Document:

Exhibit 10.5

 

Applied Therapeutics, Inc.
 2016 Equity Incentive Plan

 

(Adopted as of June 21, 2016)

 

1.                                      Purpose. The Applied Therapeutics, Inc. 2016 Equity Incentive Plan (the “Plan”), is intended to provide incentives which will attract and retain highly competent persons as officers, directors, key employees and independent contractors of Applied Therapeutics, Inc. (“Company”) and its subsidiaries, by providing them opportunities to acquire shares of common stock of the Company (“Common Stock”) or to receive monetary payments based on the value of such shares pursuant to the Awards (as defined below) described herein.

 

2.                                      Participants. Participants will consist of such officers, key employees, directors, and independent contractors of the Company and its subsidiaries, as the Company’s Board of Directors (“Board”), in its sole discretion, determine to be significantly responsible for the success and future growth and profitability of the Company and whom the Board may designate from time to time to receive Awards under the Plan (“Participants”). Designation of a Participant in any year shall not require the Board to designate such person to receive an Award in any other year or, once designated, to receive the same type or amount of Awards as granted to the Participant or any other Participant in any year. The Board shall consider such factors as it deems pertinent in selecting Participants and in determining the amount, type and terms and conditions of their respective Awards. At the Board’s discretion, the Board may delegate to the Committee (as defined below), the authority to designate and select Participants and types of Awards.

 

3.                                      Administration.

 

(a)                                 Except for those powers expressly reserved for the Board, the Plan will be administered by any subcommittee of the Board appointed by the Board to administer the Plan or, if no committee is appointed to administer the Plan, the Board (the “Committee”). The Committee is authorized, subject to the provisions of the Plan, to establish such rules and regulations as it deems necessary or appropriate for the proper administration of the Plan and to make such determinations and interpretations and to take such action in connection with the Plan and any Awards granted hereunder as it deems necessary or advisable. All determinations and interpretations made by the Committee shall be binding and conclusive on all Participants and their legal representatives. No member of the Board, and no employee of the Company shall be liable for any act or failure to act hereunder, by any other Board member or employee or by any agent to whom duties in connection with the administration of this Plan have been delegated or, except in circumstances involving his bad faith, gross negligence or fraud, for any act or failure to act by the member or employee.

 

(b)                                 The Committee may delegate to one or more of its members or to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Committee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. If administration is delegated by the Committee to any such person, as described above, the Committee may

 

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terminate all or any portion of such person’s authority under the Plan at any time and revisit in the Committee all or any portion of the administration of the Plan.

 

4.                                 Types of Awards. Awards under the Plan may be granted in any one or a combination of (i) Stock Options, (ii) Equity Appreciation Rights, (iii) Restricted Stock and Restricted Stock Units, (iv) Performance Awards and (v) Other Stock-Based Awards, each as described below (collectively, “Awards”). Each Award shall be made pursuant to a written agreement, certificate, resolution, or such other evidence approved by the Committee that sets forth the terms and conditions of the Awards granted.

 

5.                                 Shares Reserved under the Plan.

 

(a)                                 Subject to adjustment under Section 12 hereof, there is hereby reserved for issuance under the Plan 10,000 shares of Common Stock of the Company, which may be authorized but unissued or treasury shares. All shares available under the Plan are available for each type of Award under the Plan including, for the avoidance of doubt, Incentive Stock Options.

 

(b)                                 If there is a lapse, expiration, termination or cancellation of any Stock Option granted under this Plan prior to the issuance of shares in connection with such option, or if shares are issued under the Plan in connection with an Award hereunder and thereafter such shares are reacquired by the Company, those shares may again be used for new Awards under the Plan. In addition, any shares exchanged or surrendered by a Participant as full or partial payment of the exercise price under any Stock Option exercised under this Plan, any shares retained by the Company pursuant to a Participant’s tax withholding election, and any shares covered by an Award which is settled in cash, shall be added back to the shares available for Awards under the Plan. The Board shall determine the appropriate methodology for calculating the number of Shares available for issuance pursuant to the Plan.

 

(c)                                  The Committee may grant Awards under the Plan in substitution for stock and stock based awards held by employees, directors, consultants or advisors of another company (an “Acquired Company”) in connection with a merger, consolidation or similar transaction involving such Acquired Company and the Company or an Affiliate, or the acquisition by the Company or an Affiliate of property or stock of the Acquired Company. Notwithstanding any other provision of this Plan, the Committee may direct that substitute Awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances. For purposes of this Plan, an “Affiliate” means an entity in which the Company has a direct or indirect equity interest, whether now or hereafter existing; provided however, that with respect to an Incentive Stock Option, an Affiliate means a “parent corporation” (as defined in Section 424(e) of the Internal Revenue Code of 1986, as amended (the “Code”) or a “subsidiary corporation” (as defined in Code Section 424(f)) with respect to the Company, whether now or hereafter existing.

 

6.                                 Stock Options. “Stock Options” will consist of Awards from the Company, which will enable the holder to purchase a specific number of shares of Common Stock, at set terms and at a fixed purchase price. Stock Options may be incentive stock options within the meaning of Code Section 422 (“Incentive Stock Options”) or Stock Options that do not

 

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constitute Incentive Stock Options (“Nonqualified Stock Options”). The Committee will have the authority to grant to any Participant one or more Incentive Stock Options, Nonqualified Stock Options, or both types of Stock Options. Each Stock Option shall be evidenced by a written option agreement in such form and shall be subject to such terms and conditions as the Committee may approve from time to time, including without limitation the following:

 

(a)                                 Exercise Price. Each Stock Option granted hereunder shall have such per share exercise price as the Committee may determine at the Date of Grant; provided, however, that other than in the case of a permitted substitution of Stock Options under Section 5(c) hereof, the per share exercise price for any Stock Options awarded hereunder shall not be less than 100% of the Fair Market Value of the Common Stock on the date the Stock Option is granted.

 

(b)                                 Payment of Exercise Price. The Committee shall determine the acceptable form of consideration for exercising a Stock Option, including the method of payment. In the case of an Incentive Stock Option, the Committee shall determine the acceptable form of consideration at the time of grant. To the extent approved by the Committee in its discretion and as set out in the applicable Award agreement, the exercise price of a Stock Option may be paid (i) in United States dollars in cash or by check; (ii) through delivery of shares of Common Stock then owned by the Participant having a Fair Market Value equal, as of the date of exercise, to the exercise price of the Stock Option; (iii) by having the Company retain from the shares of Common Stock otherwise issuable upon exercise of the Stock Option, a number of shares having a Fair Market Value equal, as of the date of exercise, to the exercise price of the Stock Option (a “net-exercise”); (iv) payment of such other lawful consideration as the Committee may determine in its sole discretion; or (v) by any combination of (i), (ii), (iii) and (iv) above. Notwithstanding the foregoing, the Committee shall accept only such payment on exercise of an Incentive Stock Option as is permitted by Code Section 422.

 

(c)                                  Exercise Period. Stock Options granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee; provided, however, that Incentive Stock Options shall not be exercisable more than 10 years after the date they are granted. All Stock Options shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its sole discretion set forth in the option agreement at the Date of Grant, including but not limited to limitations on exercisability following termination of the Participant’s employment or consulting relationship.

 

(d)                                 Limitations on Incentive Stock Options. Incentive Stock Options may be granted only to Participants who are employees of the Company or one of its subsidiaries (within the meaning of Code Section 424(f)) at the Date of Grant. The aggregate Fair Market Value (determined as of the time the option is granted) of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all option plans of the Company) shall not exceed $100,000. Incentive Stock Options may not be granted to any Participant who, at the time of grant, owns stock possessing (after the application of the attribution rules of Code Section 424(d)) more than 10% of the total combined voting power of all classes of stock of the Company, unless the option price is fixed at not less than 110% of the Fair Market Value of the Common Stock on the Date

 

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of Grant and the exercise of such option is prohibited by its terms after the expiration of five years from the Date of Grant of such option.

 

(e)                                  Notification upon Disqualifying Disposition of an Incentive Stock Option. Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date he makes a disqualifying disposition of any Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of such Common Stock before the later of (A) two years after the Date of Grant of the Incentive Stock Option or (B) one year after the date of exercise of the Incentive Stock Option.

 

(f)                                   Redesignation as Nonqualified Stock Options. Stock Options designated as Incentive Stock Options that fail to meet the requirements of Code Section 422 shall be redesignated as Nonqualified Stock Options automatically without further action by the Committee on the date of such failure to meet the requirements of Code Section 422.

 

(g)                                  Termination of Employment or Service Provider Relationship. Unless otherwise provided by the Committee and set forth in the Award, in the event a Participant’s employment or service, as applicable, is terminated before exercise of a vested Stock Option, unless otherwise required by law, such Stock Options will be held subject to Section 11; provided that the time periods for exercising Incentive Stock Options shall be as prescribed by the Code. If the Committee determines, subsequent to a Participant’s termination of employment or service, as applicable, but before exercise of a Stock Option, that either before or after the Participant’s termination of employment or service, as applicable, the Participant engaged in conduct that constitutes “Cause,” then the Participant’s right to exercise any Option shall be forfeited immediately.

 

(h)                                 Limitation of Rights in Shares. The recipient of a Stock Option shall not be deemed for any purpose to be a shareholder of the Company with respect to any of the shares subject thereto except to the extent that the Stock Option shall have been exercised and, in addition, a certificate shall have been issued and delivered to the Participant.

 

(i)                                     “Cause”, as used in connection with the termination of a Participant’s employment or service, is defined in any employment agreement between the Company and such Participant, or in the absence of any such employment agreement, means: (1) an unauthorized use or disclosure by the Participant of the Company’s confidential information or trade secrets, or the violation of any agreement with the Company containing non-competition, non- solicitation, non-disparagement or other restrictive covenant; (2) a material breach by the Participant of any agreement between the Participant and the Company and the Participant fails to remedy such condition within ten (10) days of such breach; (3) a material failure by the Participant to comply with the Company’s written policies or rules and the Participant fails to remedy such non-compliance within ten (10)) days of such failure to comply; (4) the Participant’s violation of a federal or state law or regulation directly or indirectly applicable to the business of the Company or its affiliates, which violation was or is reasonably likely to be injurious to the Company or its affiliates; (5) the Participant’s (i) conviction of, or plea of “guilty” or “no contest” to, any crime under the laws of the United States or any State thereof (with the exception of minor vehicular accidents which do not result in bodily harm) or (ii)

 

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committing of any act of moral turpitude, dishonesty or fraud against, or the misappropriation of material property belonging to, the Company or its affiliates; (6) the Participant’s gross negligence or willful misconduct that was or is or is likely to be materially injurious to the Company or its affiliates; (7) a continuing failure by the Participant to perform assigned duties after receiving written notification of such failure from the Board and the Participant fails to remedy such condition within ten (10) days after receiving such written notification; or (8) a failure by the Participant to cooperate in good faith with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested the Participant’s cooperation. Whether an act constitutes “Cause” shall be determined by the Board in its sole discretion.

 

7.                                 Equity Appreciation Rights. “Equity Appreciation Rights” will consist of Awards from the Company, which will entitle the holder to receive a payment based on the appreciation in the Fair Market Value of the shares subject thereto up to a specified date or dates. The Committee may, in its discretion, grant Equity Appreciation Rights to the holders of any Stock Options granted hereunder. In addition, Equity Appreciation Rights may be granted independently of and without relation to Stock Options. Each Equity Appreciation Right shall be subject to such terms and conditions consistent with the Plan as the Committee shall impose from time to time, including the following:

 

(a)                                 Each Equity Appreciation Right will entitle the holder to receive the appreciation in the Fair Market Value of the shares of Common Stock referenced therein up to the date the right is subject to a payout event. In the case of a right issued in relation to a Stock Option, such appreciation shall be measured from not less than the exercise price of such Stock Option and in the case of a right issued independently of any Stock Option, such appreciation shall be measured from the applicable strike price specified by the Committee in the applicable Award agreement relating to any such Equity Appreciation Right.

 

(b)                                 Each Equity Appreciation Right will be payable at such time or times following the first to occur of the applicable payout event(s) as set forth by the Committee in the applicable Award agreement. Payment of such appreciation shall be made in cash or in shares of Common Stock, or a combination thereof, as determined by the Committee.

 

8.                                 Restricted Stock and Restricted Stock Units.

 

(a)                            “Restricted Stock” will consist of Awards of shares of Common Stock to Participants either with or without consideration therefor from Participants. Each Award of Restricted Stock shall be subject to such terms and conditions as the Committee determines appropriate, including, without limitation, restrictions on the sale or other disposition of shares, restrictions requiring the forfeiture of shares to the Company upon termination of the Participant’s employment or service with the Company or one of its Affiliates prior to satisfying a prescribed period of service. In the case of an Award of Restricted Stock, the Committee may require the Participant to deliver a duly signed stock power, endorsed in blank, relating to the shares covered by such an Award, and may also require that the stock certificates evidencing such shares be held in custody until the service restrictions thereon shall have lapsed.

 

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Each Restricted Stock Award involving actual shares of Common Stock shall specify whether the Participant shall have, with respect to the shares of Common Stock subject thereto, all of the rights of a holder of shares of Common Stock of the Company, including the right to receive dividends, if applicable, and to vote the shares.

 

(b)                            “Restricted Stock Units” will consist of Awards that entitle the Participant to receive shares of Common Stock and/or cash after a prescribed period of service. The period of service, number of reference shares of Common Stock, and other conditions and limitations applicable to each Award of Restricted Stock Units shall be as determined by the Committee and shall be stated in the applicable Award agreement. The Committee, in its sole discretion, may impose such other restrictions on Restricted Stock Units as it may deem advisable or appropriate including, without limitation, restrictions requiring the forfeiture of Restricted Stock Units to the Company upon termination of the Participant’s employment or service with the Company or one of its Affiliates prior to satisfying the prescribed period of service.

 

9.                                      Other Stock-Based Awards. “Other Stock Based Awards” will consist of other types of equity-based or equity-related Awards not otherwise described by the terms of the Plan in such amounts and subject to such terms and conditions, as the Board or the Committee shall determine Such Awards may involve the transfer of actual shares of Common Stock, or payment in cash or otherwise of amounts based on the value of Common Stock.

 

10.                               Performance Awards.

 

(a)                                 “Performance Awards” will consist of Awards for which the Committee has set performance goals at its discretion which, depending on the extent to which they are met, will determine the number of shares of Common Stock and/or cash value of Awards that will be paid out to the Participants. Performance Awards may be granted to Participants at any time and from time to time, as shall be determined by the Committee. The Committee shall have complete discretion in determining the number, amount and timing of Performance Awards granted to each Participant. Performance Awards may take such form as may be determined by the Committee, including without limitation, cash, Stock Options, Awards of shares of Common Stock, Awards of Restricted Stock or Restricted Stock Units, Other Stock-Based Awards or any combination thereof. Performance Awards may be awarded as short-term or long-term incentives.

 

(b)                                 Performance Awards under the Plan may be made subject to the attainment of one or more of the specified performance goals, as determined by the Committee in its sole discretion. Performance goals may be based upon Company-wide, Affiliate, divisional, project team, and/or individual performance. The Board or the Committee shall have the authority at any time to make adjustments to performance goals for any outstanding Performance Awards which the Board or the Committee deems necessary or desirable unless at the time of establishment of such goals the Board or the Committee shall have precluded its authority to make such adjustments.

 

(c)                                  Payment of earned Performance Awards shall be made in accordance with terms and conditions prescribed by the Committee. Performance Awards shall be payable in cash or in shares Common Stock, or a combination thereof, as determined by the Committee.

 

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11.                          Effect of Termination of Service on Awards; Forfeiture.

 

(a)                                 The Committee may provide, by rule or regulation or in any Award, or may determine in any individual case, the circumstances in which Awards shall be exercised, vested, paid or forfeited in the event a Participant ceases to be an employee, director or other service provider prior to the end of a performance period, period of restriction or the exercise, vesting or settlement of such Award. Unless otherwise determined by the Committee if, with respect to any Award, (1) Participant’s termination of employment or service, as applicable, occurs before the end of the period of restriction or the vesting date applicable to such Award (or the applicable portion of such Award) or (2) any performance goals are not achieved in whole or in part (as determined by the Committee) by the end of the period for measuring such performance goals, then all such then unvested and/or unearned Awards shall be forfeited by the Participant.

 

(b)                                 Awards under the Plan shall not be affected by the change of a Participant’s status within or among the Company and any subsidiaries or Affiliates, so long as the Participant remains an employee, officer, director or other service provider. For purposes of the Plan and any Award hereunder, if an entity that the Participant is employed by or otherwise providing services to ceases to be a subsidiary or an Affiliate, a Participant shall be deemed to terminated employment or service, as applicable, on the date of the entity’s change in status, unless the Participant continues as an employee or service provider in respect of the Company or another subsidiary or Affiliate (after giving effect to the change in status).

 

12.                          Adjustment Provisions.

 

(a)                                 If the Company shall at any time change the number of shares of Common Stock issued without new consideration to the Company (such as by stock dividend or stock split), the total number of shares of Common Stock reserved for issuance under the Plan, the maximum number of shares of Common Stock which may be made subject to Incentive Stock Options during the term of the Plan, and the number of shares of Common Stock covered by each then outstanding Award shall be equitably adjusted and the aggregate consideration payable to the Company, if any, shall not be changed.

 

(b)                                 Unless otherwise provided in Section 13, in the event of any merger, consolidation or reorganization of the Company with or into another entity other than a merger, consolidation or reorganization in which the Company is the continuing entity and which does not result in the outstanding shares of Common Stock being converted into or exchanged for different securities, cash or other property, or any combination thereof, there may be substituted, on an equitable basis as determined by the Committee, for each share of Common Stock then subject to an Award under the Plan, the number and kind of shares of stock, other securities, cash or other property to which holders of shares of Common Stock of the Company will be entitled pursuant to the transaction.

 

13.                          Change of Control of the Company; Consequences of a Change of Control.

 

(a)                            Unless otherwise expressly provided in the applicable Award agreement, upon the occurrence of a Change of Control of the Company, the Board or the Committee may

 

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(1) provide for the acceleration of vesting or to cause the lapse of restrictions with respect to, all or any portion of an Award, (2) cancel an Award for a cash payment equal to the Fair Market Value (as determined in the sole discretion of the Board) which, in the case of Stock Options and Equity Appreciation Rights, shall be deemed to be equal to the excess, if any, of the value of the consideration to be paid in the Change of Control transaction to holders of the same number of shares of Common Stock subject to such Stock Options or Equity Appreciation Rights (or, if no consideration is paid in any such transaction, the Fair Market Value of the shares of Common Stock subject to such Stock Options or Equity Appreciation Rights) over the aggregate exercise price (in the case of Stock Options) or strike price (in the case of Equity Appreciation Rights), (3) provide for the issuance of a substitute Award that will substantially preserve the otherwise applicable terms of any affected Award previously granted hereunder as determined by the Board in its sole discretion, (4) terminate unvested Stock Options without providing accelerated vesting or (5) take any other action with respect to the Awards the Board or the Committee deems appropriate. For the avoidance of doubt, the treatment of Awards upon a Change of Control of the Company may vary among the Award types and Participants in the sole discretion of the Board. Unless otherwise determined by the Board (on the same basis or on different bases as the Board shall specify), any repurchase rights or other rights of the Company that relate to an Award shall continue to apply to consideration, including cash, that has been substituted, assumed or amended for an Award pursuant to this Section 13(a). The Company may hold in escrow all or any portion of any such consideration in order to effectuate any continuing restrictions.

 

(b)                                 For purposes of this Plan, a “Change of Control” of the Company shall mean: the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation or stock transfer, but excluding any such transaction effected primarily for the purpose of changing the domicile of the Company or a bona-fide financing of the Company), unless the Company’s stockholders of record immediately prior to such transaction or series of related transactions hold, immediately after such transaction or series of related transactions, at least 50% of the voting power of the surviving or acquiring entity (provided that the sale by the Company of its securities for the purposes of raising additional funds shall not constitute a Change of Control hereunder); or a sale of all or substantially all of the assets of the Company.

 

Notwithstanding the foregoing, a Change of Control of the Company shall not be deemed to have occurred under Section 13 solely because (1) the Company, (2) an Affiliate or Initial Stockholders, (3) any one or more members of executive management of the Company or its subsidiaries, (4) any employee stock ownership plan or any other employee benefit plan of the Company or any Affiliate or (5) any combination of the Persons referred to in the preceding clauses (1) through (4) becomes the actual or beneficial owner (within the meaning of rule 13d-3 promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”)) of 50% or more of the Voting Securities of the Company.

 

(c)                                  As used in this Section 13, the following terms shall have the meanings set forth below:

 

“Initial Stockholders” means the stockholders of the Company immediately prior to any transaction which may constitute a Change of Control.

 

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“Person” means any individual, corporation, partnership, group, association or other “person,” as such term is used in section 14(d) of the Exchange Act.

 

“Voting Securities” means, with respect to any Person, any securities entitled to vote (including by the execution of action by written consent) generally in the election of directors of such Person (together with direct or indirect options or other rights to acquire any such securities).

 

14.                               Nontransferability. Unless otherwise set forth in the applicable written Award agreement, each Award granted under the Plan shall not be transferable otherwise than by will or the laws of descent and distribution, and shall be exercisable, during the Participant’s lifetime, only by the Participant or, in the event of a Participant’s disability, by the Participant’s personal representative. In the event of the death of a Participant, exercise of any Award or payment with respect to any Award shall be made only by or to the executor or administrator of the estate of the deceased Participant or the person or persons to whom the deceased Participant’s rights under the benefit shall pass by will or the laws of descent and distribution. Notwithstanding the foregoing, at the discretion of the Committee, a grant of a Stock Option may permit the transfer thereof by the Participant solely to members of the Participant’s immediate family or trusts or family partnerships or limited liability companies for the benefit of such persons, subject to such terms and conditions as may be established by the Committee.

 

15.                               Repurchase of Shares.

 

(a)                                 Upon any termination of a Participant’s employment or service with the Company or a subsidiary or Affiliate, unless otherwise provided in the Award, the Company will be entitled (in its sole and absolute discretion) to repurchase at the Company’s election all or any of the Common Stock received hereunder or acquired upon exercise of a grant held by a Participant (whether or not previously acquired by the Participant in connection with the exercise of a Stock Option or Equity Appreciation Right or upon settlement of any other Award and including any Common Stock received as a result of the exercise of any Award after the Participant’s termination date) (the “Repurchase Option”). If the Company elects to exercise the Repurchase Option with respect to Shares held by any Participant pursuant to this Section 15, it shall deliver written notice (the “Repurchase Notice”) to such Participant to such effect within 90-days after the occurrence of the event giving rise to the Repurchase Option. For the avoidance of doubt, this Repurchase Option does not apply to Common Stock purchased by or granted to a Participant under an agreement that is not part of this Plan.

 

(b)                                 The repurchase price (the “Repurchase Price”) for a Participant’s Common Stock to be repurchased (the “Surrendered Securities”) shall be the Fair Market Value of such Surrendered Securities on the date of termination of employment or service; provided that in the case of a termination of a Participant’s employment or service by the Company for Cause, the Repurchase Price shall be the lesser of the Fair Market Value of the Surrendered Securities on the date of termination of employment or service and the original exercise price (or other amount paid with respect to an Award, if any, in the case of Awards other than Stock Options and Equity Appreciation Rights) paid for such Surrendered Securities or the Fair Market Value of such Surrendered Securities on the original date of purchase, as applicable. Notwithstanding anything to the contrary in the Plan, if the Company determines, following a

 

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Participant’s termination of employment or service with the Company, but prior to the last date on which a Repurchase Option can be exercised, that either before or after the Participant’s termination of employment or service with the Company, the Participant engaged in conduct that constitutes Cause, then the Participant will be treated as having terminated employment or service for Cause for purposes of determining the Repurchase Price.

 

(c)                                  (1)                              Within ten (10) business days after the Repurchase Price for the Surrendered Securities has been determined, the Company shall send a notice to such holder of the Surrendered Securities setting forth the consideration to be paid for such securities and the time and place for the closing of the transaction, which date shall not be more than twenty (20) days nor less than five (5) days after the delivery of such notice. At such closing, the holder of the Surrendered Securities shall deliver all certificates (if any exist) evidencing the Surrendered Securities to be repurchased to the Company, and the Company shall pay for the Surrendered Securities to be repurchased pursuant to the Repurchase Option by delivery of a check or wire transfer in the aggregate amount of the Repurchase Price for such securities.

 

(2)                                 The Company shall be entitled to receive customary representations and warranties from such holder that he or she is the record and beneficial owner of the Surrendered Securities free and clear of any liens, and that he or she will transfer and deliver valid title to such securities free and clear of any liens.

 

 

(d)                                 Notwithstanding anything to the contrary contained in this Plan, all repurchases of Surrendered Securities by the Company shall be subject to applicable state and federal laws and regulations and, to the extent applicable, the Company’s debt and equity financing agreements. If any of the foregoing prohibits (in the discretion of the Company) the repurchase of Surrendered Securities which are otherwise permitted or required hereunder, the time periods provided in this Section 15 (other than the time period for delivery of the notice in Section 15(a)) shall be suspended, and the Company may make such repurchases as soon as it is permitted to do so under such restrictions; provided that, notwithstanding the foregoing, in no event shall the time periods provided in this Section 15 be suspended for more than three (3) months and that the Company shall in any event have formally notified Participant in writing of its election to repurchase within the time period specified in Section 15(a).

 

(e)                                  In the event the Company delivers a Repurchase Notice to a Participant but does not elect to repurchase all Shares held by such Participant, the Shares held by such Participant which the Company has not elected to repurchase in the Repurchase Notice shall no longer be subject to the Repurchase Option.

 

16.                          Other Provisions. Awards under the Plan may also be subject to such other provisions (whether or not applicable to the Award granted to any other Participant) as the Committee determines appropriate, including without limitation, provisions to assist the Participant in financing the acquisition of Common Stock, provisions for the acceleration of exercisability or vesting and/or early termination of Awards in the event of a Change of Control of the Company, provisions for the payment of the value of Awards to Participants in the event of a Change of Control of the Company, provisions relating to treatment of Awards upon an offering of Company equity on a national securities exchange, provisions for the forfeiture of, or restrictions on resale or other disposition of, Common Stock acquired under any form of Award,

 

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provisions to comply with Federal and State securities laws, or understandings or conditions as to the Participant’s employment in addition to those specifically provided for under the Plan.

 

17.                               Time of Granting of Awards; Fair Market Value. The date of grant (“Date of Grant”) of an Award shall be the date specified by the Committee on which an Award under this Plan will become effective (which date shall in no event be earlier than the date on which the Committee takes action with respect thereto), provided that in the case of an Incentive Stock Option, the Date of Grant shall be the later of the date on which the Committee makes the determination granting such Incentive Stock Option or the date of commencement of the Participant’s employment relationship with the Company or one of its Affiliates. Except as otherwise expressly provided in a written Award, for purposes of this Plan and any Awards hereunder, “Fair Market Value” shall mean the amount determined in good faith by the Committee as the fair market value of shares of the Company on such basis as it deems appropriate taking into account, if applicable, the requirements of Section 409A of the Code.

 

18.                               Tenure. A Participant’s right, if any, to continue to serve the Company as an officer, employee, or otherwise, shall not be enlarged or otherwise affected by his or her designation as a Participant under the Plan, nor shall this Plan in any way interfere with the right of the Company, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Award.

 

19.                               Withholding. All payments or distributions made pursuant to the Plan shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax withholding requirements. If the Company proposes or is required to distribute Common Stock pursuant to the Plan, it may require the recipient to remit to it an amount sufficient to satisfy such tax withholding requirements prior to the delivery of any certificates for such Common Stock. The Committee may, in its sole discretion and subject to such rules as it may adopt, permit an Award holder to pay all or a portion of the minimum required federal, state and local withholding taxes arising in connection with (a) a Stock Option or an Equity Appreciation Right or (b) the receipt or vesting of a Restricted Stock Award or a Performance Award, by electing to have the Company withhold shares of Common Stock having a Fair Market Value equal to the amount to be withheld.

 

20.                               Code Section 409A. The Plan, and Awards granted under it, are intended to be administered in a manner so that awards thereunder are exempt from Section 409A except to the extent specifically provided otherwise in an Award agreement. For avoidance of doubt, Stock Options and Equity Appreciation Rights are intended to qualify for the stock rights exemptions from Section 409A of the Code (“Section 409A”). Where reasonably possible and practicable, the Plan shall be administered in a manner to avoid the imposition on Participants of immediate tax recognition and additional taxes pursuant to such Section 409A. Notwithstanding the foregoing, neither the Company nor the Committee shall have any liability to any person in the event Section 409A applies to any such Award in a manner that results in adverse tax consequences for the Participant or any of his or her transferees.

 

21.                               Duration, Amendment and Termination. This Plan shall terminate upon the earlier of a termination by the Board, or at such time as there shall be no remaining shares

 

11

 

available for grant hereunder, or ten-year anniversary of effective date. Also, by mutual agreement between the Company and a Participant hereunder, under this Plan or under any other present or future plan of the Company, Awards may be granted to such Participant in substitution and exchange for, and in cancellation of, any Awards previously granted such Participant under this Plan, or any other present or future plan of the Company. The Board may amend the Plan from time to time or terminate the Plan at any time, subject to any requirement of stockholder approval required by applicable law, regulation, or stock exchange rule. The Board may amend the terms of any previously-granted Award agreement, but only if (a) the Board determines that such change is necessary or desirable for legal compliance reasons; (b) the amendment is beneficial to the Participant; or (c) the Participant consents to such amendment.

 

22.                               Governing Law. This Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).

 

23.                               Shareholder Approval. The Plan was adopted by the Board on June 21, 2016 and was approved by the Company’s shareholders on June 21, 2016.

 

24.                               Shareholder Agreements. Notwithstanding anything to the contrary herein, it shall be a condition to the receipt of any shares of Common Stock of the Company hereunder that the Participant executes the Company’s Voting Agreement, Right of First Refusal and Co-Sale Agreement or similar agreements, each as amended from time to time, as required by the Company, the Board or the Committee. In the event that the Participant fails to do so, then the Participant’s right to receive any shares of Common Stock of the Company shall be forfeited immediately.

 

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Applied Therapeutics, Inc.
 Amendment to 2016 Equity Incentive Plan

 

WHEREAS, Applied Therapeutics, Inc., a Delaware corporation (the “Company”), has adopted the Applied Therapeutics, Inc. 2016 Equity Incentive Plan, effective June 21, 2016 (the “Plan”); and

 

WHEREAS, pursuant to Section 21 of the Plan, the Board of Directors of the Company desires to amend Section 5(a) of the Plan to increase the number of shares of Common Stock reserved for issuance under the Plan to a total of 22,941 shares of Common Stock.

 

NOW THEREFORE, the Plan is hereby amended as follows, effective as of December 15, 2016:

 

1.                                 Section 5(a) of the Plan is hereby amended by replacing such section in its entirety with the following:

 

“(a)                                                   Subject to adjustment under Section 12 hereof, there is hereby reserved for issuance under the Plan 24,353 shares of Common Stock of the Company, which may be authorized but unissued or treasury shares. All shares available under the Plan are available for each type of Award under the Plan including, for the avoidance of doubt, Incentive Stock Options.”

 

2.                                 All other terms and conditions of the Plan shall remain in full force and effect.

 

3.                                 Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Plan.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be executed in its name and on behalf on this 15th day of December, 2016, effective as stated herein.

 

 

	
 
    	
APPLIED THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shoshana Shendelman
    
	
 
    	
 
    	
Name:
    	
Shoshana   Shendelman
    
	
 
    	
 
    	
Title:
    	
Chief   Executive Officer
    

 

 

Applied Therapeutics, Inc.

Amendment to 2016 Equity Incentive Plan

 

WHEREAS, Applied Therapeutics, Inc., a Delaware corporation (the “Company”), has adopted the Applied Therapeutics, Inc. 2016 Equity Incentive Plan, effective June 21, 2016, as amended (the “Plan”); and

 

WHEREAS, pursuant to Section 21 of the Plan, the Board of Directors of the Company desires to amend Section 13(a) of the Plan to provide for accelerated vesting of outstanding Awards upon a Change of Control (as defined in the Plan) of the Company.

 

NOW THEREFORE, the Plan is hereby amended as follows, effective as of June 28, 2018:

 

1.                                      Section 13(a) of the Plan is hereby amended by replacing such section in its  entirety with the following:

 

“(a)                           Notwithstanding anything to the contrary set forth in an Award agreement or any other document governing an Award, immediately prior to the occurrence of a Change of Control of the Company, each Participant will fully vest in and have the right to exercise all of his or her then-outstanding Awards, if any, including shares of Common Stock as to which such Awards would not otherwise be vested or exercisable, all restrictions on then-outstanding Awards, if any, will lapse, and, with respect to any then-outstanding Award with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.  In addition, unless otherwise expressly provided in the applicable Award agreement, upon the occurrence of a Change of Control of the Company, the Board or the Committee may (1) cancel an Award for a cash payment equal to the Fair Market Value (as determined in the sole discretion of the Board) which, in the case of Stock Options and Equity Appreciation Rights, shall be deemed to be equal to the excess, if any, of the value of the consideration to be paid in the Change of Control transaction to holders of the same number of shares of Common Stock subject to such Stock Options or Equity Appreciation Rights (or, if no consideration is paid in any such transaction, the Fair Market Value of the shares of Common Stock subject to such Stock Options or Equity Appreciation Rights) over the aggregate exercise price (in the case of Stock Options) or strike price (in the case of Equity Appreciation Rights), (2) provide for the issuance of a substitute Award that will substantially preserve the otherwise applicable terms of any affected Award previously granted hereunder as determined by the Board in its sole discretion, (3) terminate unvested Stock Options without

 

 

providing accelerated vesting or (4) take any other action with respect to the Awards the Board or the Committee deems appropriate. For the avoidance of doubt, the treatment of Awards upon a Change of Control of the Company may vary among the Award types and Participants in the sole discretion of the Board. Unless otherwise determined by the Board (on the same basis or on different bases as the Board shall specify), any repurchase rights or other rights of the Company that relate to an Award shall continue to apply to consideration, including cash, that has been substituted, assumed or amended for an Award pursuant to this Section 13(a). The Company may hold in escrow all or any portion of any such consideration in order to effectuate any continuing restrictions.”

 

2.                                        All other terms and conditions of the Plan shall remain in full force and effect.

 

3.                                        Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Plan.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be executed in its name and on behalf, effective as stated herein.

 

 

	
 
    	
APPLIED THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shoshana Shendelman
    
	
 
    	
Name:
    	
Shoshana Shendelman
    
	
 
    	
Title:
    	
Chief Executive Officer
    

 

 

Applied Therapeutics, Inc.

Amendment to 2016 Equity

Incentive Plan, as amended

 

WHEREAS, Applied Therapeutics, Inc., a Delaware corporation (the “Company”), has adopted the Applied Therapeutics, Inc. 2016 Equity Incentive Plan, effective June 21, 2016, as amended (the “Plan”); and

 

WHEREAS, pursuant to Section 21 of the Plan, the Board of Directors of the Company amended, and the stockholders of the Company approved, Section 5(a) of the Plan to increase the number of shares of the Company’s common stock (the “Common Stock”) reserved for issuance under the Plan to a total of 53,689 shares of Common Stock.

 

NOW THEREFORE, the Plan is hereby amended as follows, effective as of November 5, 2018:

 

1.             Section 5(a) of the Plan is hereby amended by replacing such section in its entirety with the following:

 

“(a)                   Subject to adjustment under Section 12 hereof, there is hereby reserved for issuance under the Plan 53,689 shares of Common Stock, which may be authorized but unissued or treasury shares. All shares available under the Plan are available for each type of Award under the Plan including, for the avoidance of doubt, Stock Options.”

 

2.             All other terms and conditions of the Plan shall remain in full force and effect.

 

3.             Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Plan.

 

[Signature page follows]

 

1

 

IN WITNESS WHEREOF, the Company has caused this instrument to be executed in its name and on behalf on this 5th day of November 2018, effective as stated herein.

 

	
 
    	
APPLIED THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Shoshana Shendelman, Ph.D.
    
	
 
    	
 
    	
Name:
    	
Shoshana Shendelman, Ph.D.
    
	
 
    	
 
    	
Title:
    	
Chief Executive OfficerExhibit 10.7

 

APPLIED THERAPEUTICS, INC.

 

2019 EMPLOYEE STOCK PURCHASE PLAN

 

ADOPTED BY THE BOARD OF DIRECTORS: APRIL 24, 2019

APPROVED BY THE STOCKHOLDERS: APRIL 26, 2019

 

1.                                      GENERAL; PURPOSE.

 

(a)                                 The Plan provides a means by which Eligible Employees of the Company and certain designated Related Corporations may be given an opportunity to purchase shares of Common Stock. The Plan permits the Company to grant a series of Purchase Rights to Eligible Employees under an Employee Stock Purchase Plan.

 

(b)                                 The Company, by means of the Plan, seeks to retain the services of such Employees, to secure and retain the services of new Employees and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Related Corporations.

 

2.                                      ADMINISTRATION.

 

(a)                                 The Board will administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in Section 2(c).

 

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

 

(i)                                    To determine how and when Purchase Rights will be granted and the provisions of each Offering (which need not be identical).

 

(ii)                                To designate from time to time which Related Corporations of the Company will be eligible to participate in the Plan.

 

(iii)                            To construe and interpret the Plan and Purchase Rights, 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, in a manner and to the extent it deems necessary or expedient to make the Plan fully effective.

 

(iv)                             To settle all controversies regarding the Plan and Purchase Rights granted under the Plan.

 

(v)                                 To suspend or terminate the Plan at any time as provided in Section 12.

 

(vi)                             To amend the Plan at any time as provided in Section 12.

 

(vii)                         Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of the Company and its Related Corporations and to carry out the intent that the Plan be treated as an Employee Stock Purchase Plan.

 

(viii)                     To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees who are foreign nationals or employed outside the United States.

 

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(c)                                  The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration is delegated to a Committee, the Committee will 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 to the Board in this Plan and in any applicable Offering Document will 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. Whether or not the Board has delegated administration of the Plan to a Committee, the Board will have the final power to determine all questions of policy and expediency that may arise in the administration of the Plan.

 

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

 

3.                                      SHARES OF COMMON STOCK SUBJECT TO THE PLAN.

 

(a)                                 Subject to the provisions of Section 11(a) relating to Capitalization Adjustments, the maximum number of shares of Common Stock that may be issued under the Plan will not exceed 180,000 shares of Common Stock, plus the number of shares of Common Stock that are automatically added on January 1st of each year for a period of up to ten years, commencing on the first January 1 following the IPO Date and ending on (and including) January 1, 2029, in an amount equal to the lesser of (i) 1% of the total number of shares of Capital Stock outstanding on December 31st of the preceding calendar year, and (ii) 360,000 shares of Common Stock. Notwithstanding the foregoing, the Board may act prior to the first day of any calendar year to provide that there will be no January 1st increase in the share reserve for such calendar year or that the increase in the share reserve for such calendar year will be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence.

 

(b)                                 If any Purchase Right granted under the Plan terminates without having been exercised in full, the shares of Common Stock not purchased under such Purchase Right will again become available for issuance under the Plan.

 

(c)                                  The stock purchasable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market.

 

4.                                      GRANT OF PURCHASE RIGHTS; OFFERING.

 

(a)                                 The Board may from time to time grant or provide for the grant of Purchase Rights to Eligible Employees under an Offering (consisting of one or more Purchase Periods) on an Offering Date or Offering Dates selected by the Board. Each Offering will be in such form and will contain such terms and conditions as the Board will deem appropriate, and will comply with the requirement of Section 423(b)(5) of the Code that all Employees granted Purchase Rights will have the same rights and privileges. The terms and conditions of an Offering shall be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical, but each Offering will include (through incorporation of the provisions of this Plan by reference in the document comprising the Offering or otherwise) the period during which the Offering will be effective, which period will not exceed 27 months beginning with the Offering Date, and the substance of the provisions contained in Sections 5 through 8, inclusive.

 

(b)                                 If a Participant has more than one Purchase Right outstanding under the Plan, unless he or she otherwise indicates in forms delivered to the Company: (i) each form will apply to all of his or her

 

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Purchase Rights under the Plan, and (ii) a Purchase Right with a lower exercise price (or an earlier-granted Purchase Right, if different Purchase Rights have identical exercise prices) will be exercised to the fullest possible extent before a Purchase Right with a higher exercise price (or a later-granted Purchase Right if different Purchase Rights have identical exercise prices) will be exercised.

 

(c)                                  The Board will have the discretion to structure an Offering so that if the Fair Market Value of a share of Common Stock on the first Trading Day of a new Purchase Period within that Offering is less than or equal to the Fair Market Value of a share of Common Stock on the Offering Date for that Offering, then (i) that Offering will terminate immediately as of that first Trading Day, and (ii) the Participants in such terminated Offering will be automatically enrolled in a new Offering beginning on the first Trading Day of such new Purchase Period.

 

5.                                      ELIGIBILITY.

 

(a)                                 Purchase Rights may be granted only to Employees of the Company or, as the Board may designate in accordance with Section 2(b), to Employees of a Related Corporation. Except as provided in Section 5(b), an Employee will not be eligible to be granted Purchase Rights unless, on the Offering Date, the Employee has been in the employ of the Company or the Related Corporation, as the case may be, for such continuous period preceding such Offering Date as the Board may require, but in no event will the required period of continuous employment be equal to or greater than two years. In addition, the Board may provide that no Employee will be eligible to be granted Purchase Rights under the Plan unless, on the Offering Date, such Employee’s customary employment with the Company or the Related Corporation is more than 20 hours per week and more than five months per calendar year or such other criteria as the Board may determine consistent with Section 423 of the Code.

 

(b)                                 The Board may provide that each person who, during the course of an Offering, first becomes an Eligible Employee will, on a date or dates specified in the Offering which coincides with the day on which such person becomes an Eligible Employee or which occurs thereafter, receive a Purchase Right under that Offering, which Purchase Right will thereafter be deemed to be a part of that Offering. Such Purchase Right will have the same characteristics as any Purchase Rights originally granted under that Offering, as described herein, except that:

 

(i)                                    the date on which such Purchase Right is granted will be the “Offering Date” of such Purchase Right for all purposes, including determination of the exercise price of such Purchase Right;

 

(ii)                                the period of the Offering with respect to such Purchase Right will begin on its Offering Date and end coincident with the end of such Offering; and

 

(iii)                            the Board may provide that if such person first becomes an Eligible Employee within a specified period of time before the end of the Offering, he or she will not receive any Purchase Right under that Offering.

 

(c)                                  No Employee will be eligible for the grant of any Purchase Rights if, immediately after any such Purchase Rights are granted, such Employee owns stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company or of any Related Corporation. For purposes of this Section 5(c), the rules of Section 424(d) of the Code will apply in determining the stock ownership of any Employee, and stock which such Employee may purchase under all outstanding Purchase Rights and options will be treated as stock owned by such Employee.

 

(d)                                 As specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase Rights only if such Purchase Rights, together with any other rights granted under all Employee

 

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Stock Purchase Plans of the Company and any Related Corporations, do not permit such Eligible Employee’s rights to purchase stock of the Company or any Related Corporation to accrue at a rate which exceeds $25,000 of Fair Market Value of such stock (determined at the time such rights are granted, and which, with respect to the Plan, will be determined as of their respective Offering Dates) for each calendar year in which such rights are outstanding at any time.

 

(e)                                  Officers of the Company and any designated Related Corporation, if they are otherwise Eligible Employees, will be eligible to participate in Offerings under the Plan. Notwithstanding the foregoing, the Board may provide in an Offering that Employees who are highly compensated Employees within the meaning of Section 423(b)(4)(D) of the Code will not be eligible to participate.

 

6.                                      PURCHASE RIGHTS; PURCHASE PRICE.

 

(a)                                 On each Offering Date, each Eligible Employee, pursuant to an Offering made under the Plan, will be granted a Purchase Right to purchase up to that number of shares of Common Stock purchasable either with a percentage or with a maximum dollar amount, as designated by the Board, but in either case not exceeding 15% of such Employee’s earnings (as defined by the Board in each Offering) during the period that begins on the Offering Date (or such later date as the Board determines for a particular Offering) and ends on the date stated in the Offering, which date will be no later than the end of the Offering.

 

(b)                                 The Board will establish one or more Purchase Dates during an Offering on which Purchase Rights granted for that Offering will be exercised and shares of Common Stock will be purchased in accordance with such Offering.

 

(c)                                  In connection with each Offering made under the Plan, the Board may specify (i) a maximum number of shares of Common Stock that may be purchased by any Participant on any Purchase Date during such Offering, (ii) a maximum aggregate number of shares of Common Stock that may be purchased by all Participants pursuant to such Offering and/or (iii) a maximum aggregate number of shares of Common Stock that may be purchased by all Participants on any Purchase Date under the Offering. If the aggregate purchase of shares of Common Stock issuable upon exercise of Purchase Rights granted under the Offering would exceed any such maximum aggregate number, then, in the absence of any Board action otherwise, a pro rata (based on each Participant’s accumulated Contributions) allocation of the shares of Common Stock available will be made in as nearly a uniform manner as will be practicable and equitable.

 

(d)                                 The purchase price of shares of Common Stock acquired pursuant to Purchase Rights will be not less than the lesser of:

 

(i)                                    an amount equal to 85% of the Fair Market Value of the shares of Common Stock on the Offering Date; or

 

(ii)                                an amount equal to 85% of the Fair Market Value of the shares of Common Stock on the applicable Purchase Date.

 

7.                                      PARTICIPATION; WITHDRAWAL; TERMINATION.

 

(a)                                 An Eligible Employee may elect to authorize payroll deductions as the means of making Contributions by completing and delivering to the Company, within the time specified in the Offering, an enrollment form provided by the Company. The enrollment form will specify the amount of Contributions not to exceed the maximum amount specified by the Board. Each Participant’s Contributions will be credited to a bookkeeping account for such Participant under the Plan and will be deposited with the general funds of the Company except where applicable law requires that Contributions be deposited with a third

 

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party. If permitted in the Offering, a Participant may begin such Contributions with the first payroll occurring on or after the Offering Date (or, in the case of a payroll date that occurs after the end of the prior Offering but before the Offering Date of the next new Offering, Contributions from such payroll will be included in the new Offering). If permitted in the Offering, a Participant may thereafter reduce (including to zero) or increase his or her Contributions. If specifically provided in the Offering, in addition to making Contributions by payroll deductions, a Participant may make Contributions through the payment by cash or check prior to a Purchase Date.

 

(b)                                 During an Offering, a Participant may cease making Contributions and withdraw from the Offering by delivering to the Company a withdrawal form provided by the Company. The Company may impose a deadline before a Purchase Date for withdrawing. Upon such withdrawal, such Participant’s Purchase Right in that Offering will immediately terminate and the Company will distribute to such Participant all of his or her accumulated but unused Contributions and such Participant’s Purchase Right in that Offering shall thereupon terminate. A Participant’s withdrawal from that Offering will have no effect upon his or her eligibility to participate in any other Offerings under the Plan, but such Participant will be required to deliver a new enrollment form to participate in subsequent Offerings.

 

(c)                                  Purchase Rights granted pursuant to any Offering under the Plan will terminate immediately if the Participant either (i) is no longer an Employee for any reason or for no reason (subject to any post-employment participation period required by law) or (ii) is otherwise no longer eligible to participate. The Company will distribute to such individual all of his or her accumulated but unused Contributions.

 

(d)                                 During a Participant’s lifetime, Purchase Rights will be exercisable only by such Participant. Purchase Rights are not transferable by a Participant, except by will, by the laws of descent and distribution, or, if permitted by the Company, by a beneficiary designation as described in Section 10.

 

(e)                                  Unless otherwise specified in the Offering, the Company will have no obligation to pay interest on Contributions.

 

8.                                      EXERCISE OF PURCHASE RIGHTS.

 

(a)                                 On each Purchase Date, each Participant’s accumulated Contributions will be applied to the purchase of shares of Common Stock, up to the maximum number of shares of Common Stock permitted by the Plan and the applicable Offering, at the purchase price specified in the Offering. No fractional shares will be issued unless specifically provided for in the Offering.

 

(b)                                 Unless otherwise provided in the Offering, if any amount of accumulated Contributions remains in a Participant’s account after the purchase of shares of Common Stock and such remaining amount is less than the amount required to purchase one share of Common Stock on the final Purchase Date of an Offering, then such remaining amount will be held in such Participant’s account for the purchase of shares of Common Stock under the next Offering under the Plan, unless such Participant withdraws from or is not eligible to participate in such next Offering, in which case such amount will be distributed to such Participant after the final Purchase Date without interest. If the amount of Contributions remaining in a Participant’s account after the purchase of shares of Common Stock is at least equal to the amount required to purchase one (1) whole share of Common Stock on the final Purchase Date of an Offering, then such remaining amount will be distributed in full to such Participant after the final Purchase Date of such Offering without interest.

 

(c)                                  No Purchase Rights may be exercised to any extent unless the shares of Common Stock to be issued upon such exercise under the Plan are covered by an effective registration statement pursuant to

 

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the Securities Act and the Plan is in material compliance with all applicable federal, state, foreign and other securities and other laws applicable to the Plan. If on a Purchase Date the shares of Common Stock are not so registered or the Plan is not in such compliance, no Purchase Rights will be exercised on such Purchase Date, and the Purchase Date will be delayed until the shares of Common Stock are subject to such an effective registration statement and the Plan is in material compliance, except that the Purchase Date will in no event be more than 6 months from the Offering Date. If, on the Purchase Date, as delayed to the maximum extent permissible, the shares of Common Stock are not registered and the Plan is not in material compliance with all applicable laws, no Purchase Rights will be exercised and all accumulated but unused Contributions will be distributed to the Participants without interest.

 

9.                                      COVENANTS OF THE COMPANY.

 

The Company will seek to obtain from each federal, state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Purchase Rights and issue and sell shares of Common Stock thereunder. If, after commercially reasonable efforts, the Company is unable to obtain the authority that counsel for the Company deems necessary for the grant of Purchase Rights or the lawful issuance and sale of Common Stock under the Plan, and at a commercially reasonable cost, the Company will be relieved from any liability for failure to grant Purchase Rights and/or to issue and sell Common Stock upon exercise of such Purchase Rights.

 

10.                               DESIGNATION OF BENEFICIARY.

 

(a)                                 The Company may, but is not obligated to, permit a Participant to submit a form designating a beneficiary who will receive any shares of Common Stock and/or Contributions from the Participant’s account under the Plan if the Participant dies before such shares and/or Contributions are delivered to the Participant. The Company may, but is not obligated to, permit the Participant to change such designation of beneficiary. Any such designation and/or change must be on a form approved by the Company.

 

(b)                                 If a Participant dies, and in the absence of a valid beneficiary designation, the Company will deliver any shares of Common Stock and/or Contributions to the executor or administrator of the estate of the Participant. If no executor or administrator has been appointed (to the knowledge of the Company), the Company, in its sole discretion, may deliver such shares of Common Stock and/or Contributions to the Participant’s spouse, dependents or relatives, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

 

11.                               ADJUSTMENTS UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS.

 

(a)                                 In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities by which the share reserve is to increase automatically each year pursuant to Section 3(a), (iii) the class(es) and number of securities subject to, and the purchase price applicable to outstanding Offerings and Purchase Rights, and (iv) the class(es) and number of securities that are the subject of the purchase limits under each ongoing Offering. The Board will make these adjustments, and its determination will be final, binding and conclusive.

 

(b)                                 In the event of a Corporate Transaction, then: (i) any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue outstanding Purchase Rights or may substitute similar rights (including a right to acquire the same consideration paid to the stockholders in the Corporate Transaction) for outstanding Purchase Rights, or (ii) if any surviving or acquiring corporation (or its parent company) does not assume or continue such

 

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Purchase Rights or does not substitute similar rights for such Purchase Rights, then the Participants’ accumulated Contributions will be used to purchase shares of Common Stock within ten business days prior to the Corporate Transaction under the outstanding Purchase Rights, and the Purchase Rights will terminate immediately after such purchase.

 

12.                               AMENDMENT, TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)                                 The Board may amend the Plan at any time in any respect the Board deems necessary or advisable. However, except as provided in Section 11(a) relating to Capitalization Adjustments, stockholder approval will be required for any amendment of the Plan for which stockholder approval is required by applicable law or listing requirements.

 

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

 

(c)                                  Any benefits, privileges, entitlements and obligations under any outstanding Purchase Rights granted before an amendment, suspension or termination of the Plan will not be materially impaired by any such amendment, suspension or termination except (i) with the consent of the person to whom such Purchase Rights were granted, (ii) as necessary to comply with any laws, listing requirements, or governmental regulations (including, without limitation, the provisions of Section 423 of the Code and the regulations and other interpretive guidance issued thereunder relating to Employee Stock Purchase Plans) including without limitation any such regulations or other guidance that may be issued or amended after the date the Plan is adopted by the Board, or (iii) as necessary to obtain or maintain favorable tax, listing, or regulatory treatment. To be clear, the Board may amend outstanding Purchase Rights without a Participant’s consent if such amendment is necessary to ensure that the Purchase Right and/or the Plan complies with the requirements of Section 423 of the Code.

 

Notwithstanding anything in the Plan or any Offering Document to the contrary, the Board will be entitled to: (i) establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars; (ii) permit Contributions in excess of the amount designated by a Participant in order to adjust for mistakes in the Company’s processing of properly completed Contribution elections; (iii) establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Contributions; (iv) amend any outstanding Purchase Rights or clarify any ambiguities regarding the terms of any Offering to enable the Purchase Rights to qualify under and/or comply with Section 423 of the Code; and (v) establish other limitations or procedures as the Board determines in its sole discretion advisable that are consistent with the Plan. The actions of the Board pursuant to this paragraph will not be considered to alter or impair any Purchase Rights granted under an Offering as they are part of the initial terms of each Offering and the Purchase Rights granted under each Offering.

 

13.                               EFFECTIVE DATE OF PLAN.

 

The Plan will become effective immediately prior to and contingent upon the IPO Date. No Purchase Rights will be exercised unless and until the Plan has been approved by the stockholders of the Company, which approval must be within 12 months before or after the date the Plan is adopted (or if required under Section 12(a) above, materially amended) by the Board.

 

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14.                               MISCELLANEOUS PROVISIONS.

 

(a)                                 Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights will constitute general funds of the Company.

 

(b)                                 A Participant will not be deemed to be the holder of, or to have any of the rights of a holder with respect to, shares of Common Stock subject to Purchase Rights unless and until the Participant’s shares of Common Stock acquired upon exercise of Purchase Rights are recorded in the books of the Company (or its transfer agent).

 

(c)                                  The Plan and Offering do not constitute an employment contract. Nothing in the Plan or in the Offering will in any way alter the at will nature of a Participant’s employment or be deemed to create in any way whatsoever any obligation on the part of any Participant to continue in the employ of the Company or a Related Corporation, or on the part of the Company or a Related Corporation to continue the employment of a Participant.

 

(d)                                 The provisions of the Plan will be governed by the laws of the State of Delaware without resort to that state’s conflicts of laws rules.

 

15.                               DEFINITIONS.

 

As used in the Plan, the following definitions will apply to the capitalized terms indicated below:

 

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

 

(b)                                 “Capital Stock” means each and every class of common stock of the Company, regardless of the number of votes per share.

 

(c)                                  “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Purchase Right after the date the Plan is adopted by the Board without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other similar equity restructuring transaction, as that term is used in Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.

 

(d)                                 “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

 

(e)                                  “Committee” means a committee of one or more members of the Board to whom authority has been delegated by the Board in accordance with Section 2(c).

 

(f)                                   “Common Stock” means, as of the IPO Date, the common stock of the Company.

 

(g)                                 “Company” means Applied Therapeutics, Inc., a Delaware corporation.

 

(h)                                 “Contributions” means the payroll deductions and other additional payments specifically provided for in the Offering that a Participant contributes to fund the exercise of a Purchase Right. A Participant may make additional payments into his or her account if specifically provided for in the

 

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Offering, and then only if the Participant has not already had the maximum permitted amount withheld during the Offering through payroll deductions.

 

(i)                                    “Corporate Transaction” means the consummation, 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 more than 50% of the outstanding securities of the Company;

 

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

 

(iv)                             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.

 

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

 

(k)                                 “Eligible Employee” means an Employee who meets the requirements set forth in the document(s) governing the Offering for eligibility to participate in the Offering, provided that such Employee also meets the requirements for eligibility to participate set forth in the Plan.

 

(l)                                    “Employee” means any person, including an Officer or Director, who is “employed” for purposes of Section 423(b)(4) of the Code by the Company or a Related Corporation. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.

 

(m)                             “Employee Stock Purchase Plan” means a plan that grants Purchase Rights intended to be options issued under an “employee stock purchase plan,” as that term is defined in Section 423(b) of the Code.

 

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

 

(o)                                 “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 any established market, the Fair Market Value of a share of Common Stock will be, unless otherwise determined by the Board, the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in such source as the Board deems reliable. Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the closing sales price 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 will be determined by the Board in good faith in compliance with applicable laws and in a manner that complies with Sections 409A of the Code.

 

(iii)                            Notwithstanding the foregoing, for any Offering that commences on the IPO Date, the Fair Market Value of the shares of Common Stock on the Offering Date will be the price per share at which the shares are first sold to the public in the Company’s initial public offering as specified in the final prospectus for that initial public offering.

 

(p)                                 “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.

 

(q)                                 “Offering” means the grant to Eligible Employees of Purchase Rights, with the exercise of those Purchase Rights automatically occurring at the end of one or more Purchase Periods. The terms and conditions of an Offering will generally be set forth in the “Offering Document” approved by the Board for that Offering.

 

(r)                                  “Offering Date” means a date selected by the Board for an Offering to commence.

 

(s)                                   “Officer” means a person who is an officer of the Company or a Related Corporation within the meaning of Section 16 of the Exchange Act.

 

(t)                                    “Participant” means an Eligible Employee who holds an outstanding Purchase Right.

 

(u)                                 “Plan” means this Applied Therapeutics, Inc. 2019 Employee Stock Purchase Plan.

 

(v)                                 “Purchase Date” means one or more dates during an Offering selected by the Board on which Purchase Rights will be exercised and on which purchases of shares of Common Stock will be carried out in accordance with such Offering.

 

(w)                               “Purchase Period” means a period of time specified within an Offering, generally beginning on the Offering Date or on the first Trading Day following a Purchase Date, and ending on a Purchase Date. An Offering may consist of one or more Purchase Periods.

 

(x)                                 “Purchase Right” means an option to purchase shares of Common Stock granted pursuant to the Plan.

 

(y)                                 “Related Corporation” means any “parent corporation” or “subsidiary corporation” of the Company whether now or subsequently established, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.

 

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

 

(aa)                          “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 will 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, limited liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%). For purposes

 

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of the foregoing clause (i), the Company will be deemed to “Own” or have “Owned” such securities if the Company, 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.

 

(bb)                          “Trading Day” means any day on which the exchange(s) or market(s) on which shares of Common Stock are listed, including but not limited to the NYSE, Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or any successors thereto, is open for trading.

 

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