Document:

exv4w9

 

EXHIBIT 4.9

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE
PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN
THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

WARRANT TO PURCHASE STOCK

Company:
SGX PHARMACEUTICALS, INC. (formerly known as STRUCTURAL GENOMIX, INC.), a Delaware corporation

Number of Shares:                     

Class of Stock: Common Stock

Warrant Price: $                     per share

Issue Date:                                         

Expiration Date:
                                        .

     THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other good and
valuable consideration, SILICON VALLEY BANK (“Holder”) is entitled to purchase the number of fully
paid and nonassessable shares of the class of securities (the “Shares”) of the company (the
“Company”) at the Warrant Price, all as set forth above and as adjusted pursuant to Article 2 of
this Warrant, subject to the provisions and upon the terms and conditions set forth in this
Warrant.

ARTICLE 1. EXERCISE.

          1.1 Method of Exercise. Holder may exercise this Warrant by delivering a duly
executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal
office of the Company. Unless Holder is exercising the conversion right set forth in Article 1.2,
Holder shall also deliver to the Company a check, wire transfer (to an account designated by the
Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for
the Shares being purchased.

          1.2 Conversion Right. In lieu of exercising this Warrant as specified in Article 1.1,
Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares
determined by dividing (a) the aggregate fair market value of the Shares or other securities
otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares
by (b) the fair market value of one Share. The fair market value of the Shares shall be determined
pursuant to Article 1.3.

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          1.3 Fair Market Value. If the Company’s common stock is traded in a public market and
the Shares are common stock, the fair market value of each Share shall be the closing price of a
Share reported for the business day immediately before Holder delivers its Notice of Exercise to
the Company (or in the instance where the Warrant is exercised immediately prior to the
effectiveness of the Company’s initial public offering, the “price to public” per share price
specified in the final prospectus relating to such offering). If the Company’s common stock is
traded in a public market and the Shares are preferred stock, the fair market value of a Share
shall be the closing price of a share of the Company’s common stock reported for the business day
immediately before Holder delivers its Notice of Exercise to the Company (or, in the instance where
the Warrant is exercised immediately prior to the effectiveness of the Company’s initial public
offering, the initial “price to public” per share price specified in the final prospectus relating
to such offering), in both cases, multiplied by the number of shares of the Company’s common stock
into which a Share is convertible. If the Company’s common stock is not traded in a public market,
the Board of Directors of the Company shall determine fair market value in its reasonable good
faith judgment.

          1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or
converts this Warrant and, if applicable, the Company receives payment of the aggregate Warrant
Price, the Company shall deliver to Holder certificates for the Shares acquired and, if this
Warrant has not been fully exercised or converted and has not expired, a new Warrant representing
the Shares not so acquired.

          1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and
amount to the Company or, in the case of mutilation on surrender and cancellation of this Warrant,
the Company shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.

          1.6 Treatment of Warrant Upon Acquisition of Company.

               1.6.1 “Acquisition”. For the purpose of this Warrant, “Acquisition” means any sale,
license, or other disposition of all or substantially all of the assets of the Company, or any
reorganization, consolidation, or merger of the Company where the holders of the Company’s
securities before the transaction beneficially own less than 50% of the outstanding voting
securities of the surviving entity or the parent of the surviving entity after the transaction.

               1.6.2 Treatment of Warrant at Acquisition.

A) Upon the written request of the Company, Holder agrees that, in the event of an Acquisition that
is not an asset sale and in which the sole consideration is cash, either (a) Holder shall exercise
its conversion or purchase right under this Warrant and such exercise will be deemed effective
immediately prior to the consummation of such Acquisition or (b) if Holder elects not to exercise
the Warrant, this Warrant will expire upon the consummation of such Acquisition. The Company shall
provide the Holder with written notice of its request relating to the foregoing (together with such
reasonable information as the Holder may request in connection with such contemplated Acquisition
giving rise to such notice), which is to be delivered to Holder not less than ten (10) calendar
days prior to the closing of the proposed Acquisition.

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B) Upon the written request of the Company, Holder agrees that, in the event of an Acquisition that
is an “arms length” sale of all or substantially all of the Company’s assets (and only its assets)
to a third party that is not an Affiliate (as defined below) of the Company (a “True Asset Sale”),
either (a) Holder shall exercise its conversion or purchase right under this Warrant and such
exercise will be deemed effective immediately prior to the consummation of such Acquisition or (b)
if Holder elects not to exercise the Warrant, this Warrant will continue until the Expiration Date
if the Company continues as a going concern following the closing of any such True Asset Sale. The
Company shall provide the Holder with written notice of its request relating to the foregoing
(together with such reasonable information as the Holder may request in connection with such
contemplated Acquisition giving rise to such notice), which is to be delivered to Holder not less
than ten (10) days prior to the closing of the proposed Acquisition.

C) Notwithstanding the foregoing provisions of this Section 1.6, in the event that the acquirer in
an Acquisition does not agree to assume this Warrant at and as of the closing thereof, this
Warrant, to the extent not exercised or converted on or prior to such closing, shall terminate and
be of no further force or effect as of immediately following such closing if all of the following
conditions are met: (i) the acquirer is subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, (ii) the class of stock or other
security of the acquirer that would be received by Holder in connection with such Acquisition were
Holder to exercise or convert this Warrant on or prior to the closing thereof is listed for trading
on a national securities exchange or approved for quotation on an automated inter-dealer quotation
system, (iii) the value (determined as of the closing of such Acquisition in accordance with the
definitive agreements therefor) of the acquirer stock and/or other securities that would be
received by Holder in respect of each Share were Holder to exercise or convert this Warrant on or
prior to the closing of such Acquisition is equal to or greater than three (3) times the
then-effective Warrant Price, and (iv) upon the exercise or conversion of this Warrant on or prior
to the closing of such Acquisition, Holder would be able to publicly resell all of the acquirer
stock and/or other securities that would be received by Holder in such Acquisition within 120 days
following the closing thereof pursuant to an effective registration statement covering such
acquirer stock and/or other securities or pursuant to the provisions of Rule 144 under the Act.

D) Upon the closing of any Acquisition other than those particularly described in subsections (A),
(B) and (C) above, the successor entity shall assume the obligations of this Warrant, and this
Warrant shall be exercisable for the same securities, cash, and property as would be payable for
the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The Warrant Price
and/or number of Shares shall be adjusted accordingly.

As used herein “Affiliate” shall mean any person or entity that owns or controls directly
or indirectly ten (10) percent or more of the stock of Company, any person or entity that controls
or is controlled by or is under common control with such persons or entities, and each of such
person’s or entity’s officers, directors, joint venturers or partners, as applicable.

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ARTICLE 2. ADJUSTMENTS TO THE SHARES.

          2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on the
Shares payable in common stock, or other securities, then upon exercise of this Warrant, for each
Share acquired, Holder shall receive, without cost to Holder, the total number and kind of
securities to which Holder would have been entitled had Holder owned the Shares of record as of the
date the dividend occurred. If the Company subdivides the Shares by reclassification or otherwise
into a greater number of shares or takes any other action which increases the amount of stock into
which the Shares are convertible, the number of shares purchasable hereunder shall be
proportionately increased and the Warrant Price shall be proportionately decreased. If the
outstanding shares are combined or consolidated, by reclassification or otherwise, into a lesser
number of shares, the Warrant Price shall be proportionately increased and the number of Shares
shall be proportionately decreased.

          2.2 Reclassification, Exchange, Combinations or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall
be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or other event. Such
an event shall include any automatic conversion of the outstanding or issuable securities of the
Company of the same class or series as the Shares to common stock pursuant to the terms of the
Company’s Certificate of Incorporation, as such may be amended from time to time, upon the closing
of a registered public offering of the Company’s common stock or as otherwise provided therein.
The Company or its successor shall promptly issue to Holder an amendment to this Warrant setting
forth the number and kind of such new securities or other property issuable upon exercise or
conversion of this Warrant as a result of such reclassification, exchange, substitution or other
event that results in a change of the number and/or class of securities issuable upon exercise or
conversion of this Warrant. The amendment to this Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article
2 including, without limitation, adjustments to the Warrant Price and to the number of securities
or property issuable upon exercise of the new Warrant. The provisions of this Article 2.2 shall
similarly apply to successive reclassifications, exchanges, substitutions, or other events.

          2.3 Adjustments for Diluting Issuances. For so long as the Shares are preferred
stock, the number of shares of common stock issuable upon conversion of the Shares, shall be
subject to adjustment, from time to time in the manner set forth in the Company’s Certificate of
Incorporation, as amended from time to time, as if the Shares were issued and outstanding on and
as of the date of any such required adjustment. The provisions set forth for the Shares in the
Company’s Certificate of Incorporation, as amended from time to time, relating to the above in
effect as of the Issue Date may not be amended, modified or waived, without the prior written
consent of Holder unless such amendment, modification or waiver affects the rights associated with
the Shares in the same manner as such amendment, modification or waiver affects the rights
associated with all other shares of Series B Preferred Stock..

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          2.4 No Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution,
issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this Warrant by the Company,
but shall at all times in good faith assist in carrying out of all the provisions of this Article
2 and in taking all such action as may be necessary or appropriate to protect Holder’s rights
under this Article against impairment; provided, however, that notwithstanding the foregoing,
nothing in this Section 2.4 shall restrict or impair the Company’s right to effect changes to the
rights, preferences and privileges associated with the Shares with the requisite consent of the
stockholders as may be required to amend the Certificate of Incorporation from time to time so
long as such amendment affects the rights, preferences and privileges granted to Holder associated
with the Shares in the same manner as the other holders of Series B Preferred Stock.

          2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise or
conversion of this Warrant and the number of Shares to be issued shall be rounded down to the
nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the
Warrant, the Company shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the fair market value of a full Share.

          2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, the
Company shall promptly notify Holder in writing, and, at the Company’s expense, promptly compute
such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company shall, upon written
request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date
thereof and the series of adjustments leading to such Warrant Price.

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

          3.1 Representations and Warranties. The Company represents and warrants to the Holder
as follows:

               (a) In February 2006, upon completion of the Company’s initial public offering, each share of
the Company’s Series B Preferred Stock converted into 0.50 shares of the Company’s Common Stock.

               (b) All Shares which may be issued upon the exercise of the purchase right represented by this
Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance,
be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and
encumbrances except for restrictions on transfer provided for herein or under applicable federal
and state securities laws.

          3.2 Notice of Certain Events. If the Company proposes at any time (a) to declare any
dividend or distribution upon any of its stock, whether in cash, property, stock, or other
securities and whether or not a regular cash dividend; or (b) to merge or consolidate with or into
any other corporation, or sell, lease, license, or convey all or substantially all of its assets,
or to liquidate, dissolve or wind up; then, in

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connection with each such event, the Company shall give Holder: (1) at least 10 calendar days prior
written notice of the date on which a record will be taken for such dividend or distribution (and
specifying the date on which the holders of common stock will be entitled thereto) or for
determining rights to vote, if any, in respect of the matters referred to in (a) above; and (2) in
the case of the matters referred to in (b) above at least 10 calendar days prior written notice of
the date when the same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other property deliverable
upon the occurrence of such event). While the Company is a private company, the Company shall send
a concurrent written notice to Holder if the Company sends any written notice to its preferred
stockholders regarding: (a) the Company offering for sale any shares of the Company’s capital stock
(or other securities convertible into such capital stock), other than (i) pursuant to the Company’s
stock option or other compensatory plans, (ii) in connection with commercial credit arrangements or
equipment financings, or (iii) in connection with strategic transactions for purposes other than
capital raising; or (b) the Company proposing to effect any reclassification or recapitalization of
any of its stock. The Company shall send concurrently to Holder the same notice as the Company
gives to the holders of registration rights if the Company proposes to offer holders of
registration rights the opportunity to participate in an underwritten public offering of the
Company’s securities for cash.

          3.3 Registration under Securities Act of 1933, as amended. The Company agrees to
solicit the requisite consent of the holders of the Company’s preferred stock to add the Holder as
a party to the Company’s Amended and Restated Investor Rights Agreement dated as of April 21, 2005,
as such may be amended from time to time (the “Investor Rights Agreement”) to provide Holder with
those certain incidental, or “Piggyback,” registration rights pursuant to and as set forth in the
Company’s Investor Rights Agreement; provided, however, that if Section 5.3 or Section 5.4 of this
Warrant conflicts with any provisions of the Investor Rights Agreement, the provisions of Section
5.3 or Section 5.4 of this Warrant, as applicable, shall control until this Warrant has been fully
exercised or terminated. The provisions set forth in the Company’s Investors’ Right Agreement or
similar agreement relating to the above in effect as of the Issue Date may not be amended, modified
or waived without the prior written consent of Holder unless such amendment, modification or waiver
affects the rights associated with the Shares in the same manner as such amendment, modification,
or waiver affects the rights associated with all other shares of the same series and class as the
Shares granted to the Holder.

          3.4 No Shareholder Rights. Except as provided in this Warrant, the Holder
will not have any rights as a shareholder of the Company until the exercise of this Warrant.

          3.5  Information. So long as the Company is not a public company and solely
after the Company’s obligations to provide financial information under the Loan Agreement have
terminated, upon the request by Holder, the Company shall provide to the Holder: (i) the quarterly
reports furnished to certain of Company’s investors under Section 3.1(c) of the Investors Rights
Agreement (as defined in Section 3.3 of this Warrant), and (ii) the annual reports furnished to
certain of Company’s investors under Section 3.1(b) of the Investors Rights Agreement..

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ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The Holder represents and warrants
to the Company as follows:

          4.1 Purchase for Own Account. This Warrant and the securities to be acquired upon
exercise of this Warrant by the Holder will be acquired for investment for the Holder’s account,
not as a nominee or agent, and not with a view to the public resale or distribution within the
meaning of the Act. Holder also represents that the Holder has not been formed for the specific
purpose of acquiring this Warrant or the Shares.

          4.2 Disclosure of Information. The Holder has received or has had full access to all
the information it considers necessary or appropriate to make an informed investment decision with
respect to the acquisition of this Warrant and its underlying securities. The Holder further has
had an opportunity to ask questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to obtain additional
information (to the extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished to the Holder or to
which the Holder has access.

          4.3 Investment Experience. The Holder understands that the purchase of this Warrant
and its underlying securities involves substantial risk. The Holder has experience as an investor
in securities of companies in the development stage and acknowledges that the Holder can bear the
economic risk of such Holder’s investment in this Warrant and its underlying securities and has
such knowledge and experience in financial or business matters that the Holder is capable of
evaluating the merits and risks of its investment in this Warrant and its underlying securities
and/or has a preexisting personal or business relationship with the Company and certain of its
officers, directors or controlling persons of a nature and duration that enables the Holder to be
aware of the character, business acumen and financial circumstances of such persons.

          4.4 Accredited Investor Status. The Holder is an “accredited investor” within the
meaning of Regulation D promulgated under the Act.

          4.5 The Act. The Holder understands that this Warrant and the Shares issuable upon
exercise or conversion hereof have not been registered under the Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the
Holder’s investment intent as expressed herein. The Holder understands that this Warrant and the
Shares issued upon any exercise or conversion hereof must be held indefinitely unless subsequently
registered under the Act and qualified under applicable state securities laws, or unless exemption
from such registration and qualification are otherwise available.

ARTICLE 5. MISCELLANEOUS.

          5.1 Term: This Warrant is exercisable in whole or in part at any time and from time
to time on or before the Expiration Date. 

          5.2 Legends. This Warrant and the Shares (and the securities issuable, directly or
indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form:

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THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION
OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM
REGISTRATION.

          5.3 Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable
upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion
of the Shares, if any) may not be transferred or assigned in whole or in part without compliance
with applicable federal and state securities laws by the transferor and the transferee (including,
without limitation, the delivery of investment representation letters and legal opinions reasonably
satisfactory to the Company, as reasonably requested by the Company) and the transferee agrees to
be bound by all of the terms and conditions of this Warrant. The Company shall not require Holder
to provide an opinion of counsel if the transfer is to Holder’s parent company, SVB Financial Group
(formerly Silicon Valley Bancshares), or any other affiliate of Holder. Additionally, the Company
shall also not require an opinion of counsel if there is no material question as to the
availability of Rule 144, including without limitation, the availability of current information as
referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in
reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the
Company is provided with a copy of Holder’s notice of proposed sale.

          5.4 Transfer Procedure. Upon receipt by Holder of the executed Warrant, Holder will
transfer all of this Warrant to Holder’s parent company, SVB Financial Group, by execution of an
Assignment substantially in the form of Appendix 2 whereby the transferee agrees to be bound by all
of the obligations of Holder under this Warrant. Subject to the provisions of Article 5.3 and upon
providing Company with written notice, SVB Financial Group and any subsequent Holder may transfer
all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the Shares
issuable directly or indirectly, upon conversion of the Shares, if any) to any transferee,
provided, however, in connection with any such transfer, SVB Financial Group or any subsequent
Holder will give the Company notice of the portion of the Warrant being transferred with the name,
address and taxpayer identification number of the transferee and Holder will surrender this Warrant
to the Company for reissuance to the transferee(s) (and Holder if applicable) by execution of an
Assignment substantially in the form of Appendix 2 whereby the transferee agrees to be bound by all
of the obligations of Holder under this Warrant. The Company may refuse to transfer this Warrant
or the Shares to any person who directly competes with the Company, unless, in either case, the
stock of the Company is publicly traded.

          5.5 Notices. All notices and other communications from the Company to the Holder, or
vice versa, shall be deemed delivered and effective when given personally or mailed by first-class
registered or certified mail, postage prepaid, at such

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address as may have been furnished to the Company or the Holder, as the case may (or on the first
business day after transmission by facsimile) be, in writing by the Company or such Holder from
time to time. Effective upon receipt of the fully executed Warrant and the initial transfer
described in Article 5.4 above, all notices to the Holder shall be addressed as follows until the
Company receives notice of a change of address in connection with a transfer or otherwise:

SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HA 200

Santa Clara, CA 95054

Telephone: 408-654-7400

Facsimile: 408-496-2405

Notice to the Company shall be addressed as follows until the Holder receives notice of a change in
address:

SGX Pharmaceuticals, Inc.

10505 Roselle Street

San Diego, CA 92121

Attn: Chief Financial Officer

Telephone: (858) 558-4850

Facsimile: (858) 622-8458

          5.6 Waiver. This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.

          5.7 Attorney’s Fees. In the event of any dispute between the parties concerning the
terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to
collect from the other party all costs incurred in such dispute, including reasonable attorney’s
fees.

          5.8 Automatic Conversion upon Expiration. In the event that, upon the Expiration
Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as
determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such
date, then this Warrant shall automatically be deemed on and as of such date to be converted
pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not
previously have been exercised or converted, and the Company shall promptly deliver a certificate
representing the Shares (or such other securities) issued upon such conversion to the Holder.

          5.9 Counterparts. This Warrant may be executed in counterparts, all of which together
shall constitute one and the same agreement.

          5.10 Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of California, without giving effect to its principles regarding
conflicts of law.

          5.11 Market Stand-Off. Upon the Company adding the Holder as a party to the Investor
Rights Agreement as contemplated in Section 3.3 hereof, Holder

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shall become subject to and bound by the “Market Stand-Off” provision in Section 2.13 of the
Investor Rights Agreement as it may be amended from time to time.

[Remainder of page intentionally left blank; signature page follows]

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	“COMPANY”	 	 
	 
	 	 	 	 
	SGX PHARMACEUTICALS, INC. (f/k/a	 	 
	STRUCTURAL GENOMIX, INC.)	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	Name:

	 	Michael Grey	 	 
	 

	 	(Print)	 	 
	Title:

	 	Chief Executive Officer and President	 	 
	 
	 	 	 	 
	“HOLDER”	 	 
	 
	 	 	 	 
	SILICON VALLEY BANK	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	Name:
	 	 	 	 
	 

	 	 

(Print)	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 

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APPENDIX 1

NOTICE OF EXERCISE

     1. Holder elects to purchase                                         shares of the
Common/Series                      Preferred [strike
 one] Stock of                                                              pursuant to the terms of the attached Warrant, and tenders payment
of the purchase price of the shares in full.

          [or]

     1. Holder elects to convert the attached Warrant into Shares/cash [strike one] in the manner
specified in the Warrant. This conversion is exercised for                                                              of the Shares
covered by the Warrant.

     [Strike paragraph that does not apply.]

     2. Please issue a certificate or certificates representing the shares in the name specified
below:

	 	 	 	 	 
	 

	 	 

Holders Name
	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

(Address)
	 	 

     3. By its execution below and for the benefit of the Company, Holder hereby restates each of
the representations and warranties in Article 4 of the Warrant as the date hereof.

	 	 	 	 	 	 	 
	 	 	HOLDER:	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	(Date):	 	 	 	 
	 

	 	 	 	 

	 	 

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APPENDIX 2

ASSIGNMENT

For value received, Silicon Valley Bank hereby sells, assigns and transfers unto

	 	 	 	 	 
	 

	 	Name:
	 	SVB Financial Group
	 

	 	Address:
	 	3003 Tasman Drive (HA-200)

Santa Clara, CA 95054
	 
	 	 	 	 
	 

	 	Tax ID:
	 	91-1962278

that certain Warrant to Purchase Stock issued by                                          (the “Company”),
on                     , 200___(the “Warrant”) together with all rights, title and interest therein.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	SILICON VALLEY BANK	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	Date:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

By its execution below, and for the benefit of the Company, SVB Financial Group makes each of the
representations and warranties set forth in Article 4 of the Warrant and agrees to all other
provisions of the Warrant as of the date hereof.

	 	 	 	 	 	 	 
	 	 	SVB Financial Group	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:exv10w5

 

EXHIBIT 10.5

SGX Pharmaceuticals, Inc.

2005 Non-Employee Directors’ Stock Option Plan

Adopted by Board of Directors August 30, 2005

Approved by Stockholders October 31, 2005

Effective Date: January 31, 2006

1. Purposes.

     (a) Eligible Option Recipients. The persons eligible to receive Options are the Non-Employee
Directors of the Company.

     (b) Available Options. The purpose of the Plan is to provide a means by which Non-Employee
Directors may be given an opportunity to benefit from increases in value of the Common Stock
through the granting of Nonstatutory Stock Options.

     (c) General Purpose. The Company, by means of the Plan, seeks to retain the services of its
current Non-Employee Directors, to secure and retain the services of new Non-Employee Directors and
to provide incentives for such persons to exert maximum efforts for the success of the Company and
its Affiliates.

2. Definitions.

     (a) “Affiliate” means, at the time of determination, any “parent” or “subsidiary” as such
terms are defined in Rule 405 of the Securities Act. The Board shall have the authority to
determine the time or times at which “parent” or “subsidiary” status is determined within the
foregoing definition.

     (b) “Annual Grant” means an Option granted annually to all Non-Employee Directors who meet the
specified criteria pursuant to Section 6(b).

     (c) “Annual Meeting” means the annual meeting of the stockholders of the Company.

     (d) “Board” means the Board of Directors of the Company.

     (e) “Capitalization Adjustment” has the meaning ascribed to that term in Section 11(a).

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

          (i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power of the Company’s
then outstanding securities other than by virtue of a merger,

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consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an
investor, any affiliate thereof or any other Exchange Act Person from the Company in a transaction
or series of related transactions the primary purpose of which is to obtain financing for the
Company through the issuance of equity securities or (B) solely because the level of Ownership held
by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of
the outstanding voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the acquisition of
voting securities by the Company, and after such share acquisition, the Subject Person becomes the
Owner of any additional voting securities that, assuming the repurchase or other acquisition had
not occurred, increases the percentage of the then outstanding voting securities Owned by the
Subject Person over the designated percentage threshold, then a Change in Control shall be deemed
to occur;

          (ii) there is consummated a merger, consolidation or similar transaction involving (directly
or indirectly) the Company and, immediately after the consummation of such merger, consolidation or
similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly
or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%)
of the combined outstanding voting power of the surviving Entity in such merger, consolidation or
similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power
of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each
case in substantially the same proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such transaction;

          (iii) the stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company
shall otherwise occur;

          (iv) there is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its Subsidiaries, other than a
sale, lease, license or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting
power of the voting securities of which are Owned by stockholders of the Company in substantially
the same proportions as their Ownership of the outstanding voting securities of the Company
immediately prior to such sale, lease, license or other disposition; or

          (v) individuals who, on the date this Plan is adopted by the Board, are members of the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of
the Board; provided, however, that if the appointment or election (or nomination for election) of
any new Board member was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of this Plan, be considered as a
member of the Incumbent Board.

     The term Change in Control shall not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company.

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     Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the Company or any
Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards
subject to such agreement where such agreement provides for acceleration of vesting of such Stock
Awards in the event of a Change in Control; provided, however, that if no definition of Change in
Control or any analogous term is set forth in such an individual written agreement, the foregoing
definition shall apply.

     (g) “Code” means the Internal Revenue Code of 1986, as amended.

     (h) “Committee” means a committee of one (1) or more members of the Board appointed by the
Board in accordance with Section 3(c).

     (i) “Common Stock” means the common stock of the Company.

     (j) “Company” means SGX Pharmaceuticals, Inc., a Delaware corporation.

     (k) “Consultant” means any person, including an advisor, who (i) is engaged by the Company or
an Affiliate to render consulting or advisory services and is compensated for such services or (ii)
is serving as a member of the Board of Directors of an Affiliate and is compensated for such
services. However, service solely as a Director, or payment of a fee for such services, shall not
cause a Director to be considered a “Consultant” for purposes of the Plan.

     (l) “Continuous Service” means that the Optionholder’s service with the Company or an
Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A
change in the capacity in which the Optionholder renders service to the Company or an Affiliate as
an Employee, Consultant or Director or a change in the entity for which the Optionholder renders
such service, provided that there is no interruption or termination of the Optionholder’s service
with the Company or an Affiliate, shall not terminate a Optionholder’s Continuous Service. For
example, a change in status from a Non-Employee Director of the Company to a consultant to an
Affiliate or an Employee of the Company shall not constitute an interruption of Continuous Service.
To the extent permitted by law, the Board or the chief executive officer of the Company, in that
party’s sole discretion, may determine whether Continuous Service shall be considered interrupted
in the case of any leave of absence approved by that party, including sick leave, military leave or
any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as
Continuous Service for purposes of vesting in an Option only to such extent as may be provided in
the Company’s leave of absence policy, in the written terms of any leave of absence agreement or
policy applicable to the Optionholder, or as otherwise required by law.

     (m) “Corporate Transaction” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:

          (i) a sale or other disposition of all or substantially all, as determined by the Board in its
sole discretion, of the consolidated assets of the Company and its Subsidiaries;

          (ii) a sale or other disposition of at least ninety percent (90%) of the outstanding
securities of the Company;

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          (iii) the consummation of a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or

          (iv) the consummation of a merger, consolidation or similar transaction following which the
Company is the surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of
the merger, consolidation or similar transaction into other property, whether in the form of
securities, cash or otherwise.

     (n) “Director” means a member of the Board.

     (o) “Disability” means the inability of a person, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of that person’s position with the Company
or an Affiliate of the Company because of the sickness or injury of the person.

     (p) “Employee” means any person employed by the Company or an Affiliate. However, service
solely as a Director, or payment of a fee for such services, shall not cause a Director to be
considered an “Employee” for purposes of the Plan.

     (q) “Entity” means a corporation, partnership or other entity.

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

     (s) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include
(i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or
any Subsidiary of the Company or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, (iv) an Entity Owned,
directly or indirectly, by the stockholders of the Company in substantially the same proportions as
their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the effective date of the Plan
as set forth in Section 14, is the Owner, directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities.

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

          (i) If the Common Stock is listed on any established stock exchange or traded on the Nasdaq
National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the greatest volume of trading in
the Common Stock) on the last market trading day prior to the date in question, as reported in The
Wall Street Journal or such other source as the Board deems reliable. Unless otherwise provided by
the Board, if there is no closing sales price (or closing bid if no sales were reported) for the
Common Stock on the date in question, then the Fair Market Value shall be the closing selling price
(or closing bid if no sales were reported) on the last preceding date for which such quotation
exists.

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          (ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be
determined by the Board in good faith.

     (u) “Initial Grant” means an Option granted to a Non-Employee Director who meets the specified
criteria pursuant to Section 6(a).

     (v) “IPO Date” means the date of the underwriting agreement between the Company and the
underwriter(s) managing the initial public offering of the Common Stock, pursuant to which the
Common Stock is priced for the initial public offering.

     (w) “Non-Employee Director” means a Director who is not an Employee.

     (x) “Nonstatutory Stock Option” means an Option not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     (y) “Officer” means a person who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated thereunder.

     (z) “Option” means a Nonstatutory Stock Option granted pursuant to the Plan.

     (aa) “Option Agreement” means a written agreement between the Company and an Optionholder
evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.

     (bb) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

     (cc) “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed to “Own,” to
have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or
Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares voting power, which includes the power to vote or to direct the voting,
with respect to such securities.

     (dd) “Plan” means this SGX Pharmaceuticals, Inc. 2005 Non-Employee Directors’ Stock Option
Plan.

     (ee) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule
16b-3, as in effect from time to time.

     (ff) “Securities Act” means the Securities Act of 1933, as amended.

     (gg) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether, at the time, stock
of any other class or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company,
and (ii) any partnership in which the Company has a direct or indirect interest

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(whether in the form of voting or participation in profits or capital contribution) of more
than fifty percent (50%).

3. Administration.

     (a) Administration by Board. The Board shall administer the Plan unless and until the Board
delegates administration of the Plan to a Committee, as provided in Section 3(c).

     (b) Powers of Board. The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:

          (i) To determine the provisions of each Option to the extent not specified in the Plan.

          (ii) To construe and interpret the Plan and Options granted under it, and to establish, amend
and revoke rules and regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

          (iii) To effect, at any time and from time to time, with the consent of any adversely affected
Optionholder, (1) the reduction of the exercise price of any outstanding Option under the Plan, (2)
the cancellation of any outstanding Option under the Plan and the grant in substitution therefor of
(A) a new Option under the Plan or another equity plan of the Company covering the same or a
different number of shares of Common Stock, (B) cash and/or (C) other valuable consideration (as
determined by the Board, in its sole discretion), or (3) any other action that is treated as a
repricing under generally accepted accounting principles.

          (iv) To amend the Plan or an Option as provided in Section 12.

          (v) To terminate or suspend the Plan as provided in Section 13.

          (vi) Generally, to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and that are not in conflict with the
provisions of the Plan.

     (c) Delegation to Committee. The Board may delegate some or all of the administration of the
Plan to a Committee or Committees of one (1) or more members of the Board, and the term “Committee”
shall apply to any person or persons to whom such authority has been delegated. If administration
is delegated to a Committee, the Committee shall have, in connection with the administration of the
Plan, the powers theretofore possessed by the Board that have been delegated to the Committee,
including the power to delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the
authority to concurrently administer the Plan with the Committee and may, at any time, revest in
the Board some or all of the powers previously delegated.

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     (d) Effect of Board’s Decision. All determinations, interpretations and constructions made by
the Board in good faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.

4. Shares Subject to the Plan.

     (a) Share Reserve. Subject to the provisions of Section 11(a) relating to Capitalization
Adjustments, the shares of Common Stock that may be issued pursuant to Options shall not exceed in
the aggregate seventy-five thousand (75,000) shares of Common Stock plus an annual increase to be
added on January 1st of each year commencing in 2007 and ending on (and including) January 1, 2015,
equal to the lesser of: (i) the aggregate number of shares of Common Stock subject to options
granted under the Plan as Initial Grants and Annual Grants during the immediately preceding fiscal
year, or (ii) an amount determined by the Board or a Committee.

     (b) Reversion of Shares to the Share Reserve. If any Option shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full, the shares of
Common Stock not acquired under such Option shall revert to and again become available for issuance
under the Plan. If any shares subject to an Option are not delivered to an Optionholder because
such shares are withheld for the payment of taxes or the Option is exercised through a reduction of
shares subject to the Option (i.e., “net exercised”), the number of shares that are not delivered
to the Optionholder as a result thereof shall remain available for issuance under the Plan. If the
exercise price of an Option is satisfied by tendering shares of Common Stock held by the
Optionholder (either by actual delivery or attestation), then the number of shares so tendered
shall remain available for issuance under the Plan.

     (c) Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.

5. Eligibility.

     The Options, as set forth in Section 6, automatically shall be granted under the Plan to all
Non-Employee Directors who meet the criteria specified in Section 6.

6. Non-Discretionary Grants.

     (a) Initial Grants. Without any further action of the Board, each person who after the IPO
Date is elected or appointed for the first time to be a Non-Employee Director automatically shall,
upon the date of his or her initial election or appointment to be a Non-Employee Director, be
granted an Initial Grant to purchase twelve thousand five hundred (12,500) shares of Common Stock
on the terms and conditions set forth herein.

     (b) Annual Grants. Without any further action of the Board, on the date of each Annual
Meeting, commencing with the Annual Meeting in 2007, each person who is then a Non-Employee
Director automatically shall be granted an Annual Grant to purchase ten thousand (10,000) shares of
Common Stock on the terms and conditions set forth herein; provided, however, that if a person who
is first elected as a Non-Employee Director after the IPO Date has not been serving as a
Non-Employee Director for the entire period since the preceding Annual Meeting, then the number of
shares subject to such Annual Grant shall be reduced pro rata for

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each full quarter prior to the date of grant during such period for which such person did not
serve as a Non- Employee Director.

7. Option Provisions.

     Each Option shall be in such form and shall contain such terms and conditions as required by
the Plan. Each Option shall contain such additional terms and conditions, not inconsistent with
the Plan, as the Board shall deem appropriate. Each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each of the following
provisions:

     (a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date
on which it was granted.

     (b) Exercise Price. The exercise price of each Option shall be one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted.

     (c) Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be
paid, to the extent permitted by applicable law, either (i) in cash at the time the Option is
exercised or (ii) at the discretion of the Board either at the time of the grant of the Option or
subsequent thereto (1) by delivery to the Company of other Common Stock at the time the Option is
exercised, (2) by a “net exercise” of the Option (as further described below), (3) 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 or (4) in any other form of legal consideration that may be acceptable to the Board.
Unless otherwise specifically provided in the Option, the purchase price of Common Stock acquired
pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired,
directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the
Company that have been held for more than six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes).

     In the case of a “net exercise” of an Option, the Company will not require a payment of the
exercise price of the Option from the Optionholder but will reduce the number of shares of Common
Stock issued upon the exercise by the largest number of whole shares that has a Fair Market Value
that does not exceed the aggregate exercise price. With respect to any remaining balance of the
aggregate exercise price, the Company shall accept a cash payment from the Optionholder. Shares of
Common Stock will no longer be outstanding under an Option (and will therefore not thereafter be
exercisable) following the exercise of such Option to the extent of (i) shares used to pay the
exercise price of an Option under a “net exercise”, (ii) shares actually delivered to the
Optionholder as a result of such exercise and (iii) shares withheld for purposes of tax
withholding.

     (d) Transferability. An Option is transferable by will or by the laws of descent and
distribution. An Option also may be transferable upon written consent of the Company if, at the
time of transfer, a Form S-8 registration statement under the Securities Act is available for the
exercise of the Option and the subsequent resale of the underlying securities. In addition, an

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Optionholder 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 the death of
the Optionholder, shall thereafter be entitled to exercise the Option.

     (e) Vesting. Options shall vest as follows:

          (i) Initial Grants: 1/36th of the shares of Common Stock subject to an Initial Grant shall
vest monthly over three (3) years.

          (ii) Annual Grants: 1/12th of the shares of Common Stock subject to an Annual Grant shall
vest monthly over one (1) year.

     (f) Termination of Continuous Service. In the event that an Optionholder’s Continuous Service
terminates for any reason, the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination of Continuous
Service) but only within such period of time ending on the expiration of the term of the Option as
set forth in the Option Agreement. If, after termination of Continuous Service, the Optionholder
does not exercise his or her Option within the time specified in the Option Agreement, the Option
shall terminate.

8. Securities Law Compliance.

     The Company shall seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Option or any Common Stock
issued or issuable pursuant to any such Option. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell Common Stock upon
exercise of such Options unless and until such authority is obtained.

9. Use of Proceeds from Stock.

     Proceeds from the sale of Common Stock pursuant to Options shall constitute general funds of
the Company.

10. Miscellaneous.

     (a) Acceleration of Exercisability and Vesting. The Board shall have the power to accelerate
the time at which an Option may first be exercised or the time during which an Option or any part
thereof will vest in accordance with the Plan, notwithstanding the provisions in the Plan or the
Option stating the time at which it may first be exercised or the time during which it will vest.

     (b) Stockholder Rights. No Optionholder shall be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares of Common Stock subject to such Option unless
and until such Optionholder has satisfied all requirements for exercise of the Option pursuant to
its terms.

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     (c) No Service Rights. Nothing in the Plan, any Option Agreement or other instrument executed
thereunder or any Option granted pursuant thereto shall confer upon any Optionholder any right to
continue to serve the Company as a Non-Employee Director or shall affect the right of the Company
or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or
without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s
agreement with the Company or an Affiliate or (iii) the service of a Director pursuant to the
Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the
state in which the Company or the Affiliate is incorporated, as the case may be.

     (d) Investment Assurances. The Company may require an Optionholder, as a condition of
exercising or acquiring Common Stock under any Option, (i) to give written assurances satisfactory
to the Company as to the Optionholder’s knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and risks of exercising
the Option; and (ii) to give written assurances satisfactory to the Company stating that the
Optionholder is acquiring the Common Stock subject to the Option for the Optionholder’s own account
and not with any present intention of selling or otherwise distributing the Common Stock. The
foregoing requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of
Common Stock under the Option has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate
in order to comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

     (e) Withholding Obligations. To the extent provided by the terms of an Option Agreement, the
Company may in its sole discretion, satisfy any federal, state or local tax withholding obligation
relating to an Option by any of the following means (in addition to the Company’s right to withhold
from any compensation paid to the Optionholder by the Company) or by a combination of such means:
(i) causing the Optionholder to tender a cash payment; (ii) withholding shares of Common Stock from
the shares of Common Stock issued or otherwise issuable to the Optionholder in connection with the
Option; or (iii) via such other method as may be set forth in the Option Agreement.

11. Adjustments upon Changes in Common Stock.

     (a) Capitalization Adjustments. If any change is made in, or other event occurs with respect
to, the Common Stock subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company (each a “Capitalization
Adjustment”)), the Plan will be appropriately adjusted in the class(es) and

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maximum number of securities subject both to the Plan pursuant to Section 4 and to the
nondiscretionary Options specified in Section 6, and the outstanding Options will be appropriately
adjusted in the class(es) and number of securities and price per share of Common Stock subject to
such outstanding Options. The Board shall make such adjustments, and its determination shall be
final, binding and conclusive. (Notwithstanding the foregoing, the conversion of any convertible
securities of the Company shall not be treated as a transaction “without receipt of consideration”
by the Company.)

     (b) Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company,
then all outstanding Options shall terminate immediately prior to the completion of such
dissolution or liquidation.

     (c) Corporate Transaction. The following provisions shall apply to Options in the event of a
Corporate Transaction unless otherwise provided in the instrument evidencing the Option or any
other written agreement between the Company or any Affiliate and the holder of the Option or unless
otherwise expressly provided by the Board at the time of grant of a Option. In the event of a
Corporate Transaction, any surviving corporation or acquiring corporation may assume or continue
any or all Options outstanding under the Plan or may substitute similar stock options for Options
outstanding under the Plan (including options to acquire the same consideration paid to the
stockholders of the Company, as the case may be, pursuant to the Corporate Transaction). In the
event that any surviving corporation or acquiring corporation does not assume or continue all such
outstanding Options or substitute similar stock options for all such outstanding Options, then with
respect to Options that have been not assumed, continued or substituted and that are held by
Optionholders whose Continuous Service has not terminated prior to the effective time of the
Corporate Transaction, the vesting of such Options (and, if applicable, the time at which such
Options may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be
accelerated in full to a date prior to the effective time of such Corporate Transaction as the
Board shall determine (or, if the Board shall not determine such a date, to the date that is five
(5) days prior to the effective time of the Corporate Transaction), and such Options shall
terminate on the effective time of the Corporate Transaction if not exercised (if applicable) at or
prior to such effective time. With respect to any other Options outstanding under the Plan that
have not been assumed, continued or substituted, the vesting of such Options (and, if applicable,
the time at which such Options may be exercised) shall not be accelerated, unless otherwise
provided in a written agreement between the Company or any Affiliate and the Optionholder, and such
Options shall terminate if not exercised (if applicable) prior to the effective time of the
Corporate Transaction.

     (d) Change in Control. An Option may be subject to additional acceleration of vesting and
exercisability upon or after a Change in Control as may be provided in the Option Agreement for
such Option or as may be provided in any other written agreement between the Company or any
Affiliate and the Optionholder, but in the absence of such provision, no such acceleration shall
occur.

12. Amendment of the Plan and Options.

     (a) Amendment of Plan. Subject to the limitations, if any, of applicable law, the Board, at
any time and from time to time, may amend the Plan. However, except as provided in Section 11(a)
relating to Capitalization Adjustments, no amendment shall be effective unless

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approved by the stockholders of the Company to the extent stockholder approval is necessary to
satisfy applicable law.

     (b) Stockholder Approval. The Board, in its sole discretion, may submit any other amendment
to the Plan for stockholder approval.

     (c) No Impairment of Rights. Rights under any Option granted before amendment of the Plan
shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of
the Optionholder and (ii) the Optionholder consents in writing.

     (d) Amendment of Options. The Board, at any time, and from time to time, may amend the terms
of any one or more Options, including, but not limited to, amendments to provide terms more
favorable than previously provided in the agreement evidencing an Option, subject to any specified
limits in the Plan that are not subject to Board discretion; provided, however, that the rights
under any Option shall not be impaired by any such amendment unless (i) the Company requests the
consent of the Optionholder and (ii) the Optionholder consents in writing.

13. Termination or Suspension of the Plan.

     (a) Plan Term. The Board may suspend or terminate the Plan at any time. No Options may be
granted under the Plan while the Plan is suspended or after it is terminated.

     (b) No Impairment of Rights. Suspension or termination of the Plan shall not impair rights
and obligations under any Option granted while the Plan is in effect except with the written
consent of the Optionholder.

14. Effective Date of Plan.

     The Plan shall become effective on the IPO Date, but no Option shall be exercised unless and
until the Plan has been approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board.

15. Choice of Law.

     The law of the state of California shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s conflict of laws rules.

12

 

SGX Pharmaceuticals, Inc.

Stock Option Grant Notice

Initial Grant

(2005 Non-Employee Directors’ Stock Option Plan)

SGX Pharmaceuticals, Inc. (the “Company”), pursuant to its 2005 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 Stock 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:

	 	 

	 	 
	Exercise Price (Per Share):

	 	 

	 	 
	Total Exercise Price:

	 	 

	 	 
	Expiration Date:

	 	 

The day before the 10th anniversary of the Date of Grant
	 	 

	 	 	 
	Type of Grant:

	 	Nonstatutory Stock Option
	 
	 	 
	Exercise Schedule:

	 	Same as Vesting Schedule
	 
	 	 
	Vesting Schedule:

	 	1/36th of the shares vest each month following the Date of Grant, subject to accelerated
vesting under specified circumstances as provided in the Stock Option Agreement and Plan.
	 
	 	 
	Payment:

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

	 	o	 	By cash or check
	 
	 	o	 	Pursuant to a Regulation T Program if the Shares are publicly traded
	 
	 	o	 	By delivery of already-owned shares if the Shares are publicly traded
	 
	 	o	 	Net exercise if the Company has adopted FAS 123, as revised, at
the time of such exercise

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and
understands and agrees to, this Grant Notice, the Stock Option Agreement and the Plan.
Optionholder further acknowledges that as of the Date of Grant, this Grant Notice, the Stock 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:
	 	 
	 	 

	 	 
	 

	 	 	 	 
	 	 

	 	 

	 	 	 	 	 	 	 	 	 	 	 
	SGX Pharmaceuticals, Inc.	 	 	 	Optionholder:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 	 	 

Signature	 	 	 	 
  
Signature
	 	 
	Title:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

	 	 	 
	Attachments:

	 	Stock Option Agreement, 2005 Non-Employee Directors’ Stock Option Plan and Notice of Exercise

 

 

SGX Pharmaceuticals, Inc.

Stock Option Grant Notice

Annual Grant

(2005 Non-Employee Directors’ Stock Option Plan)

SGX Pharmaceuticals, Inc. (the “Company”), pursuant to its 2005 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 Stock 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:

	 	 

	 	 
	Exercise Price (Per Share):

	 	 

	 	 
	Total Exercise Price:

	 	 

	 	 
	Expiration Date:

	 	 

The day before the 10th anniversary of the Date of Grant
	 	 

	 	 	 
	Type of Grant:

	 	Nonstatutory Stock Option
	 
	 	 
	Exercise Schedule:

	 	Same as Vesting Schedule
	 
	 	 
	Vesting Schedule:

	 	1/12th  of the shares vest at the end of each month following the Date of Grant,
subject to accelerated vesting under specified circumstances as provided in the Stock Option
Agreement and Plan.
	 
	 	 
	Payment:

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

	 	o	 	By cash or check
	 
	 	o	 	Pursuant to a Regulation T Program if the Shares are publicly traded
	 
	 	o	 	By delivery of already-owned shares if the Shares are publicly traded
	 
	 	o	 	Net exercise if the Company has adopted FAS 123, as revised, at
the time of such exercise

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and
understands and agrees to, this Grant Notice, the Stock Option Agreement and the Plan.
Optionholder further acknowledges that as of the Date of Grant, this Grant Notice, the Stock 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:
	 	 
	 	 

	 	 
	 

	 	 	 	 
	 	 

	 	 

	 	 	 	 	 	 	 	 	 	 	 
	SGX Pharmaceuticals, Inc.	 	 	 	Optionholder:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 	 	 

Signature	 	 	 	 
  
Signature
	 	 
	Title:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

	 	 	 
	Attachments:

	 	Stock Option Agreement, 2005 Non-Employee Directors’ Stock Option Plan and Notice of Exercise

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