 3(a) hereof; and (v) take any action,
before or after an Award is made, that the Administrator determines to be
necessary or advisable to obtain approval or comply with any local governmental
regulatory exemptions or approvals.  Notwithstanding the foregoing, the
Administrator may not take any actions hereunder, and no Awards shall be
granted, that would

 

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violate the Exchange Act or any other applicable United States securities law,
the Code, or any other applicable United States governing statute or law.

 

SECTION 3.                            STOCK ISSUABLE UNDER THE PLAN; MERGERS;
SUBSTITUTION

 

(a)                                 Stock Issuable.  The maximum number of
shares of Stock reserved and available for issuance under the Plan shall be the
sum of (i) 387,627 shares and (ii) subject to stockholder approval, an
additional 1,300,000 shares.  For purposes of this limitation, the shares of
Stock underlying any Awards that are forfeited, canceled or otherwise terminated
(other than by exercise) shall be added back to the shares of Stock available
for issuance under the Plan.  Notwithstanding the foregoing, the following
shares shall not be added to the shares authorized for grant under the Plan: 
(i) shares tendered or held back upon exercise of an Option or settlement of an
Award to cover the exercise price or tax withholding, and (ii) shares subject to
a Stock Appreciation Right that are not issued in connection with the stock
settlement of the Stock Appreciation Right upon exercise thereof.  In the event
the Company repurchases shares of Stock on the open market, such shares shall
not be added to the shares of Stock available for issuance under the Plan. 
Subject to such overall limitations, shares of Stock may be issued up to such
maximum number pursuant to any type or types of Award; provided, however, that
Stock Options or Stock Appreciation Rights with respect to no more than
1,000,000 shares of Stock may be granted to any one individual grantee during
any one calendar year period and no more than 3,602,328 shares of the Stock may
be issued in the form of Incentive Stock Options.  The shares available for
issuance under the Plan may be authorized but unissued shares of Stock or shares
of Stock reacquired by the Company.

 

(b)                                 Changes in Stock.  Subject to
Section 3(c) hereof, if, as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar change in the Company’s capital stock, the outstanding shares of Stock
are increased or decreased or are exchanged for a different number or kind of
shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, or, if, as
a result of any merger or consolidation, sale of all or substantially all of the
assets of the Company, the outstanding shares of Stock are converted into or
exchanged for securities of the Company or any successor entity (or a parent or
subsidiary thereof), the Administrator shall make an appropriate or
proportionate adjustment in (i) the maximum number of shares reserved for
issuance under the Plan, including the maximum number of shares that may be
issued in the form of Incentive Stock Options, (ii) the number of Stock Options
or Stock Appreciation Rights that can be granted to any one individual grantee
and the maximum number of shares that may be granted under a Performance-Based
Award, (iii) the number and kind of shares or other securities subject to any
then outstanding Awards under the Plan, (iv) the repurchase price, if any, per
share subject to each outstanding Restricted Stock Award, and (v) the exercise
price for each share subject to any then outstanding Stock Options and Stock
Appreciation Rights under the Plan, without changing the aggregate exercise
price (i.e., the exercise price multiplied by the number of Stock Options and
Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation
Rights remain exercisable.  The Administrator shall also make equitable or
proportionate adjustments in the number of shares subject to outstanding Awards
and the exercise price and the terms of outstanding Awards to take into
consideration cash dividends paid other than in the ordinary course or any other
extraordinary

 

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corporate event.  The adjustment by the Administrator shall be final, binding
and conclusive.  No fractional shares of Stock shall be issued under the Plan
resulting from any such adjustment, but the Administrator in its discretion may
make a cash payment in lieu of fractional shares.

 

(c)                                  Mergers and Other Transactions.  Except as
the Administrator may otherwise specify with respect to particular Awards in the
relevant Award Certificate, in the case of and subject to the consummation of a
Sale Event, all Options and Stock Appreciation Rights that are not exercisable
immediately prior to the effective time of the Sale Event shall become fully
exercisable as of the effective time of the Sale Event, all other Awards with
time-based vesting, conditions or restrictions shall become fully vested and
nonforfeitable as of the effective time of the Sale Event and all Awards with
conditions and restrictions relating to the attainment of performance goals may
become vested and nonforfeitable in connection with a Sale Event in the
Administrator’s discretion.  Upon the effective time of the Sale Event, the Plan
and all outstanding Awards granted hereunder shall terminate, unless provision
is made in connection with the Sale Event in the sole discretion of the parties
thereto for the assumption or continuation of Awards theretofore granted by the
successor entity, or the substitution of such Awards with new Awards of the
successor entity or parent thereof, with appropriate adjustment as to the number
and kind of shares and, if appropriate, the per share exercise prices, as such
parties shall agree (after taking into account any acceleration hereunder).  In
the event of such termination, (i) the Company shall have the option (in its
sole discretion) to make or provide for a cash payment to the grantees holding
Options and Stock Appreciation Rights, in exchange for the cancellation thereof,
in an amount equal to the difference between (A) the Sale Price multiplied by
the number of shares of Stock subject to outstanding Options and Stock
Appreciation Rights (to the extent then exercisable (after taking into account
any acceleration hereunder) at prices not in excess of the Sale Price) and
(B) the aggregate exercise price of all such outstanding Options and Stock
Appreciation Rights; or (ii) each grantee shall be permitted, within a specified
period of time prior to the consummation of the Sale Event as determined by the
Administrator, to exercise all outstanding Options and Stock Appreciation Rights
held by such grantee.

 

(d)                                 Substitute Awards.  The Administrator may
grant Awards under the Plan in substitution for stock and stock based awards
held by employees, directors or other key persons of another corporation in
connection with the merger or consolidation of the employing corporation with
the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation.  The Administrator may direct
that the substitute awards be granted on such terms and conditions as the
Administrator considers appropriate in the circumstances.  Any substitute Awards
granted under the Plan shall not count against the share limitation set forth in
Section 3(a).

 

SECTION 4.         ELIGIBILITY

 

Grantees under the Plan will be such full or part-time officers and other
employees, Non-Employee Directors and key persons (including Consultants) of the
Company and its Subsidiaries as are selected from time to time by the
Administrator in its sole discretion.

 

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SECTION 5.                            STOCK OPTIONS

 

Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.

 

Stock Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options.  Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a “subsidiary corporation”
within the meaning of Section 424(f) of the Code.  To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.

 

Stock Options granted pursuant to this Section 5 shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Administrator
shall deem desirable.  If the Administrator so determines, Stock Options may be
granted in lieu of cash compensation at the optionee’s election, subject to such
terms and conditions as the Administrator may establish.

 

(a)                                 Exercise Price.  The exercise price per
share for the Stock covered by a Stock Option granted pursuant to this Section 5
shall be determined by the Administrator at the time of grant but shall not be
less than 100 percent of the Fair Market Value on the date of grant.  In the
case of an Incentive Stock Option that is granted to a Ten Percent Owner, the
option price of such Incentive Stock Option shall be not less than 110 percent
of the Fair Market Value on the grant date.

 

(b)                                 Option Term.  The term of each Stock Option
shall be fixed by the Administrator, but no Stock Option shall be exercisable
more than ten years after the date the Stock Option is granted.  In the case of
an Incentive Stock Option that is granted to a Ten Percent Owner, the term of
such Stock Option shall be no more than five years from the date of grant.

 

(c)                                  Exercisability; Rights of a Stockholder. 
Stock Options shall become exercisable at such time or times, whether or not in
installments, as shall be determined by the Administrator at or after the grant
date.  The Administrator may at any time accelerate the exercisability of all or
any portion of any Stock Option.  An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of a Stock Option and
not as to unexercised Stock Options.

 

(d)                                 Method of Exercise.  Stock Options may be
exercised in whole or in part, by giving written or electronic notice of
exercise to the Company, specifying the number of shares to be purchased. 
Payment of the purchase price may be made by one or more of the following
methods to the extent provided in the Option Award Certificate:

 

(i)                                     In cash, by certified or bank check or
other instrument acceptable to the Administrator;

 

(ii)                                  Through the delivery (or attestation to
the ownership following such procedures as the Company may prescribe) of shares
of Stock that are not then subject to restrictions under any Company plan.  Such
surrendered shares shall be valued at Fair Market Value on the exercise date;

 

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(iii)                               By the optionee delivering to the Company a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company cash or a check payable and acceptable
to the Company for the purchase price; provided that in the event the optionee
chooses to pay the purchase price as so provided, the optionee and the broker
shall comply with such procedures and enter into such agreements of indemnity
and other agreements as the Company shall prescribe as a condition of such
payment procedure; or

 

(iv)                              With respect to Stock Options that are not
Incentive Stock Options, by a “net exercise” arrangement pursuant to which the
Company will reduce the number of shares of Stock issuable upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price.

 

Payment instruments will be received subject to collection.  The transfer to the
optionee on the records of the Company or of the transfer agent of the shares of
Stock to be purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the optionee (or a purchaser acting in his stead in
accordance with the provisions of the Stock Option) by the Company of the full
purchase price for such shares and the fulfillment of any other requirements
contained in the Option Award Certificate or applicable provisions of laws
(including the satisfaction of any withholding taxes that the Company is
obligated to withhold with respect to the optionee).  In the event an optionee
chooses to pay the purchase price by previously-owned shares of Stock through
the attestation method, the number of shares of Stock transferred to the
optionee upon the exercise of the Stock Option shall be net of the number of
attested shares.  In the event that the Company establishes, for itself or using
the services of a third party, an automated system for the exercise of Stock
Options, such as a system using an Internet website or interactive voice
response, then the paperless exercise of Stock Options may be permitted through
the use of such an automated system.

 

(e)                                  Annual Limit on Incentive Stock Options. 
To the extent required for “incentive stock option” treatment under Section 422
of the Code, the aggregate Fair Market Value (determined as of the time of
grant) of the shares of Stock with respect to which Incentive Stock Options
granted under this Plan and any other plan of the Company or its parent and
subsidiary corporations become exercisable for the first time by an optionee
during any calendar year shall not exceed $100,000.  To the extent that any
Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock
Option.

 

SECTION 6.         STOCK APPRECIATION RIGHTS

 

(a)                                 Award of Stock Appreciation Rights.  The
Administrator may grant Stock Appreciation Rights under the Plan.  A Stock
Appreciation Right is an Award entitling the recipient to receive shares of
Stock having a value equal to the excess of the Fair Market Value of a share of
Stock on the date of exercise over the exercise price of the Stock Appreciation
Right multiplied by the number of shares of Stock with respect to which the
Stock Appreciation Right shall have been exercised.

 

(b)                                 Exercise Price of Stock Appreciation
Rights.  The exercise price of a Stock Appreciation Right shall not be less than
100 percent of the Fair Market Value of the Stock on the date of grant.

 

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(c)                                  Grant and Exercise of Stock Appreciation
Rights.  Stock Appreciation Rights may be granted by the Administrator
independently of any Stock Option granted pursuant to Section 5 of the Plan.

 

(d)                                 Terms and Conditions of Stock Appreciation
Rights.  Stock Appreciation Rights shall be subject to such terms and conditions
as shall be determined from time to time by the Administrator.  The term of a
Stock Appreciation Right may not exceed ten years.

 

SECTION 7.         RESTRICTED STOCK AWARDS

 

(a)                                 Nature of Restricted Stock Awards.  The
Administrator shall determine the restrictions and conditions applicable to each
Restricted Stock Award at the time of grant.  Conditions may be based on
continuing employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives.  The terms and conditions of
each such Award Certificate shall be determined by the Administrator, and such
terms and conditions may differ among individual Awards and grantees.

 

(b)                                 Rights as a Stockholder.  Upon the grant of
the Restricted Stock Award and payment of any applicable purchase price, a
grantee shall have the rights of a stockholder with respect to the voting of the
Restricted Stock and the receipt of dividends; provided that if the lapse of
restrictions with respect to the Restricted Stock Award is tied to the
attainment of performance goals, any dividends paid by the Company during the
performance period shall accrue and shall not be paid to the grantee until and
to the extent the performance goals are met with respect to the Restricted Stock
Award.  Unless the Administrator shall otherwise determine, (i) uncertificated
Restricted Stock shall be accompanied by a notation on the records of the
Company or the transfer agent to the effect that they are subject to forfeiture
until such Restricted Stock are vested as provided in Section 7(d) below, and
(ii) certificated Restricted Stock shall remain in the possession of the Company
until such Restricted Stock is vested as provided in Section 7(d) below, and the
grantee shall be required, as a condition of the grant, to deliver to the
Company such instruments of transfer as the Administrator may prescribe.

 

(c)                                  Restrictions.  Restricted Stock may not be
sold, assigned, transferred, pledged or otherwise encumbered or disposed of
except as specifically provided herein or in the Restricted Stock Award
Certificate.  Except as may otherwise be provided by the Administrator either in
the Award Certificate or, subject to Section 18 below, in writing after the
Award is issued, if a grantee’s employment (or other service relationship) with
the Company and its Subsidiaries terminates for any reason, any Restricted Stock
that has not vested at the time of termination shall automatically and without
any requirement of notice to such grantee from or other action by or on behalf
of, the Company be deemed to have been reacquired by the Company at its original
purchase price (if any) from such grantee or such grantee’s legal representative
simultaneously with such termination of employment (or other service
relationship), and thereafter shall cease to represent any ownership of the
Company by the grantee or rights of the grantee as a stockholder.  Following
such deemed reacquisition of unvested Restricted Stock that are represented by
physical certificates, a grantee shall surrender such certificates to the
Company upon request without consideration.

 

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(d)                                 Vesting of Restricted Stock.  The
Administrator at the time of grant shall specify the date or dates and/or the
attainment of pre-established performance goals, objectives and other conditions
on which the non-transferability of the Restricted Stock and the Company’s right
of repurchase or forfeiture shall lapse.  Subsequent to such date or dates
and/or the attainment of such pre-established performance goals, objectives and
other conditions, the shares on which all restrictions have lapsed shall no
longer be Restricted Stock and shall be deemed “vested.”  Except as may
otherwise be provided by the Administrator either in the Award Certificate or,
subject to Section 18 below, in writing after the Award is issued, a grantee’s
rights in any shares of Restricted Stock that have not vested shall
automatically terminate upon the grantee’s termination of employment (or other
service relationship) with the Company and its Subsidiaries and such shares
shall be subject to the provisions of Section 7(c) above.

 

SECTION 8.                            RESTRICTED STOCK UNITS

 

(a)                                 Nature of Restricted Stock Units.   The
Administrator shall determine the restrictions and conditions applicable to each
Restricted Stock Unit at the time of grant.  Conditions may be based on
continuing employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives.  The terms and conditions of
each such Award Certificate shall be determined by the Administrator, and such
terms and conditions may differ among individual Awards and grantees.  Except in
the case of Restricted Stock Units with a deferred settlement date that complies
with Section 409A, at the end of the vesting period, the Restricted Stock Units,
to the extent vested, shall be settled in the form of shares of Stock. 
Restricted Stock Units with deferred settlement dates are subject to
Section 409A, and shall contain such additional terms and conditions as the
Administrator shall determine in its sole discretion in order for such Award to
comply with the requirements of Section 409A.

 

(b)                                 Election to Receive Restricted Stock Units
in Lieu of Compensation.  The Administrator may, in its sole discretion, permit
a grantee to elect to receive a portion of future cash compensation otherwise
due to such grantee in the form of an award of Restricted Stock Units.  Any such
election shall be made in writing and shall be delivered to the Company no later
than the date specified by the Administrator and in accordance with Section 409A
and such other rules and procedures established by the Administrator.  Any such
future cash compensation that the grantee elects to defer shall be converted to
a fixed number of Restricted Stock Units based on the Fair Market Value of Stock
on the date the compensation would otherwise have been paid to the grantee if
such payment had not been deferred as provided herein.  The Administrator shall
have the sole right to determine whether and under what circumstances to permit
such elections and to impose such limitations and other terms and conditions
thereon as the Administrator deems appropriate.  Any Restricted Stock Units that
are elected to be received in lieu of cash compensation shall be fully vested,
unless otherwise provided in the Award Certificate.

 

(c)                                  Rights as a Stockholder.  A grantee shall
have the rights as a stockholder only as to shares of Stock acquired by the
grantee upon settlement of Restricted Stock Units; provided, however, that the
grantee may be credited with Dividend Equivalent Rights with respect to the
stock units underlying his Restricted Stock Units, subject to such terms and
conditions as the Administrator may determine.

 

11

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(d)                                 Termination.  Except as may otherwise be
provided by the Administrator either in the Award Certificate or, subject to
Section 18 below, in writing after the Award is issued, a grantee’s right in all
Restricted Stock Units that have not vested shall automatically terminate upon
the grantee’s termination of employment (or cessation of service relationship)
with the Company and its Subsidiaries for any reason.

 

SECTION 9.                            UNRESTRICTED STOCK AWARDS

 

Grant or Sale of Unrestricted Stock.  The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Administrator) an Unrestricted Stock Award under the Plan.  Unrestricted
Stock Awards may be granted in respect of past services or other valid
consideration, or in lieu of cash compensation due to such grantee.

 

SECTION 10.                     CASH-BASED AWARDS

 

Grant of Cash-Based Awards.  The Administrator may, in its sole discretion,
grant Cash-Based Awards to any grantee in such number or amount and upon such
terms, and subject to such conditions, as the Administrator shall determine at
the time of grant.  The Administrator shall determine the maximum duration of
the Cash-Based Award, the amount of cash to which the Cash-Based Award pertains,
the conditions upon which the Cash-Based Award shall become vested or payable,
and such other provisions as the Administrator shall determine.  Each Cash-Based
Award shall specify a cash-denominated payment amount, formula or payment ranges
as determined by the Administrator.  Payment, if any, with respect to a
Cash-Based Award shall be made in accordance with the terms of the Award and may
be made in cash or in shares of Stock, as the Administrator determines.

 

SECTION 11.                     PERFORMANCE SHARE AWARDS

 

(a)                                 Nature of Performance Share Awards.  The
Administrator may, in its sole discretion, grant Performance Share Awards
independent of, or in connection with, the granting of any other Award under the
Plan.  The Administrator shall determine whether and to whom Performance Share
Awards shall be granted, the Performance Goals, the periods during which
performance is to be measured (which may not be less than one year except in the
case of a Sale Event), and such other limitations and conditions as the
Administrator shall determine.

 

(b)                                 Rights as a Stockholder.  A grantee
receiving a Performance Share Award shall have the rights of a stockholder only
as to shares actually received by the grantee under the Plan and not with
respect to shares subject to the Award but not actually received by the
grantee.  A grantee shall be entitled to receive shares of Stock under a
Performance Share Award only upon satisfaction of all conditions specified in
the Performance Share Award Certificate (or in a performance plan adopted by the
Administrator).

 

(c)                                  Termination.  Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 18 below, in writing after the Award is issued, a grantee’s rights in
all Performance Share Awards shall automatically terminate upon the grantee’s
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

 

12

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SECTION 12.                     PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

 

(a)                                 Performance-Based Awards.  Any employee or
other key person providing services to the Company and who is selected by the
Administrator may be granted one or more Performance-Based Awards in the form of
a Restricted Stock Award, Restricted Stock Units, Performance Share Awards or
Cash-Based Award payable upon the attainment of Performance Goals that are
established by the Administrator and relate to one or more of the Performance
Criteria, in each case on a specified date or dates or over any period or
periods determined by the Administrator.  The Administrator shall define in an
objective fashion the manner of calculating the Performance Criteria it selects
to use for any Performance Cycle.  Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual.  The Administrator, in its discretion, may adjust or
modify the calculation of Performance Goals for such Performance Cycle in order
to prevent the dilution or enlargement of the rights of an individual (i) in the
event of, or in anticipation of, any unusual or extraordinary corporate item,
transaction, event or development, (ii) in recognition of, or in anticipation
of, any other unusual or nonrecurring events affecting the Company, or the
financial statements of the Company, or (iii) in response to, or in anticipation
of, changes in applicable laws, regulations, accounting principles, or business
conditions provided however, that the Administrator may not exercise such
discretion in a manner that would increase the Performance-Based Award granted
to a Covered Employee.  Each Performance-Based Award shall comply with the
provisions set forth below.

 

(b)                                 Grant of Performance-Based Awards.  With
respect to each Performance-Based Award granted to a Covered Employee, the
Administrator shall select, within the first 90 days of a Performance Cycle (or,
if shorter, within the maximum period allowed under Section 162(m) of the Code)
the Performance Criteria for such grant, and the Performance Goals with respect
to each Performance Criterion (including a threshold level of performance below
which no amount will become payable with respect to such Award).  Each
Performance-Based Award will specify the amount payable, or the formula for
determining the amount payable, upon achievement of the various applicable
performance targets.  The Performance Criteria established by the Administrator
may be (but need not be) different for each Performance Cycle and different
Performance Goals may be applicable to Performance-Based Awards to different
Covered Employees.

 

(c)                                  Payment of Performance-Based Awards. 
Following the completion of a Performance Cycle, the Administrator shall meet to
review and certify in writing whether, and to what extent, the Performance Goals
for the Performance Cycle have been achieved and, if so, to also calculate and
certify in writing the amount of the Performance-Based Awards earned for the
Performance Cycle.  The Administrator shall then determine the actual size of
each Covered Employee’s Performance-Based Award, and, in doing so, may reduce or
eliminate the amount of the Performance-Based Award for a Covered Employee if,
in its sole judgment, such reduction or elimination is appropriate.

 

(d)                                 Maximum Award Payable.  The maximum
Performance-Based Award payable to any one Covered Employee under the Plan for a
Performance Cycle is 500,000 shares of Stock

 

13

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(subject to adjustment as provided in Section 3(b) hereof) or $2,000,000 in the
case of a Performance-Based Award that is a Cash-Based Award.

 

SECTION 13.                     DIVIDEND EQUIVALENT RIGHTS

 

(a)                                 Dividend Equivalent Rights.  A Dividend
Equivalent Right may be granted hereunder to any grantee as a component of an
award of Restricted Stock Units, Restricted Stock Award or Performance Share
Award or as a freestanding award.  The terms and conditions of Dividend
Equivalent Rights shall be specified in the Award Certificate.  Dividend
equivalents credited to the holder of a Dividend Equivalent Right may be paid
currently or may be deemed to be reinvested in additional shares of Stock, which
may thereafter accrue additional equivalents.  Any such reinvestment shall be at
Fair Market Value on the date of reinvestment or such other price as may then
apply under a dividend reinvestment plan sponsored by the Company, if any. 
Dividend Equivalent Rights may be settled in cash or shares of Stock or a
combination thereof, in a single installment or installments.  A Dividend
Equivalent Right granted as a component of an award of Restricted Stock Units,
Restricted Stock Award or Performance Share Award may provide that such Dividend
Equivalent Right shall be settled upon settlement or payment of, or lapse of
restrictions on, such other Award, and that such Dividend Equivalent Right shall
expire or be forfeited or annulled under the same conditions as such other
Award.  A Dividend Equivalent Right granted as a component of a Restricted Stock
Units, Restricted Stock Award or Performance Share Award may also contain terms
and conditions different from such other Award.

 

(b)                                 Interest Equivalents.  Any Award under this
Plan that is settled in whole or in part in cash on a deferred basis may provide
in the grant for interest equivalents to be credited with respect to such cash
payment.  Interest equivalents may be compounded and shall be paid upon such
terms and conditions as may be specified by the grant.

 

(c)                                  Termination.  Except as may otherwise be
provided by the Administrator either in the Award Certificate or, subject to
Section 18 below, in writing after the Award is issued, a grantee’s rights in
all Dividend Equivalent Rights or interest equivalents granted as a component of
an award of Restricted Stock Units, Restricted Stock Award or Performance Share
Award that has not vested shall automatically terminate upon the grantee’s
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

 

SECTION 14.                     TRANSFERABILITY OF AWARDS

 

(a)                                 Transferability.  Except as provided in
Section 14(b) below, during a grantee’s lifetime, his or her Awards shall be
exercisable only by the grantee, or by the grantee’s legal representative or
guardian in the event of the grantee’s incapacity.  No Awards shall be sold,
assigned, transferred or otherwise encumbered or disposed of by a grantee other
than by will or by the laws of descent and distribution or pursuant to a
domestic relations order.  No Awards shall be subject, in whole or in part, to
attachment, execution, or levy of any kind, and any purported transfer in
violation hereof shall be null and void.

 

(b)                                 Administrator Action.  Notwithstanding
Section 14(a), the Administrator, in its discretion, may provide either in the
Award Certificate regarding a given Award or by

 

14

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subsequent written approval that the grantee (who is an employee or director)
may transfer his or her Non-Qualified Options to his or her immediate family
members, to trusts for the benefit of such family members, or to partnerships in
which such family members are the only partners, provided that the transferee
agrees in writing with the Company to be bound by all of the terms and
conditions of this Plan and the applicable Award.  In no event may an Award be
transferred by a grantee for value.

 

(c)                                  Family Member.  For purposes of
Section 14(b), “family member” shall mean a grantee’s child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the grantee’s household (other than a tenant of the grantee), a trust in
which these persons (or the grantee) have more than 50 percent of the beneficial
interest, a foundation in which these persons (or the grantee) control the
management of assets, and any other entity in which these persons (or the
grantee) own more than 50 percent of the voting interests.

 

(d)                                 Designation of Beneficiary.  Each grantee to
whom an Award has been made under the Plan may designate a beneficiary or
beneficiaries to exercise any Award or receive any payment under any Award
payable on or after the grantee’s death.  Any such designation shall be on a
form provided for that purpose by the Administrator and shall not be effective
until received by the Administrator.  If no beneficiary has been designated by a
deceased grantee, or if the designated beneficiaries have predeceased the
grantee, the beneficiary shall be the grantee’s estate.

 

SECTION 15.                     TAX WITHHOLDING

 

(a)                                 Payment by Grantee.  Each grantee shall, no
later than the date as of which the value of an Award or of any Stock or other
amounts received thereunder first becomes includable in the gross income of the
grantee for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld by the
Company with respect to such income.  The Company and its Subsidiaries shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the grantee.  The Company’s obligation to
deliver evidence of book entry (or stock certificates) to any grantee is subject
to and conditioned on tax withholding obligations being satisfied by the
grantee.

 

(b)                                 Payment in Stock.  Subject to approval by
the Administrator, a grantee may elect to have the Company’s minimum required
tax withholding obligation satisfied, in whole or in part, by authorizing the
Company to withhold from shares of Stock to be issued pursuant to any Award a
number of shares with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the withholding amount due.  The
Administrator may also require Awards to be subject to mandatory share
withholding up to the required withholding amount.  For purposes of share
withholding, the Fair Market Value of withheld shares shall be determined in the
same manner as the value of Stock includible in income of the Participants.

 

15

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SECTION 16.                     SECTION 409A AWARDS

 

To the extent that any Award is determined to constitute “nonqualified deferred
compensation” within the meaning of Section 409A (a “409A Award”), the Award
shall be subject to such additional rules and requirements as specified by the
Administrator from time to time in order to comply with Section 409A.  In this
regard, if any amount under a 409A Award is payable upon a “separation from
service” (within the meaning of Section 409A) to a grantee who is then
considered a “specified employee” (within the meaning of Section 409A), then no
such payment shall be made prior to the date that is the earlier of (i) six
months and one day after the grantee’s separation from service, or (ii) the
grantee’s death, but only to the extent such delay is necessary to prevent such
payment from being subject to interest, penalties and/or additional tax imposed
pursuant to Section 409A.  Further, the settlement of any such Award may not be
accelerated except to the extent permitted by Section 409A.

 

SECTION 17.                     TERMINATION OF EMPLOYMENT; TRANSFER, LEAVE OF
ABSENCE, ETC.

 

(a)                                 Termination of Employment.  If the grantee’s
employer ceases to be a Subsidiary, the grantee shall be deemed to have
terminated employment for purposes of the Plan.

 

(b)                                 For purposes of the Plan, the following
events shall not be deemed a termination of employment:

 

(i)                                     a transfer to the employment of the
Company from a Subsidiary or from the Company to a Subsidiary, or from one
Subsidiary to another; or

 

(ii)                                  an approved leave of absence for military
service or sickness, or for any other purpose approved by the Company, if the
employee’s right to re-employment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence was granted
or if the Administrator otherwise so provides in writing.

 

SECTION 18.                     AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue the Plan and the Administrator
may, at any time, amend or cancel any outstanding Award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holder’s
consent.  Except as provided in Section 3(b) or 3(c), without prior stockholder
approval, in no event may the Administrator exercise its discretion to reduce
the exercise price of outstanding Stock Options or Stock Appreciation Rights or
effect repricing through cancellation and re-grants or cancellation of Stock
Options or Stock Appreciation Rights in exchange for cash.  To the extent
required under the rules of any securities exchange or market system on which
the Stock is listed, to the extent determined by the Administrator to be
required by the Code to ensure that Incentive Stock Options granted under the
Plan are qualified under Section 422 of the Code, or to ensure that compensation
earned under Awards qualifies as performance-based compensation under
Section 162(m) of the Code, Plan amendments shall be subject to approval by the
Company stockholders entitled to vote at a meeting of stockholders.  Nothing in
this Section 18 shall limit the Administrator’s authority to take any action
permitted pursuant to Section 3(b) or 3(c).

 

16

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SECTION 19.                     STATUS OF PLAN

 

With respect to the portion of any Award that has not been exercised and any
payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards.  In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company’s
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

 

SECTION 20.                     GENERAL PROVISIONS

 

(a)                                 No Distribution.  The Administrator may
require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.

 

(b)                                 Delivery of Stock Certificates.  Stock
certificates to grantees under this Plan shall be deemed delivered for all
purposes when the Company or a stock transfer agent of the Company shall have
mailed such certificates in the United States mail, addressed to the grantee, at
the grantee’s last known address on file with the Company.  Uncertificated Stock
shall be deemed delivered for all purposes when the Company or a Stock transfer
agent of the Company shall have given to the grantee by electronic mail (with
proof of receipt) or by United States mail, addressed to the grantee, at the
grantee’s last known address on file with the Company, notice of issuance and
recorded the issuance in its records (which may include electronic “book entry”
records).  Notwithstanding anything herein to the contrary, the Company shall
not be required to issue or deliver any certificates evidencing shares of Stock
pursuant to the exercise of any Award, unless and until the Administrator has
determined, with advice of counsel (to the extent the Administrator deems such
advice necessary or advisable), that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on
which the shares of Stock are listed, quoted or traded.  All Stock certificates
delivered pursuant to the Plan shall be subject to any stop-transfer orders and
other restrictions as the Administrator deems necessary or advisable to comply
with federal, state or foreign jurisdiction, securities or other laws, rules and
quotation system on which the Stock is listed, quoted or traded.  The
Administrator may place legends on any Stock certificate to reference
restrictions applicable to the Stock.  In addition to the terms and conditions
provided herein, the Administrator may require that an individual make such
reasonable covenants, agreements, and representations as the Administrator, in
its discretion, deems necessary or advisable in order to comply with any such
laws, regulations or requirements.  The Administrator shall have the right to
require any individual to comply with any timing or other restrictions with
respect to the settlement or exercise of any Award, including a window-period
limitation, as may be imposed in the discretion of the Administrator.

 

(c)                                  Stockholder Rights.  Until Stock is deemed
delivered in accordance with Section 20(b), no right to vote or receive
dividends or any other rights of a stockholder will exist with respect to shares
of Stock to be issued in connection with an Award, notwithstanding the exercise
of a Stock Option or any other action by the grantee with respect to an Award.

 

17

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(d)                                 Other Compensation Arrangements; No
Employment Rights.  Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, including trusts, and
such arrangements may be either generally applicable or applicable only in
specific cases.  The adoption of this Plan and the grant of Awards do not confer
upon any employee any right to continued employment with the Company or any
Subsidiary.

 

(e)                                  Trading Policy Restrictions.  Option
exercises and other Awards under the Plan shall be subject to the Company’s
insider trading policies and procedures, as in effect from time to time.

 

(f)                                   Clawback Policy.  Awards under the Plan
shall be subject to the Company’s clawback policy, as in effect from time to
time.

 

SECTION 21.                     EFFECTIVE DATE OF PLAN

 

This Third Amended and Restated Plan shall become effective upon stockholder
approval in accordance with applicable state law, the Company’s bylaws and
articles of incorporation, and applicable stock exchange rules.  No grants of
Stock Options and other Awards may be made hereunder after the tenth anniversary
of the Effective Date and no grants of Incentive Stock Options may be made
hereunder after the tenth anniversary of the date the Plan is approved by the
Board.

 

SECTION 22.                     GOVERNING LAW

 

This Plan and all Awards and actions taken thereunder shall be governed by, and
construed in accordance with, the laws of the State of Delaware, applied without
regard to conflict of law principles.

 

18

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INCENTIVE STOCK OPTION AGREEMENT
UNDER THE OCERA THERAPEUTICS, INC.
THIRD AMENDED AND RESTATED

2011 STOCK OPTION AND INCENTIVE PLAN

 

Name of Optionee:

 

 

 

 

 

No. of Option Shares:

 

 

 

 

 

Option Exercise Price per Share:

 

$

 

 

[FMV on Grant Date (110% of FMV if a 10% owner)]

 

 

 

Grant Date:

 

 

 

 

 

Expiration Date:

 

 

 

 

[up to 10 years (5 if a 10% owner)]

 

Pursuant to the Ocera Therapeutics, Inc. Third Amended and Restated 2011 Stock
Option and Incentive Plan as amended through the date hereof (the “Plan”), Ocera
Therapeutics, Inc. (the “Company”) hereby grants to the Optionee named above an
option (the “Stock Option”) to purchase on or prior to the Expiration Date
specified above all or part of the number of shares of Common Stock, par value
$0.00001 per share (the “Stock”), of the Company specified above at the Option
Exercise Price per Share specified above subject to the terms and conditions set
forth herein and in the Plan.

 

1.                                      Exercisability Schedule.  No portion of
this Stock Option may be exercised until such portion shall have become
exercisable.  Except as set forth below, and subject to the discretion of the
Administrator (as defined in Section 2 of the Plan) to accelerate the
exercisability schedule hereunder, this Stock Option shall be exercisable with
respect to the following number of Option Shares on the dates indicated so long
as the Optionee remains an employee of the Company or a Subsidiary on such
dates:

 

Incremental Number of
Option Shares Exercisable*

 

Exercisability Date

 

 

 

 

 

(      

)%

 

 

(      

)%

 

 

(      

)%

 

 

(      

)%

 

 

(      

)%

 

 

 

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

* Max. of $100,000 per yr.

 

Once exercisable, this Stock Option shall continue to be exercisable at any time
or times prior to the close of business on the Expiration Date, subject to the
provisions hereof and of the Plan.

 

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

 

2.                                      Manner of Exercise.

 

(a)                                 The Optionee may exercise this Stock Option
only in the following manner:  from time to time on or prior to the Expiration
Date of this Stock Option, the Optionee may give written notice to the
Administrator of his or her election to purchase some or all of the Option
Shares purchasable at the time of such notice.  This notice shall specify the
number of Option Shares to be purchased.

 

Payment of the purchase price for the Option Shares may be made by one or more
of the following methods:  (i) in cash, by certified or bank check or other
instrument acceptable to the Administrator; (ii) through the delivery (or
attestation to the ownership) of shares of Stock that have been purchased by the
Optionee on the open market or that are beneficially owned by the Optionee and
are not then subject to any restrictions under any Company plan and that
otherwise satisfy any holding periods as may be required by the Administrator;
or (iii) by the Optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay the
option purchase price, provided that in the event the Optionee chooses to pay
the option purchase price as so provided, the Optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity and
other agreements as the Administrator shall prescribe as a condition of such
payment procedure; or (iv) a combination of (i), (ii) and (iii) above.  Payment
instruments will be received subject to collection.

 

The transfer to the Optionee on the records of the Company or of the transfer
agent of the Option Shares will be contingent upon (i) the Company’s receipt
from the Optionee of the full purchase price for the Option Shares, as set forth
above, (ii) the fulfillment of any other requirements contained herein or in the
Plan or in any other agreement or provision of laws, and (iii) the receipt by
the Company of any agreement, statement or other evidence that the Company may
require to satisfy itself that the issuance of Stock to be purchased pursuant to
the exercise of Stock Options under the Plan and any subsequent resale of the
shares of Stock will be in compliance with applicable laws and regulations.  In
the event the Optionee chooses to pay the purchase price by previously-owned
shares of Stock through the attestation method, the number of shares of Stock
transferred to the Optionee upon the exercise of the Stock Option shall be net
of the Shares attested to.

 

(b)                                 The shares of Stock purchased upon exercise
of this Stock Option shall be transferred to the Optionee on the records of the
Company or of the transfer agent upon compliance to the satisfaction of the
Administrator with all requirements under applicable laws or regulations in
connection with such transfer and with the requirements hereof and of the Plan. 
The determination of the Administrator as to such compliance shall be final and
binding on the Optionee.  The Optionee shall not be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares of Stock
subject to this Stock Option unless and until this Stock Option shall have been
exercised pursuant to the terms hereof, the Company or the transfer agent shall
have transferred the shares to the Optionee, and the Optionee’s name shall have
been entered as the stockholder of record on the books of the Company. 
Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such shares of Stock.

 

2

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(c)                                  The minimum number of shares with respect
to which this Stock Option may be exercised at any one time shall be 100 shares,
unless the number of shares with respect to which this Stock Option is being
exercised is the total number of shares subject to exercise under this Stock
Option at the time.

 

(d)                                 Notwithstanding any other provision hereof
or of the Plan, no portion of this Stock Option shall be exercisable after the
Expiration Date hereof.

 

3.                                      Termination of Employment.  If the
Optionee’s employment by the Company or a Subsidiary (as defined in the Plan) is
terminated, the period within which to exercise the Stock Option may be subject
to earlier termination as set forth below.

 

(a)                                 Termination Due to Death.  If the Optionee’s
employment terminates by reason of the Optionee’s death, any portion of this
Stock Option outstanding on such date, to the extent exercisable on the date of
death, may thereafter be exercised by the Optionee’s legal representative or
legatee for a period of twelve (12) months from the date of death or until the
Expiration Date, if earlier. Any portion of this Stock Option that is not
exercisable on the date of death shall terminate immediately and be of no
further force or effect.

 

(b)                                 Termination Due to Disability.  If the
Optionee’s employment terminates by reason of the Optionee’s disability (as
determined by the Administrator), any portion of this Stock Option outstanding
on such date, to the extent exercisable on the date of such disability, may
thereafter be exercised by the Optionee for a period of twelve (12) months from
the date of disability or until the Expiration Date, if earlier. Any portion of
this Stock Option that is not exercisable on the date of disability shall
terminate immediately and be of no further force or effect.

 

(c)                                  Termination for Cause.  If the Optionee’s
employment terminates for Cause, any portion of this Stock Option outstanding on
such date shall terminate immediately and be of no further force and effect. For
purposes hereof, “Cause” shall mean, unless otherwise provided in an employment
agreement between the Company and the Optionee, a determination by the
Administrator that the Optionee shall be dismissed as a result of (i) any
material breach by the Optionee of any agreement between the Optionee and the
Company; (ii) the conviction of, indictment for or plea of nolo contendere by
the Optionee to a felony or a crime involving moral turpitude; or (iii) any
material misconduct or willful and deliberate non-performance (other than by
reason of disability) by the Optionee of the Optionee’s duties to the Company.

 

(d)                                 Other Termination.  If the Optionee’s
employment terminates for any reason other than the Optionee’s death, the
Optionee’s disability, or Cause, and unless otherwise determined by the
Administrator, any portion of this Stock Option outstanding on such date may be
exercised, to the extent exercisable on the date of termination, for a period of
three (3) months from the date of termination or until the Expiration Date, if
earlier. Any portion of this Stock Option that is not exercisable on the date of
termination shall terminate immediately and be of no further force or effect.

 

3

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

 

The Administrator’s determination of the reason for termination of the
Optionee’s employment shall be conclusive and binding on the Optionee and his or
her representatives or legatees.

 

4.                                      Incorporation of Plan.  Notwithstanding
anything herein to the contrary, this Stock Option shall be subject to and
governed by all the terms and conditions of the Plan, including the powers of
the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in
this Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.

 

5.                                      Transferability.  This Agreement is
personal to the Optionee, is non-assignable and is not transferable in any
manner, by operation of law or otherwise, other than by will or the laws of
descent and distribution. This Stock Option is exercisable, during the
Optionee’s lifetime, only by the Optionee, and thereafter, only by the
Optionee’s legal representative or legatee.

 

6.                                      Status of the Stock Option.  This Stock
Option is intended to qualify as an “incentive stock option” under Section 422
of the Internal Revenue Code of 1986, as amended (the “Code”), but the Company
does not represent or warrant that this Stock Option qualifies as such. The
Optionee should consult with his or her own tax advisors regarding the tax
effects of this Stock Option and the requirements necessary to obtain favorable
income tax treatment under Section 422 of the Code, including, but not limited
to, holding period requirements. To the extent any portion of this Stock Option
does not so qualify as an “incentive stock option,” such portion shall be deemed
to be a non-qualified stock option. If the Optionee intends to dispose or does
dispose (whether by sale, gift, transfer or otherwise) of any Option Shares
within the one-year period beginning on the date after the transfer of such
shares to him or her, or within the two-year period beginning on the day after
the grant of this Stock Option, he or she will so notify the Company within 30
days after such disposition.

 

7.                                      Tax Withholding.  The Optionee shall,
not later than the date as of which the exercise of this Stock Option becomes a
taxable event for Federal income tax purposes, pay to the Company or make
arrangements satisfactory to the Administrator for payment of any Federal,
state, and local taxes required by law to be withheld on account of such taxable
event. The Company shall have the authority to cause the minimum required tax
withholding obligation to be satisfied, in whole or in part, by withholding from
shares of Stock to be issued to the Optionee a number of shares of Stock with an
aggregate Fair Market Value that would satisfy the minimum withholding amount
due.

 

8.                                      No Obligation to Continue Employment. 
Neither the Company nor any Subsidiary is obligated by or as a result of the
Plan or this Agreement to continue the Optionee in employment and neither the
Plan nor this Agreement shall interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of the Optionee at any time.

 

9.                                      Integration.  This Agreement constitutes
the entire agreement between the parties with respect to this Stock Option and
supersedes all prior agreements and discussions between the parties concerning
such subject matter.

 

4

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

 

10.                               Notices.  Notices hereunder shall be mailed or
delivered to the Company at its principal place of business and shall be mailed
or delivered to the Optionee at the address on file with the Company or, in
either case, at such other address as one party may subsequently furnish to the
other party in writing.

 

 

OCERA THERAPEUTICS, INC.

 

 

 

 

 

By:

 

 

 

Title:

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned.

 

 

Dated:

 

 

 

 

 

Optionee’s Signature

 

 

 

 

 

 

 

 

Optionee’s name and address:

 

5

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

 

NON-QUALIFIED STOCK OPTION AGREEMENT
FOR COMPANY EMPLOYEES
UNDER OCERA THERAPEUTICS, INC.
THIRD AMENDED AND RESTATED

2011 STOCK OPTION AND INCENTIVE PLAN

 

Name of Optionee:

 

 

 

 

 

No. of Option Shares:

 

 

 

 

 

Option Exercise Price per Share:

 

$

 

 

[FMV on Grant Date]

 

 

 

Grant Date:

 

 

 

 

 

Expiration Date:

 

 

 

Pursuant to the Ocera Therapeutics, Inc. Third Amended and Restated 2011 Stock
Option and Incentive Plan as amended through the date hereof (the “Plan”), Ocera
Therapeutics, Inc. (the “Company”) hereby grants to the Optionee named above an
option (the “Stock Option”) to purchase on or prior to the Expiration Date
specified above all or part of the number of shares of Common Stock, par value
$0.00001 per share (the “Stock”) of the Company specified above at the Option
Exercise Price per Share specified above subject to the terms and conditions set
forth herein and in the Plan. This Stock Option is not intended to be an
“incentive stock option” under Section 422 of the Internal Revenue Code of 1986,
as amended.

 

1.                                      Exercisability Schedule.  No portion of
this Stock Option may be exercised until such portion shall have become
exercisable. Except as set forth below, and subject to the discretion of the
Administrator (as defined in Section 2 of the Plan) to accelerate the
exercisability schedule hereunder, this Stock Option shall be exercisable with
respect to the following number of Option Shares on the dates indicated so long
as Optionee remains an employee of the Company or a Subsidiary on such dates:

 

Incremental Number of
Option Shares Exercisable

 

Exercisability Date

 

 

 

 

 

(      

)%

 

 

(      

)%

 

 

(      

)%

 

 

(      

)%

 

 

(      

)%

 

 

 

Once exercisable, this Stock Option shall continue to be exercisable at any time
or times prior to the close of business on the Expiration Date, subject to the
provisions hereof and of the Plan.

 

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

 

2.                                      Manner of Exercise.

 

(a)                                 The Optionee may exercise this Stock Option
only in the following manner:  from time to time on or prior to the Expiration
Date of this Stock Option, the Optionee may give written notice to the
Administrator of his or her election to purchase some or all of the Option
Shares purchasable at the time of such notice.  This notice shall specify the
number of Option Shares to be purchased.

 

Payment of the purchase price for the Option Shares may be made by one or more
of the following methods:  (i) in cash, by certified or bank check or other
instrument acceptable to the Administrator; (ii) through the delivery (or
attestation to the ownership) of shares of Stock that have been purchased by the
Optionee on the open market or that are beneficially owned by the Optionee and
are not then subject to any restrictions under any Company plan and that
otherwise satisfy any holding periods as may be required by the Administrator;
(iii) by the Optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay the
option purchase price, provided that in the event the Optionee chooses to pay
the option purchase price as so provided, the Optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity and
other agreements as the Administrator shall prescribe as a condition of such
payment procedure; (iv) by a “net exercise” arrangement pursuant to which the
Company will reduce the number of shares of Stock issuable upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price; or (v) a combination of (i), (ii), (iii) and
(iv) above.  Payment instruments will be received subject to collection.

 

The transfer to the Optionee on the records of the Company or of the transfer
agent of the Option Shares will be contingent upon (i) the Company’s receipt
from the Optionee of the full purchase price for the Option Shares, as set forth
above, (ii) the fulfillment of any other requirements contained herein or in the
Plan or in any other agreement or provision of laws, and (iii) the receipt by
the Company of any agreement, statement or other evidence that the Company may
require to satisfy itself that the issuance of Stock to be purchased pursuant to
the exercise of Stock Options under the Plan and any subsequent resale of the
shares of Stock will be in compliance with applicable laws and regulations.  In
the event the Optionee chooses to pay the purchase price by previously-owned
shares of Stock through the attestation method, the number of shares of Stock
transferred to the Optionee upon the exercise of the Stock Option shall be net
of the Shares attested to.

 

(b)                                 The shares of Stock purchased upon exercise
of this Stock Option shall be transferred to the Optionee on the records of the
Company or of the transfer agent upon compliance to the satisfaction of the
Administrator with all requirements under applicable laws or regulations in
connection with such transfer and with the requirements hereof and of the Plan. 
The determination of the Administrator as to such compliance shall be final and
binding on the Optionee.  The Optionee shall not be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares of Stock
subject to this Stock Option unless and until this Stock Option shall have been
exercised pursuant to the terms hereof, the Company or the transfer agent shall
have transferred the shares to the Optionee, and the Optionee’s name shall have
been entered as the stockholder of record on the books of the Company. 
Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such shares of Stock.

 

2

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

 

(c)                                  The minimum number of shares with respect
to which this Stock Option may be exercised at any one time shall be 100 shares,
unless the number of shares with respect to which this Stock Option is being
exercised is the total number of shares subject to exercise under this Stock
Option at the time.

 

(d)                                 Notwithstanding any other provision hereof
or of the Plan, no portion of this Stock Option shall be exercisable after the
Expiration Date hereof.

 

3.                                      Termination of Employment.  If the
Optionee’s employment by the Company or a Subsidiary (as defined in the Plan) is
terminated, the period within which to exercise the Stock Option may be subject
to earlier termination as set forth below.

 

(a)                                 Termination Due to Death.  If the Optionee’s
employment terminates by reason of the Optionee’s death, any portion of this
Stock Option outstanding on such date, to the extent exercisable on the date of
death, may thereafter be exercised by the Optionee’s legal representative or
legatee for a period of twelve (12) months from the date of death or until the
Expiration Date, if earlier.  Any portion of this Stock Option that is not
exercisable on the date of death shall terminate immediately and be of no
further force or effect.

 

(b)                                 Termination Due to Disability.  If the
Optionee’s employment terminates by reason of the Optionee’s disability (as
determined by the Administrator), any portion of this Stock Option outstanding
on such date, to the extent exercisable on the date of such disability, may
thereafter be exercised by the Optionee for a period of twelve (12) months from
the date of disability or until the Expiration Date, if earlier.  Any portion of
this Stock Option that is not exercisable on the date of disability shall
terminate immediately and be of no further force or effect.

 

(c)                                  Termination for Cause.  If the Optionee’s
employment terminates for Cause, any portion of this Stock Option outstanding on
such date shall terminate immediately and be of no further force and effect. 
For purposes hereof, “Cause” shall mean, unless otherwise provided in an
employment agreement between the Company and the Optionee, a determination by
the Administrator that the Optionee shall be dismissed as a result of (i) any
material breach by the Optionee of any agreement between the Optionee and the
Company; (ii) the conviction of, indictment for or plea of nolo contendere by
the Optionee to a felony or a crime involving moral turpitude; or (iii) any
material misconduct or willful and deliberate non-performance (other than by
reason of disability) by the Optionee of the Optionee’s duties to the Company.

 

(d)                                 Other Termination.  If the Optionee’s
employment terminates for any reason other than the Optionee’s death, the
Optionee’s disability or Cause, and unless otherwise determined by the
Administrator, any portion of this Stock Option outstanding on such date may be
exercised, to the extent exercisable on the date of termination, for a period of
three (3) months from the date of termination or until the Expiration Date, if
earlier.  Any portion of this Stock Option that is not exercisable on the date
of termination shall terminate immediately and be of no further force or effect.

 

3

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

 

The Administrator’s determination of the reason for termination of the
Optionee’s employment shall be conclusive and binding on the Optionee and his or
her representatives or legatees.

 

4.                                      Incorporation of Plan.  Notwithstanding
anything herein to the contrary, this Stock Option shall be subject to and
governed by all the terms and conditions of the Plan, including the powers of
the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in
this Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.

 

5.                                      Transferability.  This Agreement is
personal to the Optionee, is non-assignable and is not transferable in any
manner, by operation of law or otherwise, other than by will or the laws of
descent and distribution.  This Stock Option is exercisable, during the
Optionee’s lifetime, only by the Optionee, and thereafter, only by the
Optionee’s legal representative or legatee.

 

6.                                      Tax Withholding.  The Optionee shall,
not later than the date as of which the exercise of this Stock Option becomes a
taxable event for Federal income tax purposes, pay to the Company or make
arrangements satisfactory to the Administrator for payment of any Federal,
state, and local taxes required by law to be withheld on account of such taxable
event.  The Company shall have the authority to cause the minimum required tax
withholding obligation to be satisfied, in whole or in part, by withholding from
shares of Stock to be issued to the Optionee a number of shares of Stock with an
aggregate Fair Market Value that would satisfy the minimum withholding amount
due.

 

7.                                      No Obligation to Continue Employment. 
Neither the Company nor any Subsidiary is obligated by or as a result of the
Plan or this Agreement to continue the Optionee in employment and neither the
Plan nor this Agreement shall interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of the Optionee at any time.

 

8.                                      Integration.  This Agreement constitutes
the entire agreement between the parties with respect to this Stock Option and
supersedes all prior agreements and discussions between the parties concerning
such subject matter.

 

9.                                      Notices.  Notices hereunder shall be
mailed or delivered to the Company at its principal place of business and shall
be mailed or delivered to the Optionee at the address on file with the Company
or, in either case, at such other address as one party may subsequently furnish
to the other party in writing.

 

[Signature page follows]

 

4

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

 

 

OCERA THERAPEUTICS, INC.

 

 

 

 

 

By:

 

 

 

Title:

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned.

 

 

Dated:

 

 

 

 

 

Optionee’s Signature

 

 

 

 

 

 

 

 

Optionee’s name and address:

 

5

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

 

NON-QUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
UNDER OCERA THERAPEUTICS, INC.
THIRD AMENDED AND RESTATED

2011 STOCK OPTION AND INCENTIVE PLAN

 

Name of Optionee:

 

 

 

No. of Option Shares:

 

 

 

Option Exercise Price per Share:

$

 

[FMV on Grant Date]

 

 

Grant Date:

 

 

 

Expiration Date:

 

 

[No more than 10 years]

 

Pursuant to the Ocera Therapeutics, Inc. Third Amended and Restated 2011 Stock
Option and Incentive Plan as amended through the date hereof (the “Plan”), Ocera
Therapeutics, Inc. (the “Company”) hereby grants to the Optionee named above,
who is a Director of the Company but is not an employee of the Company, an
option (the “Stock Option”) to purchase on or prior to the Expiration Date
specified above all or part of the number of shares of Common Stock, par value
$0.00001 per share (the “Stock”), of the Company specified above at the Option
Exercise Price per Share specified above subject to the terms and conditions set
forth herein and in the Plan.  This Stock Option is not intended to be an
“incentive stock option” under Section 422 of the Internal Revenue Code of 1986,
as amended.

 

1.                                      Exercisability Schedule.  No portion of
this Stock Option may be exercised until such portion shall have become
exercisable.  Except as set forth below, and subject to the discretion of the
Administrator (as defined in Section 2 of the Plan) to accelerate the
exercisability schedule hereunder, this Stock Option shall be exercisable with
respect to the following number of Option Shares on the dates indicated so long
as the Optionee remains in service as a member of the Board on such dates:

 

Incremental Number of
Option Shares Exercisable

 

Exercisability Date

 

 

 

 

 

(     

)%

 

 

(     

)%

 

 

(     

)%

 

 

(     

)%

 

 

(     

)%

 

 

 

Once exercisable, this Stock Option shall continue to be exercisable at any time
or times prior to the close of business on the Expiration Date, subject to the
provisions hereof and of the Plan.

 

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

 

2.                                      Manner of Exercise.

 

(a)                                 The Optionee may exercise this Stock Option
only in the following manner:  from time to time on or prior to the Expiration
Date of this Stock Option, the Optionee may give written notice to the
Administrator of his or her election to purchase some or all of the Option
Shares purchasable at the time of such notice.  This notice shall specify the
number of Option Shares to be purchased.

 

Payment of the purchase price for the Option Shares may be made by one or more
of the following methods:  (i) in cash, by certified or bank check or other
instrument acceptable to the Administrator; (ii) through the delivery (or
attestation to the ownership) of shares of Stock that have been purchased by the
Optionee on the open market or that are beneficially owned by the Optionee and
are not then subject to any restrictions under any Company plan and that
otherwise satisfy any holding periods as may be required by the Administrator;
(iii) by the Optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay the
option purchase price, provided that in the event the Optionee chooses to pay
the option purchase price as so provided, the Optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity and
other agreements as the Administrator shall prescribe as a condition of such
payment procedure; (iv) by a “net exercise” arrangement pursuant to which the
Company will reduce the number of shares of Stock issuable upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price; or (v) a combination of (i), (ii), (iii) and
(iv) above.  Payment instruments will be received subject to collection.

 

The transfer to the Optionee on the records of the Company or of the transfer
agent of the Option Shares will be contingent upon (i) the Company’s receipt
from the Optionee of the full purchase price for the Option Shares, as set forth
above, (ii) the fulfillment of any other requirements contained herein or in the
Plan or in any other agreement or provision of laws, and (iii) the receipt by
the Company of any agreement, statement or other evidence that the Company may
require to satisfy itself that the issuance of Stock to be purchased pursuant to
the exercise of Stock Options under the Plan and any subsequent resale of the
shares of Stock will be in compliance with applicable laws and regulations.  In
the event the Optionee chooses to pay the purchase price by previously-owned
shares of Stock through the attestation method, the number of shares of Stock
transferred to the Optionee upon the exercise of the Stock Option shall be net
of the Shares attested to.

 

(b)                                 The shares of Stock purchased upon exercise
of this Stock Option shall be transferred to the Optionee on the records of the
Company or of the transfer agent upon compliance to the satisfaction of the
Administrator with all requirements under applicable laws or regulations in
connection with such transfer and with the requirements hereof and of the Plan. 
The determination of the Administrator as to such compliance shall be final and
binding on the Optionee.  The Optionee shall not be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares of Stock
subject to this Stock Option unless and until this Stock Option shall have been
exercised pursuant to the terms hereof, the Company or the transfer agent shall
have transferred the shares to the Optionee, and the Optionee’s name shall have
been entered as the stockholder of record on the books of the Company. 
Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such shares of Stock.

 

2

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

 

(c)                                  The minimum number of shares with respect
to which this Stock Option may be exercised at any one time shall be 100 shares,
unless the number of shares with respect to which this Stock Option is being
exercised is the total number of shares subject to exercise under this Stock
Option at the time.

 

(d)                                 Notwithstanding any other provision hereof
or of the Plan, no portion of this Stock Option shall be exercisable after the
Expiration Date hereof.

 

3.                                      Termination as Director.  If the
Optionee ceases to be a Director of the Company, the period within which to
exercise the Stock Option may be subject to earlier termination as set forth
below.

 

(a)                                 Termination Due to Death.  If the Optionee’s
service as a Director terminates by reason of the Optionee’s death, any portion
of this Stock Option outstanding on such date, to the extent exercisable on the
date of death, may thereafter be exercised by the Optionee’s legal
representative or legatee for a period of twelve (12) months from the date of
death or until the Expiration Date, if earlier.  Any portion of this Stock
Option that is not exercisable on the date of death shall terminate immediately
and be of no further force or effect.

 

(b)                                 Other Termination.  If the Optionee ceases
to be a Director for any reason other than the Optionee’s death, any portion of
this Stock Option outstanding on such date may be exercised, to the extent
exercisable on the date the Optionee ceased to be a Director, for a period of
three (3) months from the date the Optionee ceased to be a Director or until the
Expiration Date, if earlier.  Any portion of this Stock Option that is not
exercisable on the date the Optionee ceases to be a Director shall terminate
immediately and be of no further force or effect.

 

4.                                      Incorporation of Plan.  Notwithstanding
anything herein to the contrary, this Stock Option shall be subject to and
governed by all the terms and conditions of the Plan, including the powers of
the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in
this Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.

 

5.                                      Transferability.  This Agreement is
personal to the Optionee, is non-assignable and is not transferable in any
manner, by operation of law or otherwise, other than by will or the laws of
descent and distribution.  This Stock Option is exercisable, during the
Optionee’s lifetime, only by the Optionee, and thereafter, only by the
Optionee’s legal representative or legatee.

 

6.                                      No Obligation to Continue as a
Director.  Neither the Plan nor this Stock Option confers upon the Optionee any
rights with respect to continuance as a Director.

 

3

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

 

7.                                      Integration.  This Agreement constitutes
the entire agreement between the parties with respect to this Stock Option and
supersedes all prior agreements and discussions between the parties concerning
such subject matter.

 

8.                                      Notices.  Notices hereunder shall be
mailed or delivered to the Company at its principal place of business and shall
be mailed or delivered to the Optionee at the address on file with the Company
or, in either case, at such other address as one party may subsequently furnish
to the other party in writing.

 

 

OCERA THERAPEUTICS, INC.

 

 

 

 

 

By:

 

 

 

Title:

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned.

 

 

Dated:

 

 

 

 

 

Optionee’s Signature

 

 

 

 

 

 

 

 

Optionee’s name and address:

 

4

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

 

NON-QUALIFIED STOCK OPTION AGREEMENT
FOR COMPANY CONSULTANTS
UNDER OCERA THERAPEUTICS, INC.
THIRD AMENDED AND RESTATED

2011 STOCK OPTION AND INCENTIVE PLAN

 

Name of Optionee:

 

 

 

No. of Option Shares:

 

 

 

Option Exercise Price per Share:

$

 

[FMV on Grant Date]

 

 

Grant Date:

 

 

 

Expiration Date:

 

 

Pursuant to the Ocera Therapeutics, Inc. Third Amended and Restated 2011 Stock
Option and Incentive Plan as amended through the date hereof (the “Plan”), Ocera
Therapeutics, Inc. (the “Company”) hereby grants to the Optionee named above an
option (the “Stock Option”) to purchase on or prior to the Expiration Date
specified above all or part of the number of shares of Common Stock, par value
$0.00001 per share (the “Stock”) of the Company specified above at the Option
Exercise Price per Share specified above subject to the terms and conditions set
forth herein and in the Plan.  This Stock Option is not intended to be an
“incentive stock option” under Section 422 of the Internal Revenue Code of 1986,
as amended.

 

1.                                      Exercisability Schedule.  No portion of
this Stock Option may be exercised until such portion shall have become
exercisable.  Except as set forth below, and subject to the discretion of the
Administrator (as defined in Section 2 of the Plan) to accelerate the
exercisability schedule hereunder, this Stock Option shall be exercisable with
respect to the following number of Option Shares on the dates indicated so long
as Optionee maintains a service relationship with the Company or a Subsidiary on
such dates:

 

Incremental Number of
Option Shares Exercisable

 

Exercisability Date

 

 

 

 

 

(     

)%

 

 

(     

)%

 

 

(     

)%

 

 

(     

)%

 

 

(     

)%

 

 

 

Once exercisable, this Stock Option shall continue to be exercisable at any time
or times prior to the close of business on the Expiration Date, subject to the
provisions hereof and of the Plan.

 

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

 

2.                                      Manner of Exercise.

 

(a)                                 The Optionee may exercise this Stock Option
only in the following manner:  from time to time on or prior to the Expiration
Date of this Stock Option, the Optionee may give written notice to the
Administrator of his or her election to purchase some or all of the Option
Shares purchasable at the time of such notice.  This notice shall specify the
number of Option Shares to be purchased.

 

Payment of the purchase price for the Option Shares may be made by one or more
of the following methods:  (i) in cash, by certified or bank check or other
instrument acceptable to the Administrator; (ii) through the delivery (or
attestation to the ownership) of shares of Stock that have been purchased by the
Optionee on the open market or that are beneficially owned by the Optionee and
are not then subject to any restrictions under any Company plan and that
otherwise satisfy any holding periods as may be required by the Administrator;
(iii) by the Optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay the
option purchase price, provided that in the event the Optionee chooses to pay
the option purchase price as so provided, the Optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity and
other agreements as the Administrator shall prescribe as a condition of such
payment procedure; (iv) by a “net exercise” arrangement pursuant to which the
Company will reduce the number of shares of Stock issuable upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price; or (v) a combination of (i), (ii), (iii) and
(iv) above.  Payment instruments will be received subject to collection.

 

The transfer to the Optionee on the records of the Company or of the transfer
agent of the Option Shares will be contingent upon (i) the Company’s receipt
from the Optionee of the full purchase price for the Option Shares, as set forth
above, (ii) the fulfillment of any other requirements contained herein or in the
Plan or in any other agreement or provision of laws, and (iii) the receipt by
the Company of any agreement, statement or other evidence that the Company may
require to satisfy itself that the issuance of Stock to be purchased pursuant to
the exercise of Stock Options under the Plan and any subsequent resale of the
shares of Stock will be in compliance with applicable laws and regulations.  In
the event the Optionee chooses to pay the purchase price by previously-owned
shares of Stock through the attestation method, the number of shares of Stock
transferred to the Optionee upon the exercise of the Stock Option shall be net
of the Shares attested to.

 

(b)                                 The shares of Stock purchased upon exercise
of this Stock Option shall be transferred to the Optionee on the records of the
Company or of the transfer agent upon compliance to the satisfaction of the
Administrator with all requirements under applicable laws or regulations in
connection with such transfer and with the requirements hereof and of the Plan. 
The determination of the Administrator as to such compliance shall be final and
binding on the Optionee.  The Optionee shall not be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares of Stock
subject to this Stock Option unless and until this Stock Option shall have been
exercised pursuant to the terms hereof, the Company or the transfer agent shall
have transferred the shares to the Optionee, and the Optionee’s name shall have
been entered as the stockholder of record on the books of the Company. 
Thereupon, the Optionee shall have full voting, dividend and other ownership
rights with respect to such shares of Stock.

 

2

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

 

(c)                                  The minimum number of shares with respect
to which this Stock Option may be exercised at any one time shall be 100 shares,
unless the number of shares with respect to which this Stock Option is being
exercised is the total number of shares subject to exercise under this Stock
Option at the time.

 

(d)                                 Notwithstanding any other provision hereof
or of the Plan, no portion of this Stock Option shall be exercisable after the
Expiration Date hereof.

 

3.                                      Termination of Service Relationship.  If
the Optionee’s service relationship with the Company or a Subsidiary (as defined
in the Plan) is terminated, the period within which to exercise the Stock Option
may be subject to earlier termination as set forth below.

 

(a)                                 Termination Due to Death.  If the Optionee’s
service relationship terminates by reason of the Optionee’s death, any portion
of this Stock Option outstanding on such date, to the extent exercisable on the
date of death, may thereafter be exercised by the Optionee’s legal
representative or legatee for a period of twelve (12) months from the date of
death or until the Expiration Date, if earlier.  Any portion of this Stock
Option that is not exercisable on the date of death shall terminate immediately
and be of no further force or effect.

 

(b)                                 Termination Due to Disability.  If the
Optionee’s service relationship terminates by reason of the Optionee’s
disability (as determined by the Administrator), any portion of this Stock
Option outstanding on such date, to the extent exercisable on the date of such
disability, may thereafter be exercised by the Optionee for a period of twelve
(12) months from the date of disability or until the Expiration Date, if
earlier.  Any portion of this Stock Option that is not exercisable on the date
of disability shall terminate immediately and be of no further force or effect.

 

(c)                                  Termination for Cause.  If the Optionee’s
service relationship terminates for Cause, any portion of this Stock Option
outstanding on such date shall terminate immediately and be of no further force
and effect.  For purposes hereof, “Cause” shall mean, unless otherwise provided
in a service relationship agreement between the Company and the Optionee, a
determination by the Administrator that the Optionee shall be dismissed as a
result of (i) any material breach by the Optionee of any agreement between the
Optionee and the Company; (ii) the conviction of, indictment for or plea of nolo
contendere by the Optionee to a felony or a crime involving moral turpitude; or
(iii) any material misconduct or willful and deliberate non-performance (other
than by reason of disability) by the Optionee of the Optionee’s duties to the
Company.

 

(d)                                 Other Termination.  If the Optionee’s
service relationship terminates for any reason other than the Optionee’s death,
the Optionee’s disability or Cause, and unless otherwise determined by the
Administrator, any portion of this Stock Option outstanding on such date may be
exercised, to the extent exercisable on the date of termination, for a period of
three (3) months from the date of termination or until the Expiration Date, if
earlier.  Any portion of this Stock Option that is not exercisable on the date
of termination shall terminate immediately and be of no further force or effect.

 

3

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

 

The Administrator’s determination of the reason for termination of the
Optionee’s service relationship shall be conclusive and binding on the Optionee
and his or her representatives or legatees.

 

4.                                      Incorporation of Plan.  Notwithstanding
anything herein to the contrary, this Stock Option shall be subject to and
governed by all the terms and conditions of the Plan, including the powers of
the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in
this Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.

 

5.                                      Transferability.  This Agreement is
personal to the Optionee, is non-assignable and is not transferable in any
manner, by operation of law or otherwise, other than by will or the laws of
descent and distribution.  This Stock Option is exercisable, during the
Optionee’s lifetime, only by the Optionee, and thereafter, only by the
Optionee’s legal representative or legatee.

 

6.                                      Tax Withholding.  The Optionee shall,
not later than the date as of which the exercise of this Stock Option becomes a
taxable event for Federal income tax purposes, pay to the Company or make
arrangements satisfactory to the Administrator for payment of any Federal,
state, and local taxes required by law to be withheld on account of such taxable
event.  The Company shall have the authority to cause the minimum required tax
withholding obligation, if any, to be satisfied, in whole or in part, by
withholding from shares of Stock to be issued to the Optionee a number of shares
of Stock with an aggregate Fair Market Value that would satisfy the minimum
withholding amount due.

 

7.                                      No Obligation to Continue Service
Relationship.  Neither the Company nor any Subsidiary is obligated by or as a
result of the Plan or this Agreement to continue the Optionee in a service
relationship and neither the Plan nor this Agreement shall interfere in any way
with the right of the Company or any Subsidiary to terminate the service
relationship of the Optionee at any time.

 

8.                                      Integration.  This Agreement constitutes
the entire agreement between the parties with respect to this Stock Option and
supersedes all prior agreements and discussions between the parties concerning
such subject matter.

 

9.                                      Notices.  Notices hereunder shall be
mailed or delivered to the Company at its principal place of business and shall
be mailed or delivered to the Optionee at the address on file with the Company
or, in either case, at such other address as one party may subsequently furnish
to the other party in writing.

 

[Signature page follows]

 

4

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OCERA THERAPEUTICS, INC.

 

 

 

By:

 

 

 

Title:

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned.

 

 

Dated:

 

 

 

 

 

Optionee’s Signature

 

 

 

 

 

 

 

 

Optionee’s name and address:

 

5

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RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR COMPANY EMPLOYEES
UNDER OCERA THERAPEUTICS, INC.
THIRD AMENDED AND RESTATED

2011 STOCK OPTION AND INCENTIVE PLAN

 

Name of Grantee:

 

 

 

No. of Restricted Stock Units:

 

 

 

Grant Date:

 

 

Pursuant to the Ocera Therapeutics, Inc. Third Amended and Restated 2011 Stock
Option and Incentive Plan as amended through the date hereof (the “Plan”), Ocera
Therapeutics, Inc. (the “Company”) hereby grants an award of the number of
Restricted Stock Units listed above (an “Award”) to the Grantee named above. 
Each Restricted Stock Unit shall relate to one share of Common Stock, par value
$0.00001 per share (the “Stock”) of the Company.

 

1.                                      Restrictions on Transfer of Award.  This
Award may not be sold, transferred, pledged, assigned or otherwise encumbered or
disposed of by the Grantee, and any shares of Stock issuable with respect to the
Award may not be sold, transferred, pledged, assigned or otherwise encumbered or
disposed of until (i) the Restricted Stock Units have vested as provided in
Paragraph 2 of this Agreement and (ii) shares of Stock have been issued to the
Grantee in accordance with the terms of the Plan and this Agreement.

 

2.                                      Vesting of Restricted Stock Units.  The
restrictions and conditions of Paragraph 1 of this Agreement shall lapse on the
Vesting Date or Dates specified in the following schedule so long as the Grantee
remains an employee of the Company or a Subsidiary on such Dates.  If a series
of Vesting Dates is specified, then the restrictions and conditions in
Paragraph 1 shall lapse only with respect to the number of Restricted Stock
Units specified as vested on such date.

 

Incremental Number of
Restricted Stock Units Vested

 

Vesting Date

 

 

 

(      

)%

 

(      

)%

 

(      

)%

 

(      

)%

 

 

The Administrator may at any time accelerate the vesting schedule specified in
this Paragraph 2.

 

3.                                      Termination of Employment.  If the
Grantee’s employment with the Company and its Subsidiaries terminates for any
reason (including death or disability) prior to the satisfaction of the vesting
conditions set forth in Paragraph 2 above, any Restricted Stock Units that have
not vested as of such date shall automatically and without notice terminate and
be forfeited, and neither the Grantee nor any of his or her successors, heirs,
assigns, or personal representatives will thereafter have any further rights or
interests in such unvested Restricted Stock Units.

 

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

 

4.                                      Issuance of Shares of Stock.  As soon as
practicable following each Vesting Date (but in no event later than two and
one-half months after the end of the year in which the Vesting Date occurs), the
Company shall issue to the Grantee the number of shares of Stock equal to the
aggregate number of Restricted Stock Units that have vested pursuant to
Paragraph 2 of this Agreement on such date and the Grantee shall thereafter have
all the rights of a stockholder of the Company with respect to such shares.

 

5.                                      Incorporation of Plan.  Notwithstanding
anything herein to the contrary, this Agreement shall be subject to and governed
by all the terms and conditions of the Plan, including the powers of the
Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.

 

6.                                      Tax Withholding.  The Grantee shall, not
later than the date as of which the receipt of this Award becomes a taxable
event for Federal income tax purposes, pay to the Company or make arrangements
satisfactory to the Administrator for payment of any Federal, state, and local
taxes required by law to be withheld on account of such taxable event.  The
Company shall have the authority to cause the required minimum tax withholding
obligation to be satisfied, in whole or in part, by withholding from shares of
Stock to be issued to the Grantee a number of shares of Stock with an aggregate
Fair Market Value that would satisfy the withholding amount due.

 

7.                                      Section 409A of the Code.  This
Agreement shall be interpreted in such a manner that all provisions relating to
the settlement of the Award are exempt from the requirements of Section 409A of
the Code as “short-term deferrals” as described in Section 409A of the Code.

 

8.                                      No Obligation to Continue Employment. 
Neither the Company nor any Subsidiary is obligated by or as a result of the
Plan or this Agreement to continue the Grantee in employment and neither the
Plan nor this Agreement shall interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of the Grantee at any time.

 

9.                                      Integration.  This Agreement constitutes
the entire agreement between the parties with respect to this Award and
supersedes all prior agreements and discussions between the parties concerning
such subject matter.

 

10.                               Notices.  Notices hereunder shall be mailed or
delivered to the Company at its principal place of business and shall be mailed
or delivered to the Grantee at the address on file with the Company or, in
either case, at such other address as one party may subsequently furnish to the
other party in writing.

 

[Signature page follows]

 

2

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

 

 

 

OCERA THERAPEUTICS, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned.

 

 

 

 

 

 

 

 

Dated:

 

 

 

 

 

Grantee’s Signature

 

 

 

 

 

 

 

 

Grantee’s name and address:

 

3

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

 

RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
UNDER OCERA THERAPEUTICS, INC.
THIRD AMENDED AND RESTATED

2011 STOCK OPTION AND INCENTIVE PLAN

 

Name of Grantee:

 

No. of Restricted Stock Units:

 

Grant Date:

 

Pursuant to the Ocera Therapeutics, Inc. Third Amended and Restated 2011 Stock
Option and Incentive Plan as amended through the date hereof (the “Plan”), Ocera
Therapeutics, Inc.  (the “Company”) hereby grants an award of the number of
Restricted Stock Units listed above (an “Award”) to the Grantee named above. 
Each Restricted Stock Unit shall relate to one share of Common Stock, par value
$0.00001 per share (the “Stock”) of the Company.

 

1.                                      Restrictions on Transfer of Award.  This
Award may not be sold, transferred, pledged, assigned or otherwise encumbered or
disposed of by the Grantee, and any shares of Stock issuable with respect to the
Award may not be sold, transferred, pledged, assigned or otherwise encumbered or
disposed of until (i) the Restricted Stock Units have vested as provided in
Paragraph 2 of this Agreement and (ii) shares of Stock have been issued to the
Grantee in accordance with the terms of the Plan and this Agreement.

 

2.                                      Vesting of Restricted Stock Units.  The
restrictions and conditions of Paragraph 1 of this Agreement shall lapse on the
Vesting Date or Dates specified in the following schedule so long as the Grantee
remains in service as a member of the Board on such Dates.  If a series of
Vesting Dates is specified, then the restrictions and conditions in Paragraph 1
shall lapse only with respect to the number of Restricted Stock Units specified
as vested on such date.

 

Incremental Number of
Restricted Stock Units Vested

 

Vesting Date

 

 

 

(      

)%

 

(      

)%

 

(      

)%

 

(      

)%

 

 

The Administrator may at any time accelerate the vesting schedule specified in
this Paragraph 2.

 

3.                                      Termination of Service.  If the
Grantee’s service with the Company and its Subsidiaries terminates for any
reason (including death or disability) prior to the satisfaction of the vesting
conditions set forth in Paragraph 2 above, any Restricted Stock Units that have
not vested as of such date shall automatically and without notice terminate and
be forfeited, and neither the Grantee nor any of his or her successors, heirs,
assigns, or personal representatives will thereafter have any further rights or
interests in such unvested Restricted Stock Units.

 

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

 

4.                                      Issuance of Shares of Stock.  As soon as
practicable following each Vesting Date (but in no event later than two and
one-half months after the end of the year in which the Vesting Date occurs), the
Company shall issue to the Grantee the number of shares of Stock equal to the
aggregate number of Restricted Stock Units that have vested pursuant to
Paragraph 2 of this Agreement on such date and the Grantee shall thereafter have
all the rights of a stockholder of the Company with respect to such shares.

 

5.                                      Incorporation of Plan.  Notwithstanding
anything herein to the contrary, this Agreement shall be subject to and governed
by all the terms and conditions of the Plan, including the powers of the
Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.

 

6.                                      Section 409A of the Code.  This
Agreement shall be interpreted in such a manner that all provisions relating to
the settlement of the Award are exempt from the requirements of Section 409A of
the Code as “short-term deferrals” as described in Section 409A of the Code.

 

7.                                      No Obligation to Continue as a
Director.  Neither the Plan nor this Award confers upon the Grantee any rights
with respect to continuance as a Director.

 

8.                                      Integration.  This Agreement constitutes
the entire agreement between the parties with respect to this Award and
supersedes all prior agreements and discussions between the parties concerning
such subject matter.

 

9.                                      Notices.  Notices hereunder shall be
mailed or delivered to the Company at its principal place of business and shall
be mailed or delivered to the Grantee at the address on file with the Company
or, in either case, at such other address as one party may subsequently furnish
to the other party in writing.

 

[Signature page follows]

 

2

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

 

 

 

OCERA THERAPEUTICS, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned.

 

 

 

 

 

 

 

 

Dated:

 

 

 

 

 

Grantee’s Signature

 

 

 

 

 

 

 

 

Grantee’s name and address:

 

3

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

 

RESTRICTED STOCK AWARD AGREEMENT
UNDER THE OCERA THERAPEUTICS, INC.
THIRD AMENDED AND RESTATED

2011 STOCK OPTION AND INCENTIVE PLAN

 

Name of Grantee:

 

No. of Shares:

 

Grant Date:

 

Pursuant to the Ocera Therapeutics, Inc. Third Amended and Restated 2011 Stock
Option and Incentive Plan (the “Plan”) as amended through the date hereof, Ocera
Therapeutics, Inc. (the “Company”) hereby grants a Restricted Stock Award (an
“Award”) to the Grantee named above.  Upon acceptance of this Award, the Grantee
shall receive the number of shares of Common Stock, par value $0.00001 per share
(the “Stock”) of the Company specified above, subject to the restrictions and
conditions set forth herein and in the Plan.  The Company acknowledges the
receipt from the Grantee of consideration with respect to the par value of the
Stock in the form of cash, past or future services rendered to the Company by
the Grantee or such other form of consideration as is acceptable to the
Administrator.

 

1.                                      Award.  The shares of Restricted Stock
awarded hereunder shall be issued and held by the Company’s transfer agent in
book entry form, and the Grantee’s name shall be entered as the stockholder of
record on the books of the Company.  Thereupon, the Grantee shall have all the
rights of a stockholder with respect to such shares, including voting and
dividend rights, subject, however, to the restrictions and conditions specified
in Paragraph 2 below.  The Grantee shall (i) sign and deliver to the Company a
copy of this Award Agreement and (ii) deliver to the Company a stock power
endorsed in blank.

 

2.                                      Restrictions and Conditions.

 

(a)                                 Any book entries for the shares of
Restricted Stock granted herein shall bear an appropriate legend, as determined
by the Administrator in its sole discretion, to the effect that such shares are
subject to restrictions as set forth herein and in the Plan.

 

(b)                                 Shares of Restricted Stock granted herein
may not be sold, assigned, transferred, pledged or otherwise encumbered or
disposed of by the Grantee prior to vesting.

 

(c)                                  On the date of this Agreement, all of the
shares of Restricted Stock are subject to a substantial risk of forfeiture and
are Shares of Restricted Stock.  If the Grantee’s employment with the Company
and its Subsidiaries is voluntarily or involuntarily terminated for any reason
(including death) prior to vesting of any shares of Restricted Stock granted
herein, all shares of Restricted Stock which have not vested shall immediately
and automatically be forfeited and returned to the Company.

 

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

 

3.                                      Vesting of Restricted Stock.  The
restrictions and conditions in Paragraph 2 of this Agreement shall lapse on the
Vesting Date or Dates specified in the following schedule so long as the Grantee
remains an employee of the Company or a Subsidiary on such Dates.  If a series
of Vesting Dates is specified, then the restrictions and conditions in
Paragraph 2 shall lapse only with respect to the number of shares of Restricted
Stock specified as vested on such date.

 

Incremental Number
of Shares Vested

 

Vesting Date

 

 

 

 

 

(      

)%

 

 

(      

)%

 

 

(      

)%

 

 

(      

)%

 

 

(      

)%

 

 

 

Subsequent to such Vesting Date or Dates, the shares of Stock on which all
restrictions and conditions have lapsed shall no longer be deemed Restricted
Stock.  The Administrator may at any time accelerate the vesting schedule
specified in this Paragraph 3.

 

4.                                      Dividends.  Dividends on shares of
Restricted Stock shall be paid currently to the Grantee.

 

5.                                      Incorporation of Plan.  Notwithstanding
anything herein to the contrary, this Award shall be subject to and governed by
all the terms and conditions of the Plan, including the powers of the
Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.

 

6.                                      Transferability.  This Agreement is
personal to the Grantee, is non-assignable and is not transferable in any
manner, by operation of law or otherwise, other than by will or the laws of
descent and distribution.

 

7.                                      Tax Withholding.  The Grantee shall, not
later than the date as of which the receipt of this Award becomes a taxable
event for Federal income tax purposes, pay to the Company or make arrangements
satisfactory to the Administrator for payment of any Federal, state, and local
taxes required by law to be withheld on account of such taxable event.  Except
in the case where an election is made pursuant to Paragraph 8 below, the Company
shall have the authority to cause the required minimum tax withholding
obligation to be satisfied, in whole or in part, by withholding from shares of
Stock to be issued or released by the transfer agent a number of shares of Stock
with an aggregate Fair Market Value that would satisfy the minimum withholding
amount due.

 

2

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

 

8.                                      Election Under Section 83(b).  The
Grantee and the Company hereby agree that the Grantee may, within 30 days
following the Grant Date of this Award, file with the Internal Revenue Service
and the Company an election under Section 83(b) of the Internal Revenue Code. 
In the event the Grantee makes such an election, he or she agrees to provide a
copy of the election to the Company.  The Grantee acknowledges that he or she is
responsible for obtaining the advice of his or her tax advisors with regard to
the Section 83(b) election and that he or she is relying solely on such advisors
and not on any statements or representations of the Company or any of its agents
with regard to such election.

 

9.                                      No Obligation to Continue Employment. 
Neither the Company nor any Subsidiary is obligated by or as a result of the
Plan or this Agreement to continue the Grantee in employment and neither the
Plan nor this Agreement shall interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of the Grantee at any time.

 

10.                               Integration.  This Agreement constitutes the
entire agreement between the parties with respect to this Award and supersedes
all prior agreements and discussions between the parties concerning such subject
matter.

 

11.                               Notices.  Notices hereunder shall be mailed or
delivered to the Company at its principal place of business and shall be mailed
or delivered to the Grantee at the address on file with the Company or, in
either case, at such other address as one party may subsequently furnish to the
other party in writing.

 

3

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

 

 

 

OCERA THERAPEUTICS, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned.

 

 

 

 

 

 

 

 

Dated:

 

 

 

 

 

Grantee’s Signature

 

 

 

 

 

 

 

 

Grantee’s name and address:

 

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