Exhibit 10.3

AVALANCHE BIOTECHNOLOGIES, INC.

INDUCEMENT AWARD

STOCK OPTION GRANT NOTICE

Avalanche Biotechnologies, Inc., a Delaware corporation, (the “Company”), hereby
grants to the holder listed below (“Participant”) an option to purchase the
number of shares of the Company’s common stock (“Stock”) set forth below (the
“Option”). This Option is subject to all of the terms and conditions set forth
herein, as well as in the Stock Option Agreement attached hereto as Exhibit A
(the “Stock Option Agreement”), which is incorporated herein by reference.

 

Participant:    [________] Grant Date:    [________] Vesting Commencement Date:
   [________] Exercise Price per Share:    $[________] Total Exercise Price:   
[________]

Total Number of Shares

Subject to the Option:

   [________] Expiration Date:    [________] Vesting Schedule:    Subject to
Participant’s continued service with the Company on the applicable vesting
dates, 25% of the total option shares shall vest on the first anniversary of the
Vesting Commencement Date, and 1/48 of the total option shares shall vest each
month thereafter so that all of the shares subject to the option are vested and
exercisable on the fourth anniversary of the Vesting Commencement Date. Type of
Option:   

Non-Qualified

Stock Option

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By his or her signature and the Company’s signature below, Participant agrees to
be bound by the terms and conditions of the Stock Option Agreement and this
Grant Notice. Participant has reviewed the Stock Option Agreement and this Grant
Notice in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Grant Notice and fully understands all provisions of
this Grant Notice and the Stock Option Agreement. Participant hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under this Grant Notice or the Stock
Option Agreement.

 

AVALANCHE BIOTECHNOLOGIES, INC.:    PARTICIPANT: By:  

 

   By:   

 

Print Name:  

 

   Print Name:   

 

Title:  

 

      Address:  

 

   Address:   

 

 

 

     

 

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EXHIBIT A

TO INDUCEMENT AWARD

STOCK OPTION GRANT NOTICE

AVALANCHE BIOTECHNOLOGIES, INC. STOCK OPTION AGREEMENT

Pursuant to the Stock Option Grant Notice (the “Grant Notice”) to which this
Stock Option Agreement (this “Agreement”) is attached, Avalanche
Biotechnologies, Inc., a Delaware corporation (the “Company”), has granted to
Participant an Option to purchase the number of shares of Stock indicated in the
Grant Notice.

WHEREAS, Participant is a new Employee who has not previously served as an
Employee or Director of the Company; and

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that
Participant shall be granted the Option as an inducement material to Participant
entering into employment with the Company.

ARTICLE 1.

GENERAL

1.1. Defined Terms. Wherever the following terms are used in this Agreement they
shall have the meanings specified below, unless the context clearly indicates
otherwise. Capitalized terms not specifically defined herein shall have the
meanings specified in the Grant Notice.

1.2. Administrator. The Option shall be administered by the Board, the Committee
and/or their delegates (the “Administrator”). To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3 promulgated under the Exchange
Act (“Rule 16b-3”), the Option shall be granted by the entire Board or a
Committee of two or more “non-employee directors” within the meaning of Rule
16b-3. In order to comply with any applicable Nasdaq or other stock exchange
listing requirements, the Option shall be granted by the Committee or a majority
of the Company’s Independent Directors and will be administered in a manner that
complies with such requirements. Except to the extent prohibited by Applicable
Law, the Administrator may delegate to one or more individuals the day-to-day
administration of the Option. Such delegation may be revoked at any time.

ARTICLE 2.

GRANT OF OPTION

2.1. Grant of Option. In consideration of Participant’s entering into employment
with or service to the Company or any Affiliate and for other good and valuable
consideration, effective as of the Grant Date set forth in the Grant Notice (the
“Grant Date”), the Company irrevocably grants to Participant the Option to
purchase any part or all of an aggregate of the number of shares of Stock set
forth in the Grant Notice, upon the terms and conditions set forth in this
Agreement, subject to adjustments as provided in Section 5.13 hereof.

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2.2. Exercise Price; Prohibition on Repricing.

(a) The exercise price of the shares of Stock subject to the Option shall be as
set forth in the Grant Notice, without commission or other charge; provided,
however, that the price per share of the shares of Stock subject to the Option
shall not be less than 100% of the Fair Market Value of a share of Stock on the
Grant Date.

(b) Subject to Section 5.13 hereof, the Administrator shall not, without the
approval of the stockholders of the Company, (i) authorize the amendment of the
Option to reduce its price per Share, or (ii) cancel the Option in exchange for
cash or another award when the Option price per Share exceeds the Fair Market
Value of the underlying shares of Stock.

2.3. Consideration to the Company. In consideration of the grant of the Option
by the Company, Participant agrees to render faithful and efficient services to
the Company or any Affiliate. Nothing in this Agreement shall confer upon
Participant any right to continue in the employ or service of the Company or any
Affiliate or shall interfere with or restrict in any way the rights of the
Company and its Affiliates, which rights are hereby expressly reserved, to
discharge or terminate the services of Participant at any time for any reason
whatsoever, with or without cause, except to the extent expressly provided
otherwise in a written agreement between the Company or an Affiliate and
Participant.

ARTICLE 3.

PERIOD OF EXERCISABILITY

3.1. Commencement of Exercisability.

(a) Subject to Sections 3.2, 3.3, 5.11 and 5.17 hereof, the Option shall become
vested and exercisable in such amounts and at such times as are set forth in the
Grant Notice.

(b) No portion of the Option which has not become vested and exercisable at the
date of Participant’s Termination of Service shall thereafter become vested and
exercisable, except as may be otherwise provided by the Administrator or as set
forth in a written agreement between the Company and Participant.

(c) Notwithstanding Sections 3.1(a) hereof and the Grant Notice, but subject to
Section 3.1(b) hereof, in the event of a Change in Control the Option shall be
treated pursuant to Section Section 5.13 hereof.

3.2. Duration of Exercisability. The installments provided for in the vesting
schedule set forth in the Grant Notice are cumulative. Each such installment
which becomes vested and exercisable pursuant to the vesting schedule set forth
in the Grant Notice shall remain vested and exercisable until it becomes
unexercisable under Section 3.3 hereof.

3.3. Expiration of Option. The Option may not be exercised to any extent by
anyone after the first to occur of the following events:

(a) The Expiration Date set forth in the Grant Notice, which shall in no event
be more than ten (10) years from the Grant Date;

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(b) The expiration of three (3) months from the date of Participant’s
Termination of Service, unless such termination occurs by reason of
Participant’s death or disability; or

(c) The expiration of one (1) year from the date of Participant’s Termination of
Service by reason of Participant’s death or disability.

3.4. Tax Withholding. The Company or any Affiliate shall have the authority and
the right to deduct or withhold, or require Participant to remit to the Company,
an amount sufficient to satisfy federal, state, local and foreign taxes
(including Participant’s FICA or employment tax obligation) required by law to
be withheld with respect to any taxable event concerning Participant arising as
a result of this Agreement. The Administrator may in its sole discretion and in
satisfaction of the foregoing requirement allow Participant to satisfy such
obligations by any payment means described in Section 4.4 hereof, including,
without limitation, by allowing Participant to elect to have the Company
withhold shares of Stock otherwise issuable under this Agreement (or allow the
surrender of shares of Stock). The number of shares of Stock which may be so
withheld or surrendered shall be limited to the number of shares of Stock which
have a Fair Market Value on the date of withholding or repurchase equal to the
aggregate amount of such liabilities based on the minimum statutory withholding
rates for federal, state, local and foreign income tax and payroll tax purposes
that are applicable to such supplemental taxable income. The Administrator shall
determine the fair market value of the shares of Stock, consistent with
applicable provisions of the Code, for tax withholding obligations due in
connection with a broker-assisted cashless option exercise involving the sale of
shares of Stock to pay the Option exercise price or any tax withholding
obligation.

3.5. Tax Indemnity.

(a) Participant agrees to indemnify and keep indemnified the Company, any
Affiliate and Participant’s employing company, if different, from and against
any liability for or obligation to pay any Tax Liability (a “Tax Liability”
being any liability for income tax, withholding tax and any other employment
related taxes or social security contributions in any jurisdiction) that is
attributable to (1) the grant or exercise of, or any benefit derived by
Participant from, the Option, (2) the acquisition by Participant of the Stock on
exercise of the Option or (3) the disposal of any Stock.

(b) The Option cannot be exercised until Participant has made such arrangements
as the Company may require for the satisfaction of any Tax Liability that may
arise in connection with the exercise of the Option and/or the acquisition of
the Stock by Participant. The Company shall not be required to issue, allot or
transfer Stock until Participant has satisfied this obligation.

(c) Participant hereby acknowledges that the Company (i) makes no
representations or undertakings regarding the treatment of any Tax Liabilities
in connection with any aspect of the Option and (ii) does not commit to and is
under no obligation to structure the terms of the grant or any aspect of the
Option, to reduce or eliminate Participant’s liability for Tax Liabilities or
achieve any particular tax result. Furthermore, if Participant becomes subject
to tax in more than one jurisdiction between the Grant Date of the Option, and
the date of any relevant taxable event, Participant acknowledges that the
Company may be required to withhold or account for Tax Liabilities in more than
one jurisdiction.

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ARTICLE 4.

EXERCISE OF OPTION

4.1. Person Eligible to Exercise. Except as provided in Section 5.3 hereof,
during the lifetime of Participant, only Participant may exercise the Option or
any portion thereof, unless it has been disposed of pursuant to a DRO. After the
death of Participant, any exercisable portion of the Option may, prior to the
time when the Option becomes unexercisable under Section 3.3 hereof, be
exercised by the deceased Participant’s personal representative or by any person
empowered to do so under the deceased Participant’s will or under the then
Applicable Laws of descent and distribution.

4.2. Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or portion thereof becomes unexercisable
under Section 3.3 hereof. However, the Option shall not be exercisable with
respect to fractional shares of Stock.

4.3. Manner of Exercise. The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary of the Company (or any third party
administrator or other person or entity designated by the Company; for the
avoidance of doubt, delivery shall include electronic delivery), during regular
business hours, of all of the following prior to the time when the Option or
such portion thereof becomes unexercisable under Section 3.3 hereof:

(a) An exercise notice in the form attached hereto as Exhibit B, stating that
the Option or portion thereof is thereby exercised, such notice complying with
all applicable rules established by the Administrator. The notice shall be
signed by Participant or other person then entitled to exercise the Option or
such portion of the Option;

(b) The receipt by the Company of full payment for the shares of Stock with
respect to which the Option or portion thereof is exercised, including payment
of any applicable withholding tax, which shall be made by deduction from other
compensation payable to Participant or in such other form of consideration
permitted under Section 4.4 hereof that is acceptable to the Company;

(c) Any other written representations or documents as may be required in the
Administrator’s sole discretion to evidence compliance with the Securities Act,
the Exchange Act or any other Applicable Law, rule or regulation; and

(d) In the event the Option or portion thereof shall be exercised pursuant to
Section 4.1 hereof by any person or persons other than Participant, appropriate
proof of the right of such person or persons to exercise the Option.

Notwithstanding any of the foregoing, the Company shall have the right to
specify all conditions of the manner of exercise, which conditions may vary by
country and which may be subject to change from time to time.

4.4. Method of Payment. Payment of the exercise price shall be by any of the
following, or a combination thereof, at the election of Participant:

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(a) Cash or check;

(b) With the consent of the Administrator, surrender of shares of Stock
(including, without limitation, shares of Stock otherwise issuable upon exercise
of the Option) held for such period of time as may be required by the
Administrator in order to avoid adverse accounting consequences and having a
Fair Market Value on the date of delivery equal to the aggregate exercise price
of the Option or exercised portion thereof; or

(c) Other legal consideration acceptable to the Administrator (including,
without limitation, through the delivery of a notice that Participant has placed
a market sell order with a broker with respect to shares of Stock then issuable
upon exercise of the Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; provided that payment of such
proceeds is then made to the Company at such time as may be required by the
Company, but in any event not later than the settlement of such sale).

 

4.5. Conditions to Issuance of Stock.

The shares of Stock deliverable upon the exercise of the Option, or any portion
thereof, may be either previously authorized but unissued shares of Stock or
issued shares of Stock which have then been reacquired by the Company. Such
shares of Stock shall be fully paid and nonassessable. The Company shall not be
required to issue or deliver any shares of Stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following
conditions:

(a) The admission of such shares of Stock to listing on all stock exchanges on
which such Stock is then listed;

(b) The completion of any registration or other qualification of such shares of
Stock under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Administrator shall, in its absolute discretion, deem necessary or
advisable;

(c) The obtaining of any approval or other clearance from any state or federal
governmental agency which the Administrator shall, in its absolute discretion,
determine to be necessary or advisable;

(d) The receipt by the Company of full payment for such shares of Stock,
including payment of any applicable withholding tax, which may be in one or more
of the forms of consideration permitted under Section 4.4 hereof;

(e) The lapse of such reasonable period of time following the exercise of the
Option as the Administrator may from time to time establish for reasons of
administrative convenience.

(f) Notwithstanding anything herein to the contrary, the Company shall not be
required to issue or deliver any certificates or make any book entries
evidencing shares of Stock pursuant to the exercise of the Option, unless and
until the Board or the Committee has determined, with advice of counsel, that
the issuance of such shares is in compliance with all

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Applicable Law, and the shares of Stock are covered by an effective registration
statement or applicable exemption from registration. In addition to the terms
and conditions provided herein, the Board or the Committee may require that
Participant make such reasonable covenants, agreements, and representations as
the Board or the Committee, in its discretion, deems advisable in order to
comply with Applicable Law;

(g) All share certificates delivered pursuant to this Agreement and all shares
of Stock issued pursuant to book entry procedures are subject to any
stop-transfer orders and other restrictions as the Administrator deems necessary
or advisable to comply with Applicable Law. The Administrator may place legends
on any share certificate or book entry to reference restrictions applicable to
the shares of Stock;

(h) The Administrator shall have the right to require Participant to comply with
any timing or other restrictions with respect to the settlement, distribution or
exercise of the Option, including a window-period limitation, as may be imposed
in the sole discretion of the Administrator;

(i) No fractional shares of Stock shall be issued and the Administrator shall
determine, in its sole discretion, whether cash shall be given in lieu of
fractional shares or whether such fractional shares shall be eliminated by
rounding down; and

(j) Notwithstanding any other provision of this Agreement, unless otherwise
determined by the Administrator or required by any Applicable Law, the Company
shall not deliver to Participant certificates evidencing shares of Stock issued
in connection with the Option and instead such shares of Stock shall be recorded
in the books of the Company (or, as applicable, its transfer agent or stock plan
administrator).

4.6. Rights as Stockholder. The holder of the Option shall not be, nor have any
of the rights or privileges of, a stockholder of the Company, including, without
limitation, voting rights and rights to dividends, in respect of any shares of
Stock purchasable upon the exercise of any part of the Option unless and until
such shares of Stock shall have been issued by the Company and held of record by
such holder (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company). No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the shares of Stock are issued, except as provided in Section 5.13 hereof.

ARTICLE 5.

OTHER PROVISIONS

5.1. Administration. The Administrator shall have the power to interpret this
Agreement and to adopt such rules for the administration and interpretation of
this Agreement as are consistent herewith and to interpret, amend or revoke any
such rules. All actions taken and all interpretations and determinations made by
the Administrator in good faith shall be final and binding upon Participant, the
Company and all other interested persons. No member of the Committee or the
Board shall be personally liable for any action, determination or interpretation
made in good faith with respect to this Agreement or the Option.

 

5.2. Whole Shares. The Option may only be exercised for whole shares of Stock.

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5.3. Option Not Transferable.

(a) Subject to Section 4.1 hereof, the Option may not be sold, pledged, assigned
or transferred in any manner other than by will or the laws of descent and
distribution or, subject to the consent of the Administrator, pursuant to a DRO,
unless and until the Option has been exercised and the shares of Stock
underlying the Option have been issued, and all restrictions applicable to such
shares of Stock have lapsed. Neither the Option nor any interest or right
therein shall be liable for the debts, contracts or engagements of Participant
or his or her successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, hypothecation, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy) unless and until
the Option has been exercised, and any attempted disposition thereof prior to
exercise shall be null and void and of no effect, except to the extent that such
disposition is permitted by the preceding sentence.

(b) During the lifetime of Participant, only Participant may exercise the Option
(or any portion thereof), unless it has been disposed of pursuant to a DRO;
after the death of Participant, any exercisable portion of the Option may, prior
to the time when such portion becomes unexercisable under this Agreement, be
exercised by Participant’s personal representative or by any person empowered to
do so under the deceased Participant’s will or under the then-Applicable Laws of
descent and distribution.

(c) Notwithstanding any other provision in this Agreement, Participant may, in
the manner determined by the Administrator, designate a beneficiary to exercise
the rights of Participant and to receive any distribution with respect to the
Option upon Participant’s death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights is subject to all terms and
conditions of this Agreement, except to the extent this Agreement otherwise
provides, and to any additional restrictions deemed necessary or appropriate by
the Administrator. If Participant is married or a domestic partner in a domestic
partnership qualified under Applicable Law and resides in a community property
state, a designation of a person other than Participant’s spouse or domestic
partner, as applicable, as his or her beneficiary with respect to more than 50%
of Participant’s interest in the Option shall not be effective without the prior
written consent of Participant’s spouse or domestic partner. If no beneficiary
has been designated or survives Participant, payment shall be made to the person
entitled thereto pursuant to Participant’s will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by Participant at any time provided the change or revocation is filed
with the Administrator prior to Participant’s death.

5.4. Tax Consultation. Participant understands that Participant may suffer
adverse tax consequences as a result of the grant, vesting and/or exercise of
the Option, and/or with the purchase or disposition of the shares of Stock
subject to the Option. Participant represents that Participant has consulted
with any tax consultants Participant deems advisable in connection with the
purchase or disposition of such shares of Stock and that Participant is not
relying on the Company for any tax advice.

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

5.6. Adjustments Upon Specified Events. The Administrator may accelerate the
vesting of the Option in such circumstances as it, in its sole discretion, may
determine. In addition, upon the occurrence of certain events relating to the
Stock contemplated by Section 5.13 hereof (including, without limitation, an
extraordinary cash dividend on such Stock), the Administrator shall make such
adjustments the Administrator deems appropriate in the number of shares of Stock
subject to the Option, the exercise price of the Option and the kind of
securities that may be issued upon exercise of the Option. Participant
acknowledges that the Option is subject to adjustment, modification and
termination in certain events as provided in this Agreement and Section 5.13
hereof.

5.7. Notices. Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of the Secretary of the
Company at the Company’s principal office, and any notice to be given to
Participant shall be addressed to Participant at Participant’s last address
reflected on the Company’s records. By a notice given pursuant to this
Section 5.7, either party may hereafter designate a different address for
notices to be given to that party. Any notice which is required to be given to
Participant shall, if Participant is then deceased, be given to the person
entitled to exercise his or her Option pursuant to Section 4.1 hereof by written
notice under this Section 5.7. Any notice shall be deemed duly given when sent
via email or when sent by certified mail (return receipt requested) and
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.

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

5.9. Governing Law. The laws of the State of Delaware shall govern the
interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.

5.10. Conformity to Securities Laws. Participant acknowledges that this
Agreement is intended to conform to the extent necessary with all provisions of
the Securities Act and the Exchange Act and any and all Applicable Law and
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, and state securities laws and regulations. Notwithstanding anything
herein to the contrary, this Agreement shall be administered, and the Option is
granted and may be exercised, only in such a manner as to conform to such
Applicable Law. To the extent permitted by Applicable Law, this Agreement shall
be deemed amended to the extent necessary to conform to such Applicable Law.

5.11. Amendment, Suspension and Termination. This Agreement may be wholly or
partially amended or otherwise modified, suspended or terminated at any time or
from time to time by the Administrator or the Board; provided, however, that,
except as may otherwise be provided by this Agreement, no amendment,
modification, suspension or termination of this Agreement shall adversely affect
the Option in any material way without the prior written consent of Participant.

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5.12. Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth in Section 5.3 hereof, this Agreement
shall be binding upon Participant and his or her heirs, executors,
administrators, successors and assigns.

5.13. Changes in Stock Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.

(a) In the event of any stock dividend, stock split, combination or exchange of
shares, merger, consolidation or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other change affecting the
shares of Stock or the share price of the Stock other than an Equity
Restructuring, the Administrator may make equitable adjustments, if any, to
reflect such change with respect to (i) the number and kind of shares of Stock
(or other securities or property) subject to the Option and (ii) the exercise
price per share for the Option.

(b) In the event of any transaction or event described in Section 5.13 hereof or
any unusual or nonrecurring transactions or events affecting the Company, any
Affiliate of the Company, or the financial statements of the Company or any
Affiliate, or of changes in Applicable Law, the Administrator, in its sole
discretion, and on such terms and conditions as it deems appropriate, either by
the terms of the Option or by action taken prior to the occurrence of such
transaction or event and either automatically or upon Participant’s request, is
hereby authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made with respect to the Option, to facilitate such transactions or events or to
give effect to such changes in laws, regulations or principles:

(i) To provide for either (A) termination of the Option in exchange for an
amount of cash and/or other property, if any, equal to the amount that would
have been attained upon the exercise of the Option or realization of
Participant’s rights (and, for the avoidance of doubt, if as of the date of the
occurrence of the transaction or event described in this Section 5.13 the
Administrator determines in good faith that no amount would have been attained
upon the exercise of the Option or realization of Participant’s rights, then the
Option may be terminated by the Company without payment) or (B) the replacement
of the Option with other rights or property selected by the Administrator in its
sole discretion having an aggregate value not exceeding the amount that could
have been attained upon the exercise of the Option or realization of
Participant’s rights had the Option been currently exercisable or payable or
fully vested;

(ii) To provide that the Option be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

(iii) To make adjustments in the number and type of shares of the Stock (or
other securities or property) subject to the Option, and/or in the terms and
conditions of (including the exercise price), the Option;

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(iv) To provide that the Option shall be exercisable or payable or fully vested
with respect to all shares of Stock covered thereby, notwithstanding anything to
the contrary in this Agreement; and

(v) To provide that the Option cannot vest, be exercised or become payable after
such event.

(c) In connection with the occurrence of any Equity Restructuring, and
notwithstanding anything to the contrary in Sections 5.13(a) and 5.13(b) hereof,
the number and type of securities subject to the Option and the exercise price
thereof shall be equitably adjusted. The adjustments provided under this
Section 5.13(c) shall be nondiscretionary and shall be final and binding on
Participant and the Company.

(d) Change in Control.

(i) Notwithstanding any other provision of this Agreement, in the event of a
Change in Control, the Option shall be assumed or an equivalent award
substituted by the successor corporation or a parent or subsidiary of the
successor corporation, in each case, as determined by the Administrator.

(ii) In the event that the successor corporation in a Change in Control and its
parents and subsidiaries refuse to assume or substitute for the Option in
accordance with Section 5.13(d)(i) hereof, the Option shall become fully vested
and, as applicable, exercisable and shall be deemed exercised, immediately prior
to the consummation of such transaction, and all forfeiture restrictions on the
Option shall lapse at such time. If the Option vests and, as applicable, is
exercised in lieu of assumption or substitution in connection with a Change in
Control, the Administrator shall notify Participant of such vesting and any
applicable exercise period, and the Option shall terminate upon the Change in
Control. For the avoidance of doubt, if the value of the Option that is
terminated in connection with this Section 5.13(d)(ii) is zero or negative at
the time of such Change in Control, such Option shall be terminated upon the
Change in Control without payment of consideration therefor.

(e) No adjustment or action described in this Section 5.13 shall be authorized
to the extent such adjustment or action would result in short-swing profits
liability under Section 16 of the Exchange Act or violate the exemptive
conditions of Rule 16b-3 of the Exchange Act unless the Administrator determines
that the Option is not to comply with such exemptive conditions.

(f) The existence of this Agreement and the Option shall not affect or restrict
in any way the right or power of the Company or the stockholders of the Company
to make or authorize any adjustment, recapitalization, reorganization or other
change in the Company’s capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options, warrants or
rights to purchase stock or of bonds, debentures, preferred or prior preference
stocks whose rights are superior to or affect the Stock or the rights thereof or
which are convertible into or exchangeable for Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

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(g) In the event of any pending stock dividend, stock split, combination or
exchange of shares, merger, consolidation or other distribution (other than
normal cash dividends) of Company assets to stockholders, or any other change
affecting the shares of Stock or the share price of the Stock including any
Equity Restructuring, for reasons of administrative convenience, the Company in
its sole discretion may refuse to permit the exercise of the Option during a
period of thirty (30) days prior to the consummation of any such transaction.

5.14. Limitations Applicable to Section 16 Persons. Notwithstanding any other
provision of this Agreement, if Participant is subject to Section 16 of the
Exchange Act, the Option and this Agreement shall be subject to any additional
limitations set forth in any applicable exemptive rule under Section 16 of the
Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that
are requirements for the application of such exemptive rule. To the extent
permitted by Applicable Law, this Agreement shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.

5.15. Not a Contract of Service Relationship. Nothing in this Agreement shall
confer upon Participant any right to continue to serve as an employee or other
service provider of the Company or any of its Affiliates or interfere with or
restrict in any way with the right of the Company or any of its Affiliates,
which rights are hereby expressly reserved, to discharge or to terminate for any
reason whatsoever, with or without cause, the services of Participant’s at any
time.

5.16. Entire Agreement. The Grant Notice, this Agreement (including all Exhibits
thereto) and the Change in Control and Severance Agreement entered into between
the Company and Participant, dated January 29, 2016, constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Participant with respect to the subject matter
hereof.

5.17. Section 409A. This Option is not intended to constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code (together
with any Department of Treasury regulations and other interpretive guidance
issued thereunder, including, without limitation, any such regulations or other
guidance that may be issued after the date hereof, “Section 409A”). However,
notwithstanding any other provision of the Grant Notice or this Agreement (or
any Exhibits hereto), if at any time the Administrator determines that the
Option (or any portion thereof) may be subject to Section 409A, the
Administrator shall have the right in its sole discretion (without any
obligation to do so or to indemnify Participant or any other person for failure
to do so) to adopt such amendments to the Grant Notice or this Agreement (or any
Exhibits hereto), or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any other actions, as
the Administrator determines are necessary or appropriate either for the Option
to be exempt from the application of Section 409A or to comply with the
requirements of Section 409A.

5.18. Limitation on Participant’s Rights. This Agreement creates only a
contractual obligation on the part of the Company as to amounts payable and
shall not be construed as creating a trust. Participant shall have only the
rights of a general unsecured creditor of the Company with respect to amounts
credited and benefits payable, if any, with respect to the Option, and rights no
greater than the right to receive the Stock as a general unsecured creditor with
respect to options, as and when exercised pursuant to the terms hereof.

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5.19. Consent to Personal Data Use. Participant acknowledges and agrees that the
Company is permitted to collect, hold, store, process, modify, transfer, lock or
delete certain personal (and sensitive) data in any medium about Participant
(i.e., name, home address, telephone number, e-mail address, date of birth, tax
identification number and payroll information) as a part of its personnel and
other business records for the exclusive purpose of tracking stock option
grants, processing stock option exercises and subsequent share transfers and
sales, arranging for appropriate tax reporting and withholding and regulatory
tracking and reporting purposes and the Company may disclose such information to
third parties in the event that such disclosure is in the Company’s view
required for the proper tracking of stock option grants, processing stock option
exercises and subsequent share transfers and sales, arranging for appropriate
tax reporting and withholding and regulatory tracking. For these purposes, this
personal data will be transferred to other locations, including locations
outside of the European Union and in so-called insecure third-party countries
that do not guarantee the data privacy protection level of the European Union.

5.20. Claw-Back Provisions. The Option (including any proceeds, gains or other
economic benefit actually or constructively received by Participant upon any
receipt or exercise of the Option or upon the receipt or resale of any shares of
Stock underlying the Option) shall be subject to the provisions of any claw-back
policy implemented by the Company, including, without limitation, any claw-back
policy adopted to comply with the requirements of Applicable Law, including,
without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection
Act and any rules or regulations promulgated thereunder, to the extent set forth
in such claw-back policy.

 

5.21. Definitions.

(a) “Affiliate” shall mean any Parent or Subsidiary of the Company.

(b) “Applicable Law” shall mean any applicable law, including, without
limitation, (i) provisions of the Code, the Securities Act, the Exchange Act and
any rules or regulations thereunder; (ii) corporate, securities, tax or other
laws, statutes, rules, requirements or regulations, whether federal, state,
local or foreign; and (iii) rules of any securities exchange or automated
quotation system on which the shares of Stock are listed, quoted or traded.

(c) “Change in Control” shall mean the occurrence, in a single transaction or in
a series of related transactions, of any one or more of the following events:

(i) A transaction or series of transactions (other than an offering of Stock to
the general public through a registration statement filed with the Securities
and Exchange Commission) whereby any “person” or related “group” of “persons”
(as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act)
(other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a “person” that, prior
to such transaction, directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities of the Company possessing more than 50% of the total combined
voting power of the Company’s securities outstanding immediately after such
acquisition; or

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(ii) During any period of two consecutive years, individuals who, at the
beginning of such period, constitute the Board together with any new Director(s)
(other than a Director designated by a person who shall have entered into an
agreement with the Company to effect a transaction described in
Section 5.21(c)(i) or 5.21(c)(iii)) whose election by the Board or nomination
for election by the Company’s stockholders was approved by a vote of at least
two-thirds of the Directors then still in office who either were Directors at
the beginning of the two-year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or

(iii) The consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination or (y) a sale or
other disposition of all or substantially all of the Company’s assets in any
single transaction or series of related transactions or (z) the acquisition of
assets or stock of another entity, in each case other than a transaction:

(A) which results in the Company’s voting securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding
or by being converted into voting securities of the Company or the person that,
as a result of the transaction, controls, directly or indirectly, the Company or
owns, directly or indirectly, all or substantially all of the Company’s assets
or otherwise succeeds to the business of the Company (the Company or such
person, the “Successor Entity”)) directly or indirectly, at least a majority of
the combined voting power of the Successor Entity’s outstanding voting
securities immediately after the transaction, and

(B) after which no person or group beneficially owns voting securities
representing 50% or more of the combined voting power of the Successor Entity;
provided, however, that no person or group shall be treated for purposes of this
Section 5.21(c)(iii)(B) as beneficially owning 50% or more of the combined
voting power of the Successor Entity solely as a result of the voting power held
in the Company prior to the consummation of the transaction; or

(iv) The Company’s stockholders approve a liquidation or dissolution of the
Company.

Notwithstanding the foregoing, if a Change in Control constitutes a payment
event with respect to any portion of the Option that provides for the deferral
of compensation and is subject to Section 409A of the Code, the transaction or
event described in subsection (i), (ii), (iii) or (iv) with respect to the
Option (or portion thereof) must also constitute a “change in control event,” as
defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by
Section 409A.

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The Committee shall have full and final authority, which shall be exercised in
its discretion, to determine conclusively whether a Change in Control of the
Company has occurred pursuant to the above definition, and the date of the
occurrence of such Change in Control and any incidental matters relating
thereto; provided that any exercise of authority is in conjunction with a
determination of whether a Change in Control is a “change in control event” as
defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with
such regulation.

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, together with the regulations and official guidance promulgated
thereunder, whether issued prior or subsequent to the grant of the Option.

(e) “Committee” shall mean the Compensation Committee of the Board, a
subcommittee of the Compensation Committee of the Board or another committee or
subcommittee of the Board.

(f) “Consultant” shall mean any consultant or advisor engaged to provide
services to the Company or any Affiliate who qualifies as a consultant or
advisor under the applicable rules of the Securities and Exchange Commission for
registration of shares on a Form S-8 Registration Statement or any successor
Form thereto.

(g) “Director” shall mean a member of the Board, as constituted from time to
time.

(h) “DRO” shall mean a “domestic relations order” as defined by the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended from
time to time, or the rules thereunder.

(i) “Employee” shall mean any officer or other employee (as determined in
accordance with Section 3401(c) of the Code and the Treasury Regulations
thereunder) of the Company or any Affiliate.

(j) “Equity Restructuring” shall mean a nonreciprocal transaction between the
Company and its stockholders, such as a stock dividend, stock split, spin-off,
rights offering or recapitalization through a large, nonrecurring cash dividend,
that affects the number or kind of shares of Stock (or other securities of the
Company) or the share price of Stock (or other securities) and causes a change
in the per share value of the Stock underlying the Option.

(k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time.

(l) “Fair Market Value” shall mean, as of any given date, the value of a share
of Stock determined as follows:

If the Stock is (i) listed on any established securities exchange (such as the
New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select
Market), (ii) listed on any national market system or (iii) listed, quoted or
traded on any automated quotation system, its Fair Market Value shall be the
closing sales price for a share of Stock as quoted on such exchange or system
for such date or, if there is no closing sales price for a share of Stock on the
date in question, the closing sales price for a share of Stock on the last
preceding date for which such quotation exists, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

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

If the Stock is not listed on an established securities exchange, national
market system or automated quotation system, but the Stock is regularly quoted
by a recognized securities dealer, its Fair Market Value shall be the mean of
the high bid and low asked prices for such date or, if there are no high bid and
low asked prices for a share of Stock on such date, the high bid and low asked
prices for a share of Stock on the last preceding date for which such
information exists, as reported in The Wall Street Journal or such other source
as the Administrator deems reliable; or

If the Stock is neither listed on an established securities exchange, national
market system or automated quotation system nor regularly quoted by a recognized
securities dealer, its Fair Market Value shall be established by the
Administrator in good faith.

(m) “Independent Director” means a member of the Board who is an “independent
director” within the meaning of Nasdaq Listing Rule 5605.

(n) “Parent” shall mean any entity (other than the Company), whether domestic or
foreign, in an unbroken chain of entities ending with the Company if each of the
entities other than the Company beneficially owns, at the time of the
determination, securities or interests representing more than fifty percent
(50%) of the total combined voting power of all classes of securities or
interests in one of the other entities in such chain.

(o) “Securities Act” shall mean the Securities Act of 1933, as amended.

(p) “Subsidiary” shall mean any entity (other than the Company), whether
domestic or foreign, in an unbroken chain of entities beginning with the Company
if each of the entities other than the last entity in the unbroken chain
beneficially owns, at the time of the determination, securities or interests
representing more than fifty percent (50%) of the total combined voting power of
all classes of securities or interests in one of the other entities in such
chain.

(q) “Termination of Service” shall mean:

As to a Consultant, the time when the engagement of Participant as a Consultant
to the Company or an Affiliate is terminated for any reason, with or without
cause, including, without limitation, by resignation, discharge, death or
retirement, but excluding terminations where the Consultant simultaneously
commences or remains in employment or service with the Company or any Affiliate.

As to a Non-Employee Director, the time when Participant who is a Non-Employee
Director ceases to be a Director for any reason, including, without limitation,
a termination by resignation, failure to be elected, death or retirement, but
excluding terminations where Participant simultaneously commences or remains in
employment or service with the Company or any Affiliate.

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

As to an Employee, the time when the employee-employer relationship between
Participant and the Company or any Affiliate is terminated for any reason,
including, without limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding terminations where Participant
simultaneously commences or remains in employment or service with the Company or
any Affiliate.

The Administrator, in its sole discretion, shall determine the effect of all
matters and questions relating to Terminations of Service, including, without
limitation, the question of whether a Termination of Service resulted from a
discharge for cause and all questions of whether particular leaves of absence
constitute a Termination of Service. For purposes of this Agreement,
Participant’s employee-employer relationship or consultancy relations shall be
deemed to be terminated in the event that the Affiliate employing or contracting
with Participant ceases to remain an Affiliate following any merger, sale of
stock or other corporate transaction or event (including, without limitation, a
spin-off).

* * * * *

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EXHIBIT B

INDUCEMENT AWARD

STOCK OPTION GRANT NOTICE

NOTICE OF EXERCISE

Avalanche Biotechnologies, Inc.

1035 O’Brien Drive, Suite A

Menlo Park, CA 94025

Ladies and Gentlemen:

1. Exercise of Option. Effective upon delivery of full payment (or election of
payment by shares) of the Exercise Price per Share (the “Exercise Price”) and
any required tax withholdings, the undersigned Participant hereby elects to
exercise the Participant’s option (“Option”), granted on             , to
purchase              whole shares (the “Exercised Shares”) of shares of Stock
under and pursuant to the Inducement Award Stock Option Grant Notice (including
Exhibits thereto) (the “Agreement”) between the Participant and Avalanche
Biotechnologies, Inc. (the “Company”) dated             . Capitalized terms used
but not otherwise defined in this Notice of Exercise (the “Exercise Notice”)
shall have the meanings ascribed to them in the Agreement.

2. Delivery of Payment of Exercise Price. The Participant is paying for the
Exercised Shares (check as applicable):

 

  ¨ with the consent of the Administrator, by surrender of shares of Stock held
for such period of time as may be required by the Administrator in order to
avoid adverse accounting consequences and having a Fair Market Value on the date
of delivery equal to the aggregate Exercise Price of the Exercised Shares; or

 

  ¨ by delivering with this Exercise Notice cash and/or a certified or cashier’s
check payable to the Company in the amount of $                     ; and/or

 

  ¨ with the consent of the Administrator, by delivering with this Exercise
Notice                      shares of Stock that are owned by the Participant
and endorsed for transfer to the Company and that have an aggregate Fair Market
Value on the date of exercise equal to the portion of the aggregate Exercise
Price being covered thereby (if not prohibited by any contractual arrangement
otherwise); and/or

 

  ¨ Participant has placed a market sell order with a broker with respect to
shares of Stock issuable upon exercise of the Option, and the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the aggregate Exercise Price, with payment of such
proceeds made to the Company at such time as may be required by the Company, but
in any event not later than the settlement of such sale.

3. Delivery of Payment of Taxes. The Participant is paying the local, state and
federal withholding taxes and/or all other taxes that the Company has advised
are due by reason of this exercise of the Option, in the amount of $
                     (check as applicable):

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

  ¨ with the consent of the Administrator, by surrender of shares of Stock held
for such period of time as may be required by the Administrator in order to
avoid adverse accounting consequences and having a Fair Market Value on the date
of delivery equal to the aggregate Exercise Price of the Exercised Shares; or

 

  ¨ by delivering with this Exercise Notice cash and/or a certified or cashier’s
check payable to the Company in the amount of $                     ; and/or

 

  ¨ with the consent of the Administrator, by delivering with this Exercise
Notice              shares of Stock that are owned by the Participant and
endorsed for transfer to the Company and that have an aggregate Fair Market
Value on the date of exercise equal to the portion of the aggregate Exercise
Price being covered thereby (if not prohibited by any contractual arrangement
otherwise); and/or

 

  ¨ Participant has placed a market sell order with a broker with respect to
shares of Stock issuable upon exercise of the Option, and the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the aggregate Exercise Price, with payment of such
proceeds made to the Company at such time as may be required by the Company, but
in any event not later than the settlement of such sale.

4. Registration of Shares. Please register the Exercised Shares (check one):

 

  ¨ in the Participant’s name only;

 

  ¨ as community property in the names of the Participant and the Participant’s
spouse (                    ); or

 

  ¨ in the names of the Participant and the Participant’s spouse
(                    ), as joint tenants with right of survivorship.

5. Representations of the Participant. The Participant acknowledges that the
Participant has received, read, and understood the Agreement and this Exercise
Notice and agrees to abide by and be bound by their terms and conditions.

6. Rights as Stockholder. Until the issuance of the Exercised Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Exercised Shares, notwithstanding the exercise of the
Option. The Exercised Shares shall be issued to the Participant as soon as
practicable after the Option is exercised. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date of
issuance, except as provided in Section 5.13 of the Agreement.

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

8. Governing Law. This Exercise Notice shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to principles of
conflicts of law.

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9. Entire Agreement. The Agreement is incorporated herein by reference. This
Exercise Notice and the Agreement constitute the entire agreement of the parties
with respect to the subject matter hereof and supersede in their entirety all
prior undertakings and agreements of the Company and the Participant with
respect to the subject matter hereof, and may not be modified adversely to the
Participant’s interest except by means of a writing signed by the Company and
the Participant.

[Signatures appear on next page.]

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Submitted by:     Accepted by:     AVALANCHE BIOTECHNOLOGIES, INC.

 

   

 

Name:     By:     Title:

 

    Social Security Number     Address:     Address:

 

   

1035 O’Brien Drive, Suite A

 

   

Menlo Park, CA 94025

 

   

 

Date Signed     Date Received