Exhibit 10.8


 


ARYX THERAPEUTICS, INC.

2007 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN


 


OPTION AGREEMENT

(NONSTATUTORY STOCK OPTION)


 


Pursuant to your Option Grant
Notice (“Grant Notice”)
and this Option Agreement, ARYx Therapeutics, Inc. (the “Company”) has granted
you an option under its 2007 Non-Employee Directors’ Stock Option Plan (the “Plan”) to purchase
the number of shares of the Company’s Common Stock indicated in your Grant
Notice at the exercise price indicated in your Grant Notice. Defined terms not
explicitly defined in this Option Agreement but defined in the Plan shall have
the same definitions as in the Plan.


 


The details of your option are
as follows:


 


1.             VESTING. Subject
to the limitations contained herein, your option will vest as provided in your
Grant Notice, provided that vesting will cease upon the termination of your
Continuous Service.


 


2.             NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common Stock subject to
your option and your exercise price per share referenced in your Grant Notice
may be adjusted from time to time for Capitalization Adjustments.


 


3.             METHOD OF PAYMENT. Payment of the exercise price is due in full upon exercise of all or
any part of your option. You may elect to make payment of the exercise price in
cash or by check or in any other manner permitted by your Grant
Notice, which may include one or more of the following:


 


(a)           Provided
that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds.


 


(b)           Provided
that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, by
delivery to the Company (either by actual delivery or attestation) of already-owned
shares of Common Stock that are owned free and clear of any liens, claims,
encumbrances or security interests, and that are valued at Fair Market Value on
the date of exercise. Notwithstanding the foregoing, you may not exercise your
option by tender to the Company of Common Stock to the extent such tender would
violate the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.


 


4.             WHOLE SHARES. You may exercise your option only for whole shares of Common Stock.


 

















 


5.             SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the
registration requirements of the Securities Act. The exercise of your option
must also comply with other applicable laws and regulations governing your
option, and you may not exercise your option if the Company determines that
such exercise would not be in material compliance with such laws and
regulations.


 


6.             TERM. You
may not exercise your option before the commencement or after the expiration of
its term. The term of your option commences on the Date of Grant and expires
upon the earliest
of the following:


 


(a)           three
(3) months after the termination of your Continuous Service for any reason
other than your Disability or death or upon a Change in Control, provided that
if during any part of such three (3)-month period your option is not
exercisable solely because of the condition set forth in Section 5, your option
shall not expire until the earlier of the Expiration Date or until it shall
have been exercisable for an aggregate period of three (3) months after the
termination of your Continuous Service;


 


(b)           twelve
(12) months after the termination of your Continuous Service due to your
Disability;


 


(c)           eighteen
(18) months after your death if you die either during your Continuous Service
or within three (3) months after your Continuous Service terminates;


 


(d)           twelve
(12) months after the effective date of a Change in Control if termination
occurs as of, or within twelve (12) months following the effective date of such
a Change in Control;


 


(e)           the
Expiration Date indicated in your Grant Notice; or


 


(f)            the
day before the tenth (10th) anniversary of the Date of Grant.


 


7.             EXERCISE.


 


(a)           You
may exercise the vested portion of your option (and the unvested portion of
your option if your Grant Notice so permits) during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such
additional documents as the Company may then require.


 


(b)           By
exercising your option you agree that, as a condition to any exercise of your
option, the Company may require you to enter into an arrangement providing for
the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of your option, (2) the lapse of
any substantial risk of forfeiture to which the shares of Common Stock are
subject at the time of exercise, or (3) the disposition of shares of Common
Stock acquired upon such exercise.


 


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8.             TRANSFERABILITY. Your option is transferable only by will or by the laws of
descent and distribution and is exercisable only by you during your lifetime. However,
you may transfer your option for no consideration upon written consent of the
Board (i) if, at the time of transfer, a Form S-8 registration statement under
the Securities Act is available for the issuance of shares by the Company upon
the exercise of such transferred option, or (ii) the transfer is to your
employer at the time of transfer or an affiliate of your employer at the time
of transfer. Any such transfer is subject to such limits as the Board
may establish, and subject to the transferee agreeing to remain subject to all
the terms and conditions applicable to your option prior to such transfer. The
forgoing right to transfer your option shall apply to the right to consent to
amendments to the Option Agreement for such option. In addition, until you
transfers the option, you may, by delivering written notice to the
Company, in a form provided by or otherwise satisfactory to the Company,
designate a third party who, in the event of your death, shall thereafter be
entitled to exercise your option.


 


9.             CHANGE IN CONTROL.


 


(a)           In the event that
you are required to resign your position as a Non-Employee Director as a
condition of a Change in Control or you are removed from your position as a
Non-Employee Director in connection with a Change in Control, your option shall
become fully vested and exercisable immediately prior to the effectiveness of
such resignation or removal (and contingent upon the effectiveness of such
Change in Control).


 


(b)           If any payment or
benefit you would receive in connection with a Change in Control from the
Company or otherwise (“Payment”)
would (i) constitute a “parachute payment” within the meaning of Section 280G
of the Code, and (ii) but for this sentence, be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then the Company shall cause to
be determined, before any amounts of the Payment are paid to you, which of the
following two alternative forms of payment would maximize your after-tax
proceeds: (i) payment in full of the entire amount of the Payment (a “Full Payment”), or
(ii) payment of only a part of the Payment so that you receive the largest
payment possible without the imposition of the Excise Tax (a “Reduced Payment”),
whichever amount results in your receipt, on an after-tax basis, of the greater
amount of the Payment notwithstanding that all or some portion of the Payment
may be subject to the Excise Tax. For purposes of determining whether to make a
Full Payment or a Reduced Payment, the Company shall cause to be taken into
account all applicable federal, state and local income and employment taxes and
the Excise Tax (all computed at the highest applicable marginal rate, net of
the maximum reduction in federal income taxes which could be obtained from a
deduction of such state and local taxes).


 


(c)           If a Reduced
Payment is made, (i) the Payment shall be paid only to the extent permitted
under the Reduced Payment alternative, and you shall have no rights to any
additional payments and/or benefits constituting the Payment, and (ii)
reduction in payments and/or benefits shall occur in the following order unless
you elect in writing a different order (provided, however, that such election shall
be subject to Company approval if made on or after the date on which the event
that triggers the Payment occurs): (1) reduction of cash payments; (2)
cancellation of accelerated vesting of equity awards other than stock options;
(3) cancellation of accelerated vesting of stock options; and (4) reduction of
other benefits paid to you. In the event that acceleration of compensation from
your equity awards is to be reduced, such


 


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acceleration of vesting shall be canceled in the
reverse order of the date of grant (i.e., earliest
granted Stock Award cancelled last) unless you elect in writing a different
order for cancellation.


 


(d)           The accounting firm
engaged by the Company for general tax purposes as of the day prior to the
effective date of the Change in Control shall perform the foregoing
calculations. If the accounting firm so engaged by the Company is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control, the Company shall appoint a nationally recognized accounting firm
to make the determinations required hereunder. The Company shall bear all
expenses with respect to the determinations by such accounting firm required to
be made hereunder.


 


(e)           The accounting firm
engaged to make the determinations hereunder shall provide its calculations,
together with detailed supporting documentation, to you and the Company within
fifteen (15) calendar days after the date on which your right to a Payment is
triggered (if requested at that time by you or the Company) or such other time
as requested by you or the Company. If the accounting firm determines that no
Excise Tax is payable with respect to a Payment, either before or after the
application of the Reduced Amount, it shall furnish you and the Company with an
opinion reasonably acceptable to you that no Excise Tax will be imposed with
respect to such Payment. Any good faith determinations of the accounting firm
made hereunder shall be final, binding and conclusive upon you and the Company.


 


10.          OPTION NOT A SERVICE CONTRACT. Your option is not an
employment or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue in the
employ of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment. In addition, nothing in your option shall obligate
the Company or an Affiliate, their respective stockholders, Boards of
Directors, Officers or Employees to continue any relationship that you might
have as a Director or Consultant for the Company or an Affiliate.


 


11.          WITHHOLDING OBLIGATIONS.


 


(a)           At the time you
exercise your option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any
other amounts payable to you, and otherwise agree to make adequate provision
for (including by means of a “cashless exercise” pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board to the
extent permitted by the Company), any sums required to satisfy the federal,
state, local and foreign tax withholding obligations of the Company or an
Affiliate, if any, which arise in connection with the exercise of your option.


 


(b)           Upon your request and
subject to approval by the Company, in its sole discretion, and compliance with
any applicable legal conditions or restrictions, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the exercise
of your option a number of whole shares of Common Stock having a Fair Market
Value, determined by the Company as of the date of exercise, not in excess of
the minimum amount of tax required to be withheld by law (or such lower amount
as may be necessary to avoid classification of your option as a liability for
financial accounting purposes). Any adverse consequences to you arising in
connection with such share withholding procedure shall be your


 


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sole responsibility. If the date of determination of
any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence
shall not be permitted unless you make a proper and timely election under
Section 83(b) of the Code, covering the aggregate number of shares of Common
Stock acquired upon such exercise with respect to which such determination is
otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing
of such election, shares of Common Stock shall be withheld solely from fully
vested shares of Common Stock determined as of the date of exercise of your
option that are otherwise issuable to you upon such exercise. Any adverse
consequences to you arising in connection with such share withholding procedure
shall be your sole responsibility.


 


(c)           You may not
exercise your option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied. Accordingly, you may not be able to
exercise your option when desired even though your option is vested, and the
Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided
for herein unless such obligations are satisfied.


 


12.          NOTICES. Any notices provided for in your option or the
Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by mail by the Company to you,
five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.


 


13.          GOVERNING PLAN DOCUMENT. Your option is subject to all
the provisions of the Plan, the provisions of which are hereby made a part of
your option, and is further subject to all interpretations, amendments, rules
and regulations, which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of
your option and those of the Plan, the provisions of the Plan shall control.


 


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ARYX THERAPEUTICS, INC.


2007 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN


 


OPTION GRANT NOTICE


([IPO] [INITIAL] [ANNUAL] GRANT)


 


ARYx Therapeutics, Inc. (the “Company”), pursuant
to its 2007 Non-Employee Directors’ Stock Option Plan (the “Plan”), hereby grants
to Optionholder an option to purchase the number of shares of the Company’s
Common Stock set forth below. This option is subject to all of the terms and
conditions as set forth herein and in the Option Agreement, the Plan, and the
Notice of Exercise, all of which are attached hereto and incorporated herein in
their entirety.


 


	
   

  	
  Optionholder:

  	
   

  	
   

  	
   

  
	
   

  	
  Date of Grant:

  	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares Subject to Option:

  	
   

  	
  [16,666] [6,666]

  	
   

  
	
   

  	
  Exercise Price (Per Share):

  	
   

  	
   

  	
   

  
	
   

  	
  Total Exercise Price:

  	
   

  	
   

  	
   

  
	
   

  	
  Expiration Date:

  	
   

  	
   

  	
   

  



 


	
  Type of Grant:

  	
   

  	
  Nonstatutory Stock Option

  
	
   

  	
   

  	
   

  
	
  Exercise Schedule:

  	
   

  	
  [IPO Grant/Initial Grant: The shares vest and become exercisable in a
  series of thirty-six (36) successive equal monthly installments over the
  three (3)-year period measured from the Date of Grant.]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Annual Grant: The shares vest and become exercisable in a series of
  twelve (12) successive equal monthly installments over the one (1)-year
  period measured from the Date of Grant.]

  
	
   

  	
   

  	
   

  
	
  Payment:

  	
   

  	
  By one or a combination of the following items (described in the
  Option Agreement):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x   By
  cash or check

  
	
   

  	
   

  	
  x   Pursuant
  to a Regulation T Program if the Shares are publicly traded

  
	
   

  	
   

  	
  x   By
  delivery of already-owned shares if the Shares are publicly traded

  



 


Additional Terms/Acknowledgements:
The undersigned Optionholder acknowledges receipt of, and understands and
agrees to, this Option Grant Notice, the Option Agreement, and the Plan. Optionholder
further acknowledges that as of the Date of Grant, this Option Grant Notice,
the Option Agreement, and the Plan set forth the entire understanding between
Optionholder and the Company regarding the acquisition of stock in the Company
and supersede all prior oral and written agreements on that subject with the
exception of (i) options previously granted and delivered to Optionholder under
the Plan, and (ii) the following agreements only:


 


OTHER AGREEMENTS:


 


 


	
  ARYX THERAPEUTICS, INC.

  	
   

  	
  OPTIONHOLDER:

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
							



 


ATTACHMENTS: 
Option Agreement, 2007 Non-Employee Directors’ Stock Option Plan, and
Notice of Exercise


 

















 


ATTACHMENT I


 


OPTION AGREEMENT


 


 


ATTACHMENT II


 


2007 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN


 


 


ATTACHMENT III


 


NOTICE OF EXERCISE


 

















 


NOTICE OF EXERCISE


 


ARYx Therapeutics, Inc.


6300 Dumbarton Circle

Fremont, CA 94555


 


	
   

  	
  Date of Exercise:

  	
   

  



 


Ladies and
Gentlemen:


 


This constitutes notice under my stock option that I
elect to purchase the number of shares for the price set forth below.


 


	
  Type of
  option:

  	
   

  	
  Nonstatutory

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Stock option dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Number of shares as to which option is
  exercised: 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Shares to be issued in name of:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total exercise price:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Cash payment delivered herewith:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Value of
                  
  shares of ARYx Therapeutics, Inc. Common Stock
  delivered herewith(1):

  	
   

  	
  $

  	
   

  



 


By this exercise, I agree (i) to provide such
additional documents as you may require pursuant to the terms of the ARYx
Therapeutics, Inc. 2007 Non-Employee
Directors’ Stock Option Plan, and (ii) to provide for the payment by me
to you (in the manner designated by you) of your withholding obligation, if
any, relating to the exercise of this option.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name]

  



 






(1)           Shares
must meet the public trading requirements set forth in the option.  Shares must be valued on the date of exercise
in accordance with the terms of the Plan and the option being exercised, and
must be owned free and clear of any liens, claims, encumbrances or security
interests.  Certificates must be endorsed
or accompanied by an executed assignment separate from certificate.