EXHIBIT 10.8
ALTUS PHARMACEUTICALS INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
     AGREEMENT made as of the ___ day of ___ 20___, between Altus
Pharmaceuticals Inc. (the “Company”), a Delaware corporation having a principal
place of business in Cambridge, Massachusetts, and                      (the
“Non-Employee Director”).
     WHEREAS, the Company desires to grant to the Non-Employee Director an
Option to purchase shares of its common stock, $.01 par value per share (the
“Shares”), under and for the purposes set forth in the Company’s Amended and
Restated 2002 Employee, Director and Consultant Stock Plan (the “Plan”);
     WHEREAS, the Company and the Non-Employee Director understand and agree
that any terms used and not defined herein have the same meanings as in the
Plan; and
     WHEREAS, the Company and the Non-Employee Director each intend that the
Option granted herein shall be a Non-Qualified Option.
     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
     1. GRANT OF OPTION.
     The Company hereby grants to the Non-Employee Director the right and option
to purchase all or any part of an aggregate of ___Shares, on the terms and
conditions and subject to all the limitations set forth herein, under United
States securities and tax laws, and in the Plan, which is incorporated herein by
reference. The Non-Employee Director acknowledges receipt of a copy of the Plan.
     2. PURCHASE PRICE.
     The purchase price of the Shares covered by the Option shall be
$               per Share, subject to adjustment, as provided in the Plan, in
the event of a stock split, reverse stock split or other events affecting the
holders of Shares after the date hereof (the “Purchase Price”). Payment shall be
made in accordance with Paragraph 9 of the Plan.
     3. EXERCISABILITY OF OPTION.
     Subject to the terms and conditions set forth in this Agreement and the
Plan, the Option granted hereby shall become exercisable as follows:

     
On                     , 20___ and every three months thereafter until the
fourth anniversary of ___, 20___
  One-sixteenth of the Shares

 

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     Notwithstanding the foregoing, in the event of a Change in Control (as
defined in Paragraph 24B of the Plan) all of the Shares which are not then
vested under this Option shall become fully vested and immediately exercisable
as of the date of the Change in Control including, but not limited to, pursuant
to a Corporate Transaction that also constitutes a Change in Control pursuant to
Paragraph 24B of the Plan unless this Option prior to the date of the Change in
Control has expired or been terminated pursuant to its terms or the terms of the
Plan.
     The foregoing rights are cumulative and are subject to the other terms and
conditions of this Agreement and the Plan.
     4. TERM OF OPTION.
     The Option shall terminate ten years from the date of this Agreement, but
shall be subject to earlier termination as provided herein or in the Plan.
     If the Non-Employee Director ceases to be a director of the Company or of
an Affiliate (for any reason other than the death or Disability of the
Non-Employee Director or termination of the Non-Employee Director for “cause”
(as defined in the Plan), the Option may be exercised, if it has not previously
terminated, within three months after the date the Non-Employee Director ceases
to be a director of the Company or an Affiliate, or within the originally
prescribed term of the Option, whichever is earlier, but may not be exercised
thereafter. In such event, the Option shall be exercisable only to the extent
that the Option has become exercisable and is in effect at the date of such
cessation of service.
     Notwithstanding the foregoing, in the event of the Non-Employee Director’s
Disability or death within three months after the termination of service, the
Non-Employee Director or the Non-Employee Director’s Survivors may exercise the
Option within one year after the date of the Non-Employee Director’s termination
of service, but in no event after the date of expiration of the term of the
Option.
     In the event the Non-Employee Director’s service is terminated by the
Company or an Affiliate for “cause” (as defined in the Plan), the Non-Employee
Director’s right to exercise any unexercised portion of this Option shall cease
immediately as of the time the Non-Employee Director is notified his or her
service is terminated for “cause”, and this Option shall thereupon terminate.
Notwithstanding anything herein to the contrary, if subsequent to the
Non-Employee Director’s termination, but prior to the exercise of the Option,
the Board of Directors of the Company determines that, either prior or
subsequent to the Non-Employee Director’s termination, the Non-Employee Director
engaged in conduct which would constitute “cause,” then the Non-Employee
Director shall immediately cease to have any right to exercise the Option and
this Option shall thereupon terminate.

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     In the event of the Disability of the Non-Employee Director, as determined
in accordance with the Plan, the Option shall be exercisable within one year
after the Non-Employee Director’s termination of service or, if earlier, within
the term originally prescribed by the Option. In such event, the Option shall be
exercisable:

  (a)   to the extent that the Option has become exercisable but has not been
exercised as of the date of Disability; and     (b)   in the event rights to
exercise the Option accrue periodically, to the extent of a pro rata portion
through the date of Disability of any additional vesting rights that would have
accrued on the next vesting date had the Non-Employee Director not become
Disabled. The proration shall be based upon the number of days accrued in the
current vesting period prior to the date of Disability.

     In the event of the death of the Non-Employee Director while a director of
the Company or of an Affiliate, the Option shall be exercisable by the
Non-Employee Director’s Survivors within one year after the date of death of the
Non-Employee Director or, if earlier, within the originally prescribed term of
the Option. In such event, the Option shall be exercisable:

  (x)   to the extent that the Option has become exercisable but has not been
exercised as of the date of death; and     (y)   in the event rights to exercise
the Option accrue periodically, to the extent of a pro rata portion through the
date of death of any additional vesting rights that would have accrued on the
next vesting date had the Non-Employee Director not died. The proration shall be
based upon the number of days accrued in the current vesting period prior to the
Non-Employee Director’s date of death.

     5. METHOD OF EXERCISING OPTION.
     Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company or its designee, in substantially the
form of Exhibit A attached hereto. Such notice shall state the number of Shares
with respect to which the Option is being exercised and shall be signed by the
person exercising the Option. Payment of the purchase price for such Shares
shall be made in accordance with Paragraph 9 of the Plan. The Company shall
deliver such Shares as soon as practicable after the notice shall be received,
provided, however, that the Company may delay issuance of such Shares until
completion of any action or obtaining of any consent, which the Company deems
necessary under any applicable law (including, without limitation, state
securities or “blue sky” laws). The Shares as to which the Option shall have
been so exercised shall be registered in the Company’s share register in the
name of the person so exercising the Option (or, if the Option shall be
exercised by the Non-Employee Director and if the Non-Employee Director shall so
request in the notice exercising the Option, shall be registered in the name of
the Non-Employee Director and another person jointly, with right of
survivorship) and shall be delivered as provided above to or upon the written
order of the person exercising the Option. In the event the Option shall be
exercised, pursuant to Section 4 hereof, by any person other than the
Non-Employee Director, such notice

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shall be accompanied by appropriate proof of the right of such person to
exercise the Option. All Shares that shall be purchased upon the exercise of the
Option as provided herein shall be fully paid and nonassessable.
     6. PARTIAL EXERCISE.
     Exercise of this Option to the extent above stated may be made in part at
any time and from time to time within the above limits, except that no
fractional share shall be issued pursuant to this Option.
     7. NON-ASSIGNABILITY.
     The Option shall not be transferable by the Non-Employee Director otherwise
than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act or the rules thereunder. However, the
Non-Employee Director, with the approval of the Administrator, may transfer the
Option for no consideration to or for the benefit of the Non-Employee Director’s
Immediate Family (including, without limitation, to a trust for the benefit of
the Non-Employee Director’s Immediate Family or to a partnership or limited
liability company for one or more members of the Non-Employee Director’s
Immediate Family), subject to such limits as the Administrator may establish,
and the transferee shall remain subject to all the terms and conditions
applicable to the Option prior to such transfer and each such transferee shall
so acknowledge in writing as a condition precedent to the effectiveness of such
transfer. The term “Immediate Family” shall mean the Non-Employee Director’s
spouse, former spouse, parents, children, stepchildren, adoptive relationships,
sisters, brothers, nieces, nephews and grandchildren (and, for this purpose,
shall also include the Non-Employee Director.) Except as provided in the
previous sentence, the Option shall be exercisable, during the Non-Employee
Director’s lifetime, only by the Non-Employee Director (or, in the event of
legal incapacity or incompetency, by the Non-Employee Director’s guardian or
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of the Option or of any rights
granted hereunder contrary to the provisions of this Section 7, or the levy of
any attachment or similar process upon the Option shall be null and void.
     8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
     The Non-Employee Director shall have no rights as a stockholder with
respect to Shares subject to this Agreement until registration of the Shares in
the name of the Non-Employee Director. Except as is expressly provided in the
Plan with respect to certain changes in the capitalization of the Company, no
adjustment shall be made for dividends or similar rights for which the record
date is prior to the date of such registration.

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     9. ADJUSTMENTS.
     The Plan contains provisions covering the treatment of Options in a number
of contingencies such as stock splits and mergers. Provisions in the Plan for
adjustment with respect to stock subject to Options and the related provisions
with respect to successors to the business of the Company are hereby made
applicable hereunder and are incorporated herein by reference.
     10. TAXES.
     The Non-Employee Director acknowledges that upon exercise of the Option the
Non-Employee Director will be deemed to have taxable income measured by the
difference between the then fair market value of the Shares received upon
exercise and the price paid for such Shares pursuant to this Agreement. The
Non-Employee Director acknowledges that any income or other taxes due from him
or her with respect to this Option or the Shares issuable pursuant to this
Option shall be the Non-Employee Director’s responsibility.
     The Non-Employee Director agrees that the Company may withhold from the
Non-Employee Director’s remuneration, if any, the minimum statutory amount of
federal, state and local withholding taxes attributable to such amount that is
considered compensation includable in such person’s gross income. At the
Company’s discretion, the amount required to be withheld may be withheld in cash
from such remuneration, or in kind from the Shares otherwise deliverable to the
Non-Employee Director on exercise of the Option. The Non-Employee Director
further agrees that, if the Company does not withhold an amount from the
Non-Employee Director’s remuneration sufficient to satisfy the Company’s income
tax withholding obligation, the Non-Employee Director will reimburse the Company
on demand, in cash, for the amount under-withheld.
     11. PURCHASE FOR INVESTMENT.
     Unless the offering and sale of the Shares to be issued upon the particular
exercise of the Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:

  (a)   The person(s) who exercise the Option shall warrant to the Company, at
the time of such exercise, that such person(s) are acquiring such Shares for
their own respective accounts, for investment, and not with a view to, or for
sale in connection with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s) evidencing the
Shares issued pursuant to such exercise:

“The shares represented by this certificate have been taken for investment and
they may not be sold or otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration Statement with respect to

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such shares shall be effective under the Securities Act of 1933, as amended, or
(b) the Company shall have received an opinion of counsel satisfactory to it
that an exemption from registration under such Act is then available, and
(2) there shall have been compliance with all applicable state securities laws;”
and

  (b)   If the Company so requires, the Company shall have received an opinion
of its counsel that the Shares may be issued upon such particular exercise in
compliance with the 1933 Act without registration thereunder. Without limiting
the generality of the foregoing, the Company may delay issuance of the Shares
until completion of any action or obtaining of any consent, which the Company
deems necessary under any applicable law (including without limitation state
securities or “blue sky” laws).

     12. RESTRICTIONS ON TRANSFER OF SHARES.
     12.1 The Non-Employee Director agrees that in the event the Company
proposes to offer for sale to the public any of its equity securities and such
Non-Employee Director is requested by the Company and any underwriter engaged by
the Company in connection with such offering to sign an agreement restricting
the sale or other transfer of Shares, then it will promptly sign such agreement
and will not transfer, whether in privately negotiated transactions or to the
public in open market transactions or otherwise, any Shares or other securities
of the Company held by him or her during such period as is determined by the
Company and the underwriters, not to exceed 90 days following the closing of the
offering, plus such additional period of time as may be required to comply with
Marketplace Rule 2711 of the National Association of Securities Dealers, Inc. or
similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall
be in writing and in form and substance reasonably satisfactory to the Company
and such underwriter and pursuant to customary and prevailing terms and
conditions. Notwithstanding whether the Non-Employee Director has signed such an
agreement, the Company may impose stop-transfer instructions with respect to the
Shares or other securities of the Company subject to the foregoing restrictions
until the end of the Lock-Up Period.
     12.2 The Non-Employee Director acknowledges and agrees that neither the
Company, its shareholders nor its directors and officers, has any duty or
obligation to disclose to the Non-Employee Director any material information
regarding the business of the Company or affecting the value of the Shares
before, at the time of, or following a termination in service of the
Non-Employee Director by the Company, including, without limitation, any
information concerning plans for the Company to make a public offering of its
securities or to be acquired by or merged with or into another firm or entity.
     13. NO OBLIGATION TO MAINTAIN RELATIONSHIP.
     The Company is not by the Plan or this Option obligated to continue the
Non-Employee Director as a director of the Company or an Affiliate. The
Non-Employee Director acknowledges: (i) that the Plan is discretionary in nature
and may be suspended or terminated by the Company at any time; (ii) that the
grant of the Option is a one-time benefit which does not

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create any contractual or other right to receive future grants of options, or
benefits in lieu of options; (iii) that the Non-Employee Director’s
participation in the Plan is voluntary; and (iv) that the Option is not part of
normal or expected compensation for purposes of calculating any severance,
resignation, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement benefits or similar payments.
     14. NOTICES.
     Any notices required or permitted by the terms of this Agreement or the
Plan shall be given by recognized courier service, facsimile, registered or
certified mail, return receipt requested, addressed as follows:
If to the Company:

         
 
  Altus Pharmaceuticals Inc.    
 
  640 Memorial Drive    
 
  Cambridge, MA 02139    
 
  Attn: Legal Department    
 
        If to the Non-Employee Director:    
 
       
 
 
 
   
 
 
 
   
 
 
 
   

or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
     15. GOVERNING LAW.
     This Agreement shall be construed and enforced in accordance with the law
of the State of Delaware, without giving effect to the conflict of law
principles thereof. For the purpose of litigating any dispute that arises under
this Agreement, the parties hereby consent to exclusive jurisdiction in
Massachusetts and agree that such litigation shall be conducted in the courts of
Middlesex County, Massachusetts or the federal courts of the United States for
the District of Massachusetts.
     16. BENEFIT OF AGREEMENT.
     Subject to the provisions of the Plan and the other provisions hereof, this
Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.

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     17. ENTIRE AGREEMENT.
     This Agreement, together with the Plan, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
     18. MODIFICATIONS AND AMENDMENTS.
     The terms and provisions of this Agreement may be modified or amended as
provided in the Plan.
     19. WAIVERS AND CONSENTS.
     Except as provided in the Plan, the terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
     20. DATA PRIVACY.
     By entering into this Agreement, the Non-Employee Director: (i) authorizes
the Company and each Affiliate, and any agent of the Company or any Affiliate
administering the Plan or providing Plan record keeping services, to disclose to
the Company or any of its Affiliates such information and data as the Company or
any such Affiliate shall request in order to facilitate the grant of options and
the administration of the Plan; (ii) waives any data privacy rights he or she
may have with respect to such information; and (iii) authorizes the Company and
each Affiliate to store and transmit such information in electronic form.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and the Non-Employee Director has hereunto set his
or her hand, all as of the day and year first above written.

            ALTUS PHARMACEUTICALS INC.
      By:           Name:           Title:        

                                       

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Exhibit A
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time
as the Company has filed a Registration Statement with the Securities and
Exchange Commission under which the issuance of the Shares for which this
exercise is being made is registered and such Registration Statement remains
effective.
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
TO: ALTUS PHARMACEUTICALS INC.
Ladies and Gentlemen:
     I hereby exercise my Non-Qualified Stock Option to purchase
                     shares (the “Shares”) of the common stock, $.01 par value,
of Altus Pharmaceuticals Inc. (the “Company”), at the exercise price of
$                     per share, pursuant to and subject to the terms of that
certain Non-Qualified Stock Option Agreement between the undersigned and the
Company dated                     , 200__.
     I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
     I am paying the option exercise price for the Shares as follows:
 
     Please issue the Shares (check one):
     o to me; or
     o to me and                                         , as joint tenants with
right of survivorship,
     at the following address:

           
 
 
 
   
 
 
 
   
 
 
 
   

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          My mailing address for shareholder communications, if different from
the address listed above, is:

         
 
       
 
       
 
 
 
   
 
 
 
   
 
 
 
   

         
 
  Very truly yours,    
 
       
 
       
 
 
 
Non-Employee Director (signature)    
 
       
 
       
 
 
 
Print Name    
 
       
 
       
 
 
 
Date    
 
       
 
       
 
 
 
Social Security Number    

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