Document:

Exhibit 4.3

 

THIS WARRANT AND THE UNITS 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 AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

WARRANT TO PURCHASE LIMITED LIABILITY COMPANY INTERESTS

 

Company: Morphic Rock Holding, LLC, a Delaware limited liability company

Number of Units: As set forth in Paragraph A below

Type/Series of Units: Preferred Units

Warrant Price: $0.75286 per Unit, subject to adjustment

Issue Date: March 31, 2016

Expiration Date: March 30, 2026       See also Section 5.1(b).

Credit Facility:  This Warrant to Purchase Limited Liability Company Interests (“Warrant”) is issued in connection with that certain Loan and Security Agreement of even date herewith among Silicon Valley Bank, the Company and Morphic Rock Therapeutic, Inc. (as amended and/or modified and in effect from time to time, the “Loan Agreement”).

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK (together with any successor or permitted assignee or transferee of this Warrant or of any units issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and non-assessable units of limited liability company interest of the Class (as defined below) of the above-named company (the “Company”) as determined pursuant to Paragraph A below, at the above-stated Warrant Price per Unit, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.  Reference is made to Section 5.4 of this Warrant whereby Silicon Valley Bank shall transfer this Warrant to its parent company, SVB Financial Group.

 

The type and series of limited liability company interests or units for which this Warrant shall be exercisable (as may be adjusted from time to time pursuant to the provisions of this Warrant, the “Class”) shall be Preferred Units as defined in, and having the relative rights, powers, preferences and privileges as set forth in, the Company’s Amended and Restated Operating Agreement dated as of June 10, 2015, as amended and/or restated and in effect from time to time (the “Operating Agreement”).  As used herein, “units” refers generally to limited liability company interests in the Company, whether such interests be styled as units, percentage interests, shares or otherwise in the Operating Agreement.

 

A.                                    Number of Units.   Upon the making of each Equipment Advance (as defined in the Loan Agreement) to Borrower (as defined in the Loan Agreement), this Warrant automatically shall become exercisable for such number of units of the Class (cumulatively, and as may be adjusted from time to time in accordance with the provisions of this Warrant, the “Units”) as shall equal (i)(a) 0.03, multiplied by (b) the amount of such Equipment Advance, divided by (ii) the Warrant Price in effect on and as of the date of such Equipment Advance, subject to adjustment thereafter from time to time in accordance with the provisions of this Warrant.

 

 

SECTION 1. EXERCISE.

 

1.1                               Method of Exercise.  Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Units being purchased.

 

1.2                               Cashless Exercise.  On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Units equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised.  Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Units as are computed using the following formula:

 

X = Y(A-B)/A

 

where:

 

X =                             the number of Units to be issued to the Holder;

 

Y =                             the number of Units with respect to which this Warrant is being exercised (inclusive of the Units surrendered to the Company in payment of the aggregate Warrant Price);

 

A =                             the Fair Market Value (as determined pursuant to Section 1.3 below) of one Unit; and

 

B =                             the Warrant Price.

 

1.3                               Fair Market Value.  If the Company’s common or ordinary units are then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”) and the Class is common or ordinary units, the fair market value of a Unit shall be the closing price or last sale price of a common or ordinary unit reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company.  If the Company’s common or ordinary units are then traded in a Trading Market and the Class is a series of convertible preferred units or other units convertible into common or ordinary units, the fair market value of a Unit shall be the closing price or last sale price of a common or ordinary unit reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company multiplied by the number of common or ordinary units into which a unit of the Class is then convertible.  If the Company’s common or ordinary units are not then traded in a Trading Market, the Manager or Managers of the Company shall determine the fair market value of a Unit in its, his or their reasonable good faith judgment.

 

1.4                               Delivery of Certificate and New Warrant.  Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, if units of the Class are then certificated by the Company,, the Company shall deliver to Holder a certificate representing the Units issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Units not so acquired.  If units of the Class are not

 

2

 

then certificated by the Company, the Company will deliver to Holder such evidence of the issuance of such Units to Holder as required or permitted under the Operating Agreement or, if there be none, such evidence as Holder may reasonably request.

 

1.5                               Replacement of Warrant.  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, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

 

1.6                               Treatment of Warrant Upon Acquisition of Company.

 

(a)                                 Acquisition.  For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company; (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the members and other holders of units of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power (even if such voting power be limited solely to such matters as required by applicable law) immediately after such merger, consolidation or reorganization (or, if such Company members and other holders of units beneficially own a majority of the outstanding voting power (even if such voting power be limited solely to such matters as required by applicable law) of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the members and/or other holders of units of the Company of units representing at least a majority of the Company’s then-total outstanding combined voting power (even if such voting power be limited solely to such matters as required by applicable law).

 

(b)                                 Treatment of Warrant at Acquisition.  In the event of an Acquisition in which the consideration to be received by the Company’s members and other holders of units consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), and the fair market value of one Unit as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Units, then this Warrant shall automatically be deemed to be Cashless Exercised pursuant to Section 1.2 above as to all Units effective immediately prior to and contingent upon the consummation of a Cash/Public Acquisition.  In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof and the Company shall promptly notify the Holder of the number of Units (or such other securities) issued upon exercise.  In the event of a Cash/Public Acquisition where the fair market value of one Unit as determined in accordance with Section 1.3 above would be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.

 

(c)                                  Upon the closing of any Acquisition other than a Cash/Public Acquisition, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for

 

3

 

the Units issuable upon exercise of the unexercised portion of this Warrant as if such Units were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

 

(d)                                 As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in a Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition..

 

SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 

2.1                               Unit Dividends, Splits, Etc.  If the Company declares or pays a dividend or distribution on the outstanding units of the Class payable in additional units of the Class or other units, securities or property (other than cash), then upon exercise of this Warrant, for each Unit acquired, Holder shall receive, without additional cost to Holder, the total number and kind of units, securities and property which Holder would have received had Holder owned the Units of record as of the date the dividend or distribution occurred.  If the Company subdivides the outstanding units of the Class by reclassification or otherwise into a greater number of units, the number of Units purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased.  If the outstanding units of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of units, the Warrant Price shall be proportionately increased and the number of Units shall be proportionately decreased.

 

2.2                               Reclassification, Exchange, Combinations or Substitution.  Upon any event whereby all of the outstanding units of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Units been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events.

 

4

 

2.3                               Conversion to Corporation.  If the Company converts to a corporation pursuant to Section 10.06(b) of the Operating Agreement, including, without limitation, in connection with the Company’s initial, underwritten public offering pursuant to an effective registration statement under the Act (the “IPO”), then from and after the date of such conversion, this Warrant shall be exercisable for such number and class of equity securities into which the Units would have been converted had the Units been outstanding on the date of such conversion, and the Warrant Price shall equal the Warrant Price in effect as of immediately prior to such conversion divided by the number of securities into which one Unit would have been converted, all subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.

 

2.4                               No Fractional Unit.  No fractional Unit shall be issuable upon exercise of this Warrant and the number of Units to be issued shall be rounded down to the nearest whole Unit.  If a fractional Unit interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Unit interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Unit, less (ii) the then-effective Warrant Price.

 

2.5                               Notice/Certificate as to Adjustments.  Upon each adjustment of the Warrant Price, Class and/or number of Units, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Units and facts upon which such adjustment is based.  The Company shall, upon written request from Holder, furnish Holder with a certificate of its Manager, including computations of such adjustment and the Warrant Price, Class and number of Units in effect upon the date of such adjustment.

 

SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

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

 

(a)                                 The initial Warrant Price referenced on the first page of this Warrant is not greater than the price per unit at which units of the Class were last sold and issued prior to the Issue Date hereof in an arms-length transaction in which at least $500,000 of such units were sold.

 

(b)                                 All Units which may be issued upon the exercise of this Warrant, and all units and/or other securities, if any, issuable upon conversion of the Units, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein, under the Operating Agreement or under applicable federal and state securities laws.  The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued units such number of units of the Class, common or ordinary units and other securities as will be sufficient to permit the exercise in full of this Warrant and the conversion of the Units into common or ordinary units or such other securities, if any.

 

(c)                                  The Company’s capitalization table attached hereto as Schedule 1 is true and complete, in all material respects, as of the Issue Date.

 

3.2                               Notice of Certain Events.  If the Company proposes at any time to:

 

(a) declare any dividend or distribution upon the outstanding units of the Class or, if units of the Class are then convertible into common or ordinary units, such common or ordinary units, whether in cash, property, units, or other securities and whether or not a regular or periodic cash dividend or distribution (other than a distribution of cash upon the outstanding units of the Class and/or common or ordinary units made solely for the purpose of permitting the holders thereof to satisfy their respective federal and state tax obligations in respect of the taxable income of the Company);

 

5

 

(b) offer for subscription or sale pro rata to the holders of the outstanding units of the Class any additional Company units of any type, class, series or other designation (other than pursuant to contractual pre-emptive rights);

 

(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding units of the Class;

 

(d) effect an Acquisition or to liquidate, dissolve or wind up; or

 

(e) effect an IPO;

 

then, in connection with each such event, the Company shall give Holder:

 

(1) in respect of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur of (i) the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding units of the Class will be entitled thereto) or for determining rights to vote, if any, or (ii) the closing or effective date of such event;

 

(2) in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding units of the Class will be entitled to exchange their units for the securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such event giving rise to the notice); and

 

(3) with respect to the IPO, at least seven (7) Business Days prior written notice of the date on which the Company proposes to file its registration statement in connection therewith.

 

The Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements.

 

3.3                                      Tax Treatment of Warrant.

 

(a)                                 Application of Noncompensatory Option Treasury Regulations.  The parties hereto acknowledge and agree that at the time of the execution of this Warrant, the Company and Holder intend that the Warrant be treated as a “noncompensatory option” within the meaning of Treasury Regulations Section 1.721-2(f).  Therefore, unless and until this Warrant is exercised in accordance with its terms, or there is superseding authority under which the Company’s tax counsel determines in writing (and a copy thereof provided to Holder) such treatment is not appropriate, or a Final Determination (as defined below) to the contrary has been made, for federal and applicable state and local income tax purposes, the parties hereto agree to (i) treat the issuance of the Warrant as an open transaction and not as the issuance of a partnership or membership interest in the Company, (ii) treat each Holder, with respect to ownership of the Warrant, as the holder of a warrant or option exercisable for limited liability company units or interests and not as a partner or a Member of the Company, and (iii) consistent with the regulations promulgated by the Treasury Department (“Treasury Regulations”) under the Internal Revenue Code of 1986, as amended, or any successor statute (the “Code”) regarding noncompensatory partnership options, not allocate any profits or losses or other items of income, gain,

 

6

 

deduction, loss or credit hereunder to a Holder of this Warrant with respect to this Warrant or the limited liability company interests issuable on exercise hereof prior to the exercise of this Warrant.  The parties shall file all tax returns and information reports in a manner consistent with the foregoing, except to the extent otherwise required by the adoption of any superseding authority under which the Company’s tax counsel determines in writing (and a copy thereof provided to Holder) such treatment is not appropriate or a Final Determination.  To the extent the Company, after consultation with its tax counsel, determines that it is required to make any disclosure regarding the treatment of this Warrant described above under Code Section 6662 or otherwise on its tax returns or other tax filings, the Company shall promptly notify Holder and, prior to filing, give Holder and its agents and representatives an opportunity to review and comment on any such disclosure.  For purposes of this Section 3.3, “Final Determination” means, with respect to any issue, (x) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final and not subject to further appeal, (y) a closing agreement entered into under Code Section 7121 or any other binding settlement agreement entered into in connection with or in contemplation of an administrative or judicial proceeding, or (z) the completion of the highest level of administrative proceedings if a judicial contest is not or is no longer available.

 

(b)                                 Exercise of Warrant.  Upon exercise of this Warrant, the parties agree to treat the exercise of this Warrant consistently with applicable Treasury Regulations, including, without limitation, to the extent allowed thereunder (i) establishing an initial Capital Account (as defined in the Operating Agreement) for Holder equal to the consideration paid or deemed paid to the Company for the issuance of this Warrant plus the fair market value of any property contributed to the Company upon exercise of this Warrant, if any, (ii) revaluing all Company assets and property immediately following exercise of this Warrant and allocating built-in gain or loss in the Company’s assets and property to Holder and then to the historic Members as contemplated under the Treasury Regulations and, to the extent such allocation is insufficient to adjust Holder’s Capital Account in accordance with its right to share in capital, shifting capital between Holder and the historic Members as contemplated under the Treasury Regulations, and (iii) making associated Code Section 704(c) and “corrective allocations” as described in the Treasury Regulations.

 

(c)                                  Effect on Tax Distributions.  For purposes of determining the amount of any tax distribution made under the Operating Agreement to an exercising Holder who becomes a Member, any Code Section 704(c) allocations or “corrective allocations” made as contemplated in Section 3.3(b) to such Member shall be treated as taxable income allocated to such Member by the Company, a tax distribution shall be made with respect to such allocations, and any and all tax distributions to an exercising Holder (whether made pursuant to this Section 3.3(c) or the Operating Agreement) shall be computed in accordance with the Operating Agreement.  If, pursuant to a Final Determination or otherwise, Holder is allocated taxable income with respect to this Warrant in respect of any period prior to exercise hereof and such Holder has not otherwise received a tax distribution under the Operating Agreement with respect to such amounts, and/or if Holder is with respect to any period prior to exercise hereof treated by federal or state tax authorities as a Member and the Units issuable upon exercise hereof treated as outstanding pursuant to Treasury Regulation 1.761-3 and/or any corresponding applicable state tax regulation, then promptly upon making such required allocation of taxable income to Holder or receipt of Holder’s written notice of such Final Determination, as applicable, the Company shall indemnify Holder from and against, and shall either make a payment to all appropriate taxing authorities (if required) in satisfaction of, or shall make a distribution of cash to Holder to cover, such Holder’s aggregate federal and state tax liabilities in respect of such amount of taxable income or treatment (which shall include, without limitation, (x) all interest, penalties and fines thereon, (y) and all penalties, fines and interest thereon, if any, in respect of Holder’s liability for failure

 

7

 

to file tax returns in all applicable jurisdictions with respect to such periods for which such taxing authorities treat Holder as the owner of the Units, and (z) all amounts necessary for Holder to satisfy its aggregate federal and state tax liabilities in respect of such Company payments or distributions to Holder), and such payment or distribution shall be made prior to making any other subsequent distributions under the Operating Agreement.  If Holder is allowed a refund or credit of taxes actually paid by the Company or with respect to which the Company made a tax distribution to Holder pursuant to this Section 3.3(c), (i) Holder shall claim such overpayment as a refund (rather than as a credit) to the extent permitted under applicable laws and (ii) such refund shall be for the account of the Company and shall be paid over to the Company, within thirty (30) days of receipt of such amount.

 

(d)                                 Survival.  The provisions of this Section 3.3 shall survive (i) the exercise of this Warrant and the sale or other disposition by Holder of the Units, and (ii) the expiration or earlier termination of this Warrant.

 

SECTION 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 Holder are being acquired for investment for 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 it has not been formed for the specific purpose of acquiring this Warrant or the Units.

 

4.2                                      Disclosure of Information.  Holder is aware of the Company’s business affairs and financial condition and 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.  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 Holder or to which Holder has access.

 

4.3                                      Investment Experience.  Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk.  Holder has experience as an investor in securities of companies in the development stage and acknowledges that 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 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 Holder to be aware of the character, business acumen and financial circumstances of such persons.

 

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

 

4.5                                      The Act.  Holder understands that this Warrant and the Units issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom,

 

8

 

which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein.  Holder understands that this Warrant and the Units issued upon any exercise 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.  Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

4.6                                       Rights as Member; Operating Agreement.  Without limiting any provision of this Warrant, Holder agrees that, as a Holder of this Warrant, it will not be a Member (as defined in the Operating Agreement) and will have none of the rights or obligations of a Member unless and until the exercise of this Warrant, and then only with respect to the Units issued upon such exercise.  Upon exercise of this Warrant, the Company agrees that Holder shall automatically and without further action by any person be admitted as a Member (as defined in the Operating Agreement) under the Operating Agreement with respect to the Units issued upon such exercise, and Holder and such Units shall, subject to the provisions of Section 3.3 above, thereupon be subject to and bound by the Operating Agreement.  Holder shall execute and deliver a counterpart signature page, joinder agreement, instrument of accession or similar instrument to the Operating Agreement upon the Company’s request following exercise hereof.

 

SECTION 5. MISCELLANEOUS.

 

5.1                               Term; Automatic Cashless Exercise Upon Expiration.

 

(a)                                 Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Pacific time, on the Expiration Date and shall be void thereafter.

 

(b)                                 Automatic Cashless Exercise upon Expiration.  In the event that, upon the Expiration Date, the fair market value of one Unit (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 exercised pursuant to Section 1.2 above as to all Units (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Units (or such other securities) issued upon such exercise to Holder.

 

5.2                               Legends.                                                Each certificate evidencing Units (and each certificate evidencing securities issued upon conversion of any Units, if any) shall be imprinted with a legend in substantially the following form:

 

THE UNITS EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE LIMITED LIABILITY COMPANY INTERESTS ISSUED BY THE ISSUER TO SILICON VALLEY BANK DATED MARCH 31, 2016, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

9

 

5.3                               Compliance with Securities Laws on Transfer.  This Warrant and the Units issued upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Units, if any) may not be transferred or assigned in whole or in part except in 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).  The Company shall not require Holder to provide an opinion of counsel if the transfer is to SVB Financial Group (Silicon Valley Bank’s parent company) or any other affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act.  Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.

 

5.4                               Transfer Procedure.  After receipt by Silicon Valley Bank of the executed Warrant, Silicon Valley Bank will transfer all of this Warrant to its parent company, SVB Financial Group.  By its acceptance of this Warrant, SVB Financial Group hereby makes to the Company each of the representations and warranties set forth in Section 4 hereof and agrees to be bound by all of the terms and conditions of this Warrant as if the original Holder hereof.  Subject to the provisions of Section 5.3 and upon providing the Company with written notice, SVB Financial Group and any subsequent Holder may transfer all or part of this Warrant or the Units issued upon exercise of this Warrant (or the securities issued upon conversion of the Units, 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 and/or Units (and/or securities issued upon conversion of the Units, if any) 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); and provided further, that any subsequent transferee other than SVB Financial Group shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant; and provided, further, that any transfer of Units (or of securities issued upon conversion of the Units, if any), shall be subject to the restrictions and other provisions of the Operating Agreement.  Notwithstanding any contrary provision herein, at all times prior to the IPO, Holder may not, without the Company’s prior written consent, transfer this Warrant or any portion hereof, or any Units issued upon any exercise hereof, or any units or other securities issued upon any conversion of any Units issued upon any exercise hereof, to any person or entity who directly competes with the Company, except in connection with an Acquisition of the Company by such a direct competitor.

 

5.5                               Notices.  All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5.  All notices to 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, HC 215

Santa Clara, CA 95054

 

10

 

Telephone: (408) 654-7400

Facsimile:  (408) 988-8317

Email address:  derivatives@svb.com

 

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

 

Morphic Rock Holding, LLC

Attn: Chief Financial Officer

35 Gatehouse Drive,

Suite A2

Waltham, MA 02451

Telephone:

Facsimile:

Email:

 

With a copy (which shall not constitute notice) to:

 

Foley Hoag LLP

Attn: Arlene L. Bender, Esq.

155 Seaport Boulevard

Boston, MA 02210-2600

Telephone: (617) 832-1000

Facsimile: (617) 832-7000

Email: abender@foleyhoag.com

 

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

 

5.7                               Attorneys’ 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 attorneys’ fees.

 

5.8                               Counterparts; Facsimile/Electronic Signatures.  This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement.  Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

 

5.9                               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.

 

5.10                        Headings.  The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

5.11                        Business Days.  “Business Day” is any day that is not a Saturday, Sunday or a day on which Silicon Valley Bank is closed.

 

11

 

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Limited Liability Company Interests to be executed by their duly authorized representatives effective as of the Issue Date written above.

 

 

	
“COMPANY”
    	
 
    
	
 
    	
 
    
	
MORPHIC ROCK HOLDING,   LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Robert E. Farrell   Jr.
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Robert E. Farrell Jr.
    	
 
    
	
 
    	
(Print)
    	
 
    
	
Title:
    	
VP Finance + Ops,   Treasurer + Assistant Secretary
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
“HOLDER”
    	
 
    
	
 
    	
 
    
	
SILICON   VALLEY BANK
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Ryan Roller
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
Ryan Roller
    	
 
    
	
 
    	
(Print)
    	
 
    
	
Title:
    	
Vice President
    	
 
    

 

 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.                                      The undersigned Holder hereby exercises its right purchase             units of the [CLASS OR OTHER DESIGNATION] Units of                     (the “Company”) in accordance with the attached Warrant To Purchase Limited Liability Company Interests, and tenders payment of the aggregate Warrant Price for such units as follows:

 

[    ]                                                                            check in the amount of $         payable to order of the Company enclosed herewith

 

[    ]                                                                            Wire transfer of immediately available funds to the Company’s account

 

[    ]                                                                            Cashless Exercise pursuant to Section 1.2 of the Warrant

 

[    ]                                                                            Other [Describe]

 

2.                                      If units of the above-stated Class are currently certificated by the Company, please issue a certificate or certificates representing the Units in the name specified below:

 

	
 
    	
 
    
	
 
    	
Holder’s Name
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Address)
    

 

3.   By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Limited Liability Company Interests as of the date hereof.

 

 

	
 
    	
HOLDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(Date):
    	
 
    

 

Appendix I

 

SCHEDULE 1

 

Company Capitalization Table

 

See attachedExhibit 10.2

 

2018 Stock Incentive Plan

 

1.                                      Purpose.

 

The purpose of this plan (the “Plan”) is to secure for Morphic Holding, Inc., a Delaware corporation (the “Company”) and its shareholders the benefits arising from capital stock ownership by employees, officers and directors of, and consultants or advisors to, the Company and its parent and subsidiary corporations who are expected to contribute to the Company’s future growth and success.  Under the Plan recipients may be awarded both (i) Options (as defined in Section 2.1) to purchase the Company’s common stock, par value $0.0001 (“Common Stock”) and (ii) shares of Common Stock (“Restricted Stock Awards”).  Except where the context otherwise requires, the term “Company” shall include any parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the “Code”).  Those provisions of the Plan which make express reference to Section 422 of the Code shall apply only to Incentive Stock Options (as that term is defined below).

 

2.                                      Types of Awards and Administration.

 

2.1                               Options.  Options granted pursuant to the Plan (“Options”) shall be authorized by action of the Board of Directors of the Company (the “Board” or “Board of Directors”) and may be either incentive stock options (“Incentive Stock Options”) meeting the requirements of Section 422 of the Code or non-statutory Options which are not intended to meet the requirements of Section 422.  All Options when granted are intended to be non-statutory Options, unless the applicable Option Agreement (as defined in Section 5.1) explicitly states that the Option is intended to be an Incentive Stock Option.  The vesting of Options may be conditioned upon the completion of a specified period of employment with the Company and/or such other conditions or events as the Board may determine.  The Board may also provide that Options are immediately exercisable subject to certain repurchase rights in the Company dependent upon the continued employment of the optionee and/or such other conditions or events as the Board may determine.

 

2.1.1                     Incentive Stock Options.  Incentive Stock Options may only be granted to employees of the Company.  For so long as the Code shall so provide, Options granted to any employee under the Plan (and any other incentive stock option plans of the Company) which are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to the extent that such Options, in the aggregate, become exercisable for the first time in any one calendar year for shares of Common Stock with an aggregate fair market value (determined as of the respective date or dates of grant) of more than $100,000.  If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a non-statutory Option appropriately granted under the Plan provided that such Option (or portion thereof) otherwise meets the Plan’s requirements relating to non-statutory Options.

 

2.2                               Restricted Stock Awards.  The Board in its discretion may grant Restricted Stock Awards, entitling the recipient to acquire, for a purchase price determined by

 

 

the Board, shares of Common Stock subject to such restrictions and conditions as the Board may determine at the time of grant (“Restricted Stock”), including continued employment and/or achievement of pre-established performance goals and objectives.

 

2.3                               Administration.  The Plan shall be administered by the Board, whose construction and interpretation of the terms and provisions of the Plan shall be final and conclusive.  The Board may in its sole discretion authorize issuance of Restricted Stock, the grant of Options and the issuance of shares upon exercise of such Options as provided in the Plan.  The Board shall have authority, subject to the express provisions of the Plan, to construe Restricted Stock Agreements, Option Agreements and the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of Restricted Stock Agreements and Option Agreements, and to make all other determinations in the judgment of the Board necessary or desirable for the administration of the Plan.  The Board may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Restricted Stock Agreement or Option Agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency.  No director or person acting pursuant to authority delegated by the Board shall be liable for any action or determination under the Plan made in good faith.  The Board may, to the full extent permitted by or consistent with applicable laws or regulations, delegate any or all of its powers under the Plan to a committee (the “Committee”) appointed by the Board, and if the Committee is so appointed, to the extent of such delegation, all references to the Board in the Plan shall mean and relate to such Committee, other than references to the Board in this sentence and in Section 18 (as to amendment or termination of the Plan) and Section 22.

 

3.                                      Eligibility.

 

Options may be granted, and Restricted Stock may be issued, to persons who are, at the time of such grant or issuance, employees, officers or directors of, or consultants or advisors to, the Company; provided, that the class of persons to whom Incentive Stock Options may be granted shall be limited to employees of the Company.

 

3.1                               10% Shareholder.  If any employee to whom an Incentive Stock Option is to be granted is, at the time of the grant of such Option, the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (after taking into account the attribution of stock ownership rules of Section 424(d) of the Code) (a “Greater Than 10% Shareholder”), any Incentive Stock Option granted to such individual must:  (i) have an exercise price per share of not less than 110% of the fair market value of one share of Common Stock at the time of grant; and (ii) expire by its terms not more than five years from the date of grant.

 

4.                                      Stock Subject to Plan.

 

Subject to adjustment as provided in Section 14.2 below, the maximum number of shares of Common Stock which may be issued under the Plan is 13,045,265 shares plus an additional number of shares equal to the number of shares of Common Stock subject to awards granted prior to the effectiveness of this Plan that are forfeited to or otherwise repurchased by the Company, up to a maximum of 9,222,634 shares, all of which may be issued with respect to

 

2

 

Incentive Stock Options.  If an Option shall expire or terminate for any reason without having been exercised in full, the unpurchased shares subject to such Option shall again be available for subsequent Option grants or Restricted Stock Awards under the Plan.  If shares of Restricted Stock shall be forfeited to, or otherwise repurchased by, the Company pursuant to a Restricted Stock Agreement, such repurchased shares shall again be available for subsequent Option grants or Restricted Stock Awards under the Plan.  If shares otherwise issuable upon exercise of an Option are withheld by the Company in payment of the exercise price of an Option or to satisfy tax withholding obligations with respect to such exercise, such withheld shares shall again be available for subsequent Option grants or Restricted Stock Awards under the Plan.

 

5.                                      Forms of Restricted Stock Agreements and Option Agreements.

 

5.1                               Option Agreement.  Each recipient of an Option shall execute an option agreement (“Option Agreement”) in such form not inconsistent with the Plan as may be approved by the Board of Directors.  Such Option Agreements may differ among recipients.

 

5.2                               Restricted Stock Agreement.  Each recipient of a grant of Restricted Stock shall execute an agreement (“Restricted Stock Agreement”) in such form not inconsistent with the Plan as may be approved by the Board of Directors.  Such Restricted Stock Agreements may differ among recipients.

 

5.3                               “Lock-Up” Agreement.  Unless the Board specifies otherwise, each Restricted Stock Agreement and Option Agreement shall provide that upon the request of the Company or the managing underwriter(s) of any offering of securities of the Company that is the subject of a registration statement filed under the United States Securities Act of 1933, as amended from time to time (the “Act”), the holder of any Option or the purchaser of any Restricted Stock shall, in connection therewith, agree in writing (in such form as the Company or such managing underwriter(s) shall request) to the general effect that for a period of time (not to exceed 180 days) from the effective date of the registration statement under the Act for such offering, the holder or purchaser will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any shares of the common stock of the Company owned or controlled by him or her.

 

6.                                      Purchase Price.

 

6.1                               General.  The purchase price per share of Restricted Stock and per share of stock deliverable upon the exercise of an Option shall be determined by the Board, provided, however, that in the case of any Option, the exercise price shall not be less than 100% of the fair market value of such stock, as determined by the Board, at the time of grant of such Option, or less than 110% of such fair market value in the case of any Incentive Stock Option granted to a Greater Than 10% Shareholder.

 

6.2                               Payment of Purchase Price.  Option Agreements may provide for the payment of the exercise price by delivery of cash or a check to the order of the Company in an amount equal to the exercise price of such Options, or, to the extent provided in the applicable Option Agreement, by one of the following methods:

 

3

 

(i)  with the consent of the Board, by delivery to the Company of shares of Common Stock; such surrendered shares shall have a fair market value equal in amount to the exercise price of the Options being exercised,

 

(ii) with the consent of the Board, a personal recourse note issued by the optionee to the Company in a principal amount equal to such aggregate exercise price and with such other terms, including interest rate and maturity, as the Company may determine in its discretion; provided, however, that the interest rate borne by such note shall not be less than the lowest applicable federal rate, as defined in Section 1274(d) of the Code,

 

(iii) with the consent of the Board, if the class of Common Stock is registered under the Securities Exchange Act of 1934 at such time, subject to rules as may be established by the Board, by delivery to the Company of a properly executed exercise notice along with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price,

 

(iv) with the consent of the Board, by reducing the number of Option shares otherwise issuable to the optionee upon exercise of the Option by a number of shares of Common Stock having a fair market value equal to such aggregate exercise price,

 

(v) with the consent of the Board, by any combination of such methods of payment.

 

The fair market value of any shares of Common Stock or other non-cash consideration which may be delivered upon exercise of an Option shall be determined by the Board of Directors.  Restricted Stock Agreements may provide for the payment of any purchase price in any manner approved by the Board of Directors at the time of authorizing the issuance thereof.

 

7.                                      Option Period.

 

Notwithstanding any other provision of the Plan or any Option Agreement, each Option and all rights thereunder shall expire on the date specified in the applicable Option Agreement, provided that such date shall not be later than ten years after the date on which the Option is granted (or five years in the case of an Incentive Stock Option granted to a Greater Than 10% Shareholder), and in either case, shall be subject to earlier termination as provided in the Plan or Option Agreement.

 

8.                                      Exercise of Options.

 

8.1                               General.  Each Option shall be exercisable either in full or in installments at such time or times and during such period as shall be set forth in the Option Agreement evidencing such Option, subject to the provisions of the Plan.  To the extent not exercised, installments shall accumulate and be exercisable, in whole or in part, at any time after becoming exercisable, but not later than the date the Option expires.

 

4

 

8.2                               Notice of Exercise.  An Option may be exercised by the optionee by delivering to the Company on any business day a written notice specifying the number of shares of Common Stock the optionee then desires to purchase and specifying the address to which the certificates for such shares are to be mailed (the “Notice”), accompanied by payment for such shares.  In addition, the Company may require any individual to whom an Option is granted, as a condition of exercising such Option, to give written assurances (the “Investment Letter”) in a substance and form satisfactory to the Company to the effect that such individual is acquiring the Common Stock subject to the Option for his or her own account for investment and not with a view to the resale or distribution thereof, and to such other effects as the Company deems necessary or advisable in order to comply with any securities law(s).

 

8.3                               Delivery.  As promptly as practicable after receipt of the Notice, the Investment Letter (if required) and payment, the Company shall deliver or cause to be delivered to the optionee certificates for the number of shares with respect to which such Option has been so exercised, issued in the optionee’s name; provided, however, that such delivery shall be deemed effected for all purposes when the Company or a stock transfer agent shall have deposited such certificates in the United States mail, addressed to the optionee, at the address specified in the Notice.

 

9.                                      Transferability of Options.

 

No Option shall be assignable or transferable by the person to whom it is granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and during the life of an optionee, an Option shall be exercisable only by the optionee.  Notwithstanding the foregoing, the Board may, in its discretion, allow for transfer of a non-statutory Option, subject to such terms and conditions as determined by the Board.

 

10.                               Termination of Employment; Disability; Death.  Except as may be otherwise expressly provided in the terms and conditions of the Option Agreement, Options shall terminate on the earliest to occur of:

 

(i)                                     the date of expiration thereof;

 

(ii)                                  90 days after termination of the optionee’s employment with, or provision of services to, the Company by the Company for Cause (as hereinafter defined);

 

(iii)                               90 days after the date of voluntary termination of the optionee’s employment with, or provision of services to, the Company by the optionee (other than for death or permanent disability as defined below); or

 

(iv)                              90days after the date of termination of the optionee’s employment with, or provision of services to, the Company by the Company without Cause (other than for death or permanent disability as defined below).

 

5

 

Until the date on which the Option so expires, the optionee may exercise that portion of his or her Option which is exercisable at the time of termination of the employment or service relationship.

 

An employment or service relationship between the Company and the optionee shall be deemed to exist during any period during which the optionee is employed by or providing services to the Company.  Whether an authorized leave of absence or an absence due to military or government service shall constitute termination of the employment relationship between the Company and the optionee shall be determined by the Board at the time thereof.

 

For purposes of this Section 10, the term “Cause” shall mean (a) any material breach by the optionee of any agreement to which the optionee and the Company are both parties, (b) any act (other than retirement) or omission to act by the optionee which may have a material and adverse effect on the Company’s business or on the optionee’s ability to perform services for the Company, including, without limitation, the commission of any crime (other than minor traffic violations), or (c) any material misconduct or material neglect of duties by the optionee in connection with the business or affairs of the Company.  An optionee’s employment shall be deemed to have been terminated for Cause if the Company determines within thirty (30) days of the termination of employment (whether such termination was voluntary or involuntary) that termination for Cause was warranted.

 

In the event of the permanent and total disability or death of an optionee while in an employment or other relationship with the Company, any Option held by such optionee shall terminate on the earlier of the date of expiration of the Option or 180 days following the date of such disability or death.  After disability or death, the optionee (or in the case of death, his or her executor, administrator or any person or persons to whom this option may be transferred by will or by laws of descent and distribution) shall have the right, at any time prior to such termination of an Option , to exercise the Option to the extent the optionee was entitled to exercise such Option as of the date of his or her disability or death.  An optionee is permanently and totally disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months; permanent and total disability shall be determined in accordance with Section 22(e)(3) of the Code and the regulations issued thereunder.

 

11.                               Rights as a Shareholder.  The holder of an Option shall have no rights as a shareholder with respect to any shares covered by the Option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until the date of issue of a stock certificate to him or her for such shares.  No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.

 

6

 

12.                               Conflict with Other Rights.  Certain recipients of Options or grants of Restricted Stock may be required to enter into that certain Voting Agreement and/or that certain Right of First Refusal and Co-Sale Agreement of the Company, each dated as of December   , 2018 (such agreements, respectively, as the same may be amended from time to time, the “Voting Agreement,” and the “ROFR Agreement”), which agreements contain rights of first refusal in favor of the Company and other terms and conditions.  For so long as the Voting Agreement or ROFR Agreement remain in existence, the terms and conditions of such agreements shall supersede any conflicting provisions contained in this Plan or in any Option Agreement or Restricted Stock Agreement to which a recipient is a party; provided, however, that any other provisions of the Plan and such recipient’s Option Agreement(s) and/or Restricted Stock Agreement(s) shall remain in full force and effect.  If, however, the Voting Agreement or ROFR Agreement shall terminate, any provisions of the Plan or such recipient’s Option Agreement(s) or Restricted Stock Agreement(s) that were previously superseded by either such terminated agreement shall be in full force and effect in accordance with their terms.

 

13.                               Additional Provisions.  The Board of Directors may, in its sole discretion, include additional provisions in Restricted Stock Agreements and Option Agreements, including, without limitation, restrictions on transfer, rights of the Company to repurchase shares of Restricted Stock or shares of Common Stock acquired upon exercise of Options, commitments to pay cash bonuses, to make, arrange for or guaranty loans or to transfer other property to optionees upon exercise of Options, or such other provisions as shall be determined by the Board of Directors; provided that such additional provisions shall not be inconsistent with any other term or condition of the Plan and such additional provisions shall not be such as to cause any Incentive Stock Option to fail to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code.

 

14.                               Acceleration, Extension, Etc.  The Board of Directors may, in its sole discretion, (i) accelerate the date or dates on which all or any particular Option or Options may be exercised or (ii) extend the period or periods of time during which all, or any particular, Option or Options may be exercised.

 

15.                               Adjustment Upon Changes in Capitalization

 

15.1                        No Effect of Options upon Certain Corporate Transactions.  The existence of outstanding Options shall not affect in any way the right or power of the Company to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation, or any issue of Common Stock, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

15.2                        Adjustment Provisions.  If, through or as a result of any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased, decreased or exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional

 

7

 

shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, an appropriate and proportionate adjustment shall be made in (x) the maximum number and kind of shares reserved for issuance under the Plan, (y) the number and kind of shares or other securities subject to any then outstanding Options, and (z) the price for each share or other security subject to any then outstanding Options, so that upon exercise of such Options, in lieu of the shares of Common Stock for which such Options were then exercisable, the relevant optionee shall be entitled to receive, for the same aggregate consideration, the same total number and kind of shares or other securities, cash or property that the owner of an equal number of outstanding shares of Common Stock immediately prior to the event requiring adjustment would own as a result of the event.  If any such event shall occur, appropriate adjustment shall also be made in the application of the provisions of this Section 14 and Section 15 with respect to Options and the rights of optionees after the event so that the provisions of such Sections shall be applicable after the event and be as nearly equivalent as practicable in operation after the event as they were before the event.

 

15.3                        No Adjustment in Certain Cases.  Except as hereinbefore expressly provided, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock then subject to outstanding options.

 

15.4                        Board Authority to Make Adjustments.  Any adjustments under this Section 14 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive.  No fractional shares will be issued under the Plan on account of any such adjustments.

 

16.                               Effect of Certain Transactions

 

16.1                        General.  Except as provided in any Option Agreement or Restricted Stock Agreement to the contrary, if the Company is merged with or into or consolidated with another corporation under circumstances where the stockholders of the Company immediately prior to such merger or consolidation do not own after such merger or consolidation shares representing at least fifty percent (50%) of the voting power of the Company or the surviving or resulting corporation, as the case may be, or if shares representing fifty percent (50%) or more of the voting power of the Company are transferred to an Unrelated Third Party, as hereinafter defined, or if the Company is liquidated, or sells or otherwise disposes of all or substantially all its assets (each such transaction is referred to herein as a “Change in Control Transaction”), the Board, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to some or all outstanding Options or Restricted Stock Awards (and need not take the same action as to each such Option or Restricted Stock Award): (i) provide that such Options shall be assumed, or equivalent Options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), provided that any such Options substituted for Incentive Stock Options shall meet the requirements of Section 424(a) of the Code, (ii) upon written notice to the optionees, provide that all unexercised Options (whether vested or unvested) will terminate immediately

 

8

 

prior to the consummation of the Change in Control Transaction unless exercised by the optionee to the extent otherwise then exercisable within a specified period following the date of such notice, (iii) upon written notice to the grantees, provide that all unvested shares of Restricted Stock shall be repurchased at cost, (iv) make or provide for a cash payment to the optionees equal to the difference between (A) the  fair market value of the per share consideration (whether cash, securities or other property or any combination of the above) the holder of a share of Common Stock will receive upon consummation of  the Change in Control Transaction (the “Per Share Transaction Price”) times the number of shares of Common Stock subject to outstanding vested Options (to the extent then exercisable at prices not equal to or in excess of the Per Share Transaction Price) and (B) the aggregate exercise price of such outstanding vested Options, in exchange for the termination of such Options, or (v) provide that all or any outstanding Options shall become exercisable and all or any outstanding Restricted Stock Awards shall vest in part or in full immediately prior to such event. To the extent that any Options are exercisable at a price equal to or in excess of the Per Share Transaction Price, the Board may provide that such Options shall terminate immediately upon the consummation of the Change in Control Transaction without any payment being made to the holders of such Options.  “Unrelated Third Party” shall mean any person who is not, on the date of adoption of this Plan by the Board, a holder of stock of any class or preference or any stock option of the Company.

 

16.2                        Substitute Options.  The Company may grant Options in substitution for options held by employees, officers or directors of, or consultants or advisors to, another corporation who become employees, officers or directors of, or consultants or advisors to, the Company, as the result of a merger or consolidation of the employing corporation with the Company or as a result of the acquisition by the Company of property or stock of the employing corporation.  The Company may direct that substitute Options be granted on such terms and conditions as the Board considers appropriate in the circumstances.

 

16.3                        Restricted Stock.  In the event of a business combination or other transaction of the type detailed in Section 15.1, any securities, cash or other property received in exchange for shares of Restricted Stock shall continue to be governed by the provisions of any Restricted Stock Agreement pursuant to which they were issued, including any provision regarding vesting, and such securities, cash, or other property may be held in escrow on such terms as the Board of Directors may direct, to insure compliance with the terms of any such Restricted Stock Agreement.

 

17.                               No Special Employment Rights.  Nothing contained in the Plan or in any Option Agreement or Restricted Stock Agreement shall confer upon any optionee or holder of Restricted Stock any right with respect to the continuation of his or her employment by the Company or interfere in any way with the right of the Company at any time to terminate such employment or to increase or decrease his or her compensation.

 

9

 

18.                               Other Employee Benefits.  The amount of any compensation deemed to be received by an employee as a result of the issuance of shares of Restricted Stock or the grant or exercise of an Option or the sale of shares received upon issuance of a Restricted Stock Award or exercise of an Option will not constitute compensation with respect to which any other employee benefits of such employee are determined, including, without limitation, benefits under any bonus, pension, profit-sharing, life insurance or salary continuation plan, except as otherwise specifically determined by the Board of Directors.

 

19.                               Amendment of the Plan.

 

19.1                        The Board may at any time, and from time to time, modify or amend in any respect or terminate the Plan.  If shareholder approval is not obtained within twelve months after any amendment increasing the number of shares authorized under the Plan or changing the class of persons eligible to receive Options under the Plan, no Options granted pursuant to such amendments shall be deemed to be Incentive Stock Options and no Incentive Stock Options shall be issued pursuant to such amendments thereafter.

 

19.2                        The termination or any modification or amendment of the Plan shall not, without the consent of an optionee or the holder of Restricted Stock, adversely affect his or her rights under an Option or Restricted Stock Award previously granted to him or her.  With the consent of the recipient of Restricted Stock or optionee affected, the Board may amend outstanding Restricted Stock Agreements or Option Agreements in a manner not inconsistent with the Plan.

 

20.                               Withholding.  The Company shall have the right to deduct from payments of any kind otherwise due to the optionee or recipient of Restricted Stock, any federal, state or local taxes of any kind required by law to be withheld with respect to issuance of any shares of Restricted Stock or shares issued upon exercise of Options.  Prior to delivery of any Common Stock pursuant to the terms of this Plan, the Board has the right to require that the optionee or recipient of Restricted Stock remit to the Company an amount sufficient to satisfy any minimum tax withholding obligation.  Subject to the prior approval of the Company, which may be withheld by the Company in its sole discretion, the obligor may elect to satisfy any minimum withholding obligations, in whole or in part, (i) by causing the Company to withhold shares of Common Stock otherwise issuable, or (ii) by delivering to the Company a sufficient number of  shares of Common Stock.  The shares so withheld shall have a fair market value equal to such minimum withholding obligation.  The fair market value of the shares used to satisfy such minimum withholding obligation shall be determined by the Company as of the date that the amount of tax to be withheld is to be determined.  A person who has made an election pursuant to this Section 19 may only satisfy his or her withholding obligation with shares of Common Stock which are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar restrictions.

 

21.                               Effective Date and Duration of the Plan.

 

21.1                        Effective Date.  The Plan shall become effective when adopted by the Board of Directors.  If shareholder approval is not obtained within twelve months after the date of the Board’s adoption of the Plan, no Options previously granted under the Plan shall be

 

10

 

deemed to be Incentive Stock Options and no Incentive Stock Options shall be granted thereafter.  Amendments to the Plan not requiring shareholder approval shall become effective when adopted by the Board.  Amendments requiring shareholder approval shall become effective when adopted by the Board, but if shareholder approval is not obtained within twelve months of the Board’s adoption of such amendment, any Incentive Stock Options granted pursuant to such amendment shall be deemed to be non-statutory Options provided that such Options are authorized by the Plan.  Subject to this limitation, Options may be granted under the Plan at any time after the effective date and before the date fixed for termination of the Plan.

 

21.2                        Termination.  Unless sooner terminated by action of the Board of Directors, the Plan shall terminate upon the close of business on the day next preceding the tenth anniversary of the date of its adoption by the Board of Directors.

 

22.                               Provision for Foreign Participants.  The Board of Directors may, without amending the Plan, modify the terms of Option Agreements or Restricted Stock Agreements to differ from those specified in the Plan with respect to participants who are foreign nationals or employed outside the United States to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

 

23.                               Requirements of Law.  The Company shall not be required to sell or issue any shares under any Option or Restricted Stock Award if the issuance of such shares shall constitute a violation by the optionee, the Restricted Stock Award recipient, or by the Company of any provision of any law or regulation of any governmental authority.  In addition, in connection with the Act, the Company shall not be required to issue any shares upon exercise of any Option unless the Company has received evidence satisfactory to it to the effect that the holder of such Option will not transfer such shares except pursuant to a registration statement in effect under the Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required in connection with any such transfer. Any determination in this connection by the Board shall be final, binding and conclusive.  In the event the shares issuable on exercise of an Option are not registered under the Act or under the securities laws of each relevant state or other jurisdiction, the Company may imprint on the certificate(s) appropriate legends that counsel for the Company considers necessary or advisable to comply with the Act or any such state or other securities law.  The Company may register, but in no event shall be obligated to register, any securities covered by the Plan pursuant to the Act; and in the event any shares are so registered the Company may remove any legend on certificates representing such shares.  The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option, the grant of any Restricted Stock Award or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority.

 

24.                               Conversion of Incentive Stock Options into Non-Qualified Options; Termination.  The Board of Directors, with the consent of any optionee, may in its discretion take such actions as may be necessary to convert such optionee’s Incentive Stock Options (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into non-statutory Options at any time prior to the expiration of such Incentive Stock Options, regardless of whether the optionee is an employee of the Company or a parent or subsidiary of the Company at the time of such conversion.  At the time of such conversion, the

 

11

 

Board of Directors (with the consent of the optionee) may impose such conditions on the exercise of the resulting non-statutory Options as the Board of Directors in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan.  Nothing in this Plan shall be deemed to give any optionee the right to have such optionee’s Incentive Stock Options converted into non-statutory Options, and no such conversion shall occur until and unless the Board of Directors takes appropriate action.  The Board of Directors, with the consent of the optionee, may also terminate any portion of any Incentive Stock Option that has not been exercised at the time of such termination.

 

25.                               Non-Exclusivity of this Plan; Non-Uniform Determinations.  Neither the adoption of this Plan by the Board of Directors nor the approval of this Plan by the stockholders of the Company shall be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.

 

The determinations of the Board of Directors under this Plan need not be uniform and may be made by it selectively among persons who receive or are eligible to receive Options or Restricted Stock Awards under this Plan (whether or not such persons are similarly situated).  Without limiting the generality of the foregoing, the Board of Directors shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Option Agreements and Restricted Stock Agreements, as to (a) the persons to receive Options or Restricted Stock Awards under this Plan, (b) the terms and provisions of Options or Restricted Stock Awards, (c) the exercise by the Board of Directors of its discretion in respect of the exercise of Options pursuant to the terms of this Plan, and (d) the treatment of leaves of absence pursuant to Section 10 hereof.

 

26.                               Governing Law.  This Plan and each Option or Restricted Stock Award shall be governed by the laws of Massachusetts, without regard to its principles of conflicts of law.

 

12

 

STANDARD FORM

 

INCENTIVE STOCK OPTION

 

Granted by

 

Morphic Holding, Inc. (the “Company”)

 

Under the 2018 Stock Incentive Plan

 

This Option is and shall be subject in every respect to the provisions of the Company’s 2018 Stock Incentive Plan, as amended from time to time (the “Plan”), which is incorporated herein by reference and made a part hereof.  The holder of this Option (the “Holder”) hereby accepts this Option subject to all the terms and provisions of the Plan and agrees that (a) in the event of any conflict between the terms hereof and those of the Plan, the latter shall prevail, and (b) all decisions under and interpretations of the Plan by the Board or the Committee shall be final, binding and conclusive upon the Holder and his or her heirs and legal representatives.

 

1.                                      Name of Holder:

 

2.                                      Date of Grant:

 

3.                                      Maximum number of shares for which this Option is exercisable:

 

4.                                      Exercise (purchase) price per share:  [Note: must be at least fair market value, or 110% of fair market value in case of ISO granted to Greater Than 10% Shareholder]

 

5.                                      Method of Exercise:  This Option may be exercised by the delivery of written notice to the Company setting forth the number of shares with respect to which the Option is to be exercised, together with payment by one of the following methods:

 

cash or a personal, certified or bank check or postal money order payable to the order of the Company for an amount equal to the exercise price of the shares being purchased; or

 

with the consent of the Company, any of the other methods set forth in the Plan.

 

[Note:  in the alternative, may specify methods allowed]

 

As an additional condition to exercise of this Option, the Holder shall deliver to the Company an investment letter in form and substance satisfactory to the Company and its counsel.  No such investment letter shall be required as a condition to such exercise at any time when there shall be an effective registration statement under the Securities Act of 1933, as amended (the “Act”) covering the shares for which this Option may be exercised.

 

 

6.                                      Expiration Date of Option:  [Note:  for ISO, cannot be longer than  10 years from date of grant, or 5 years in case of a Greater Than 10% Shareholder]

 

7.                                      Vesting Schedule:  [Note:  Company to elect vesting schedule; following is an example of a standard vesting provision]  This Option shall become exercisable for 25% of the maximum number of shares granted on the first anniversary of the Date of Grant, and shall become exercisable for an additional 2.08331/3% of the maximum number of shares granted on the last day of each one month period thereafter; so that the Option shall be fully vested on the fourth anniversary of the Date of Grant.  All vesting shall cease upon the date of termination of employment.

 

8.                                      Termination of Employment.  This Option shall terminate on the earliest to occur of:

 

(i)                                     the date of expiration hereof;

 

(ii)                                  [0-90] days after termination of the Holder’s employment with the Company by the Company for Cause (as defined in the Plan);

 

(iii)                               [0-90] days after the date of voluntary termination of employment by the Holder (other than for death or permanent and total disability as defined in the Plan);

 

(iv)                              [0-90] days after the date of termination of the Holder’s employment with the Company by the Company without Cause (other than for death or permanent and total disability as defined in the Plan); or

 

(v)                                 [       ] days after the “permanent and total disability”(as defined at Section 10 of the Plan) or death of the Holder.

 

9.                                      Company’s Right of First Refusal.  Prior to the effective date of a registration statement under the Act, any shares of stock issued pursuant to exercise of this Option shall be subject to the Company’s right of first refusal as set forth at Appendix A.

 

10.                               Lock-Up Agreement.  The Holder agrees that upon the request of the Company or the managing underwriter(s) of any offering of securities of the Company that is the subject of a registration statement filed under the Act, for a period of time (not to exceed 180 days) from the effective date of the registration statement under the Act for such offering, the Holder will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any shares of Common Stock issued pursuant to the exercise of this Option, without the prior written consent of the Company and such underwriters.

 

11.                               Incentive Stock Option; Disqualifying Disposition.  Although this Option is intended to qualify as an incentive stock option under the Internal Revenue Code of 1986 (the “Code”), the Company makes no representation as to the tax treatment upon exercise of this Option or sale or other disposition of the shares covered by this Option, and the Holder is advised to consult a personal tax advisor.  Upon a Disqualifying Disposition of shares received upon exercise of this Option, the Holder will forfeit the favorable income

 

2

 

tax treatment otherwise available with respect to the exercise of this Option.  A “Disqualifying Disposition” shall have the meaning specified in Section 421(b) of the Code; as of the date of grant of this Option a Disqualifying Disposition is any disposition (including any sale) of such shares before the later of (a) the second anniversary of the date of grant of this Option and (b) the first anniversary of the date on which the Holder acquired such shares by exercising this Option, provided that such holding period requirements terminate upon the death of the Holder.  The Holder shall notify the Company in writing immediately upon making a Disqualifying Disposition of any shares of Common Stock received pursuant to the exercise of this Option, and shall provide the Company with any information that the Company shall request concerning any such Disqualifying Disposition.

 

12.                               Notice.  Any notice to be given to the Company hereunder shall be deemed sufficient if addressed to the Company and delivered to the office of the Company, Morphic Holding, Inc. 35 Gatehouse Drive A2, Waltham, MA 02451, attention of the president, or such other address as the Company may hereafter designate.

 

Any notice to be given to the Holder hereunder shall be deemed sufficient if addressed to and delivered in person to the Holder at his or her address furnished to the Company or when deposited in the mail, postage prepaid, addressed to the Holder at such address.

 

IN WITNESS WHEREOF, the parties have executed this Option, or caused this Option to be executed, as of the Date of Grant.

 

	
 
    	
Morphic Holding, Inc.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    

 

The undersigned Holder hereby acknowledges receipt of a copy of the Plan and this Option (including Appendix A hereto), and agrees to the terms of this Option and the Plan.

 

	
 
    	
 
    
	
Holder
    	
 
    

 

3

 

APPENDIX A

 

Right of First Refusal

 

1.                                      General.  Prior to the effective date of a registration statement under the Securities Act of 1933, as amended (the “Act”), covering any shares of the Company’s Common Stock and until such time as the Company shall have effected a public offering of its Common Stock registered under the Act, in the event that, at any time when the Holder (which term for purposes of this section shall mean the Holder and his or her executors, administrators and any other person to whom this Option may be transferred by will or the laws of descent and distribution) is permitted to do so, the Holder desires to sell, assign or otherwise transfer any of the shares issued upon the exercise of this Option, the Holder shall first offer such shares to the Company by giving written notice of the Holder’s desire so to sell, assign or transfer such shares.

 

2.                                      Notice of Intended Transfer.  The notice shall state the number of shares offered, the name of the person or persons to whom it is proposed to sell, assign or transfer such shares and the price at which such shares are intended to be sold, assigned or transferred.  Such notice shall constitute an offer to the Company for the Company to purchase the number of shares set forth in the notice at a price per share equal to the price stated therein.

 

3.                                      Company to Accept or Decline Within 30 Days.  The Company may accept the offer as to all, but not less than all, such shares by notifying the Holder in writing within 30 days after receipt of such notice of its acceptance of the offer.  If the offer is accepted, the Company shall have 60 days after such acceptance within which to purchase the offered shares at a price per share as aforesaid.  If within the applicable time periods the Holder does not receive notice of the Company’s intention to purchase the offered shares, or if payment in full of the purchase price is not made by the Company, the offer shall be deemed to have been rejected and the Holder may transfer title to such shares within 90 days from the date of the Holder’s written notice to the Company of the Holder’s intention to sell, but such transfer shall be made only to the proposed transferee and at the proposed price as stated in such notice and after compliance with any other provisions of this Option applicable to the transfer of such shares.

 

4.                                      Transferred Shares to Remain Subject to Right of First Refusal.  Shares that are so transferred to such transferee shall remain subject to the rights of the Company set forth in this Appendix A.  As a condition to such transfer, such transferee shall execute and deliver all such documents as the Company may require to evidence the binding agreement of such transferee so to remain subject to the rights of the Company.

 

5.                                      Remedies of Company.  No sale, assignment, pledge or other transfer of any of the shares covered by this Option shall be effective or given effect on the books of the Company unless all of the applicable provisions of this Appendix A have been duly complied with, and the Company may inscribe on the face of any certificate representing any of such shares a legend referring to the provisions of this Appendix A.  If any transfer of shares is made or attempted in violation of the foregoing restrictions, or if shares are not offered to the Company as required hereby, the Company shall have the right to purchase such shares from the owner thereof or his transferee at any time before or after the transfer, as herein provided.  In addition to

 

4

 

any other legal or equitable remedies which it may have, the Company may enforce its rights by actions for specific performance (to the extent permitted by law) and may refuse to recognize any transferee as one of its stockholders for any purpose, including, without limitation, for purposes of dividend and voting rights, until all applicable provisions hereof have been complied with.

 

6.                                      Shares Subject to Right of First Refusal.  For purposes of the Right of First Refusal pursuant to this Appendix A, the term “shares” shall mean any and all new, substituted or additional securities or other property issued to the Holder, by reason of his or her ownership of Common Stock pursuant to the exercise of this Option, in connection with any stock dividend, liquidating dividend, stock split or other change in the character or amount of any of the outstanding securities of the Company, or any consolidation, merger or sale of all or substantially all of the assets of the Company.

 

7.                                      Legends on Stock Certificates.  Any certificate representing shares of stock subject to the provisions of this Appendix A may have endorsed thereon one or more legends, substantially as follows:

 

(i)                                     “Any disposition of any interest in the securities represented by this certificate is subject to restrictions, and the securities represented by this certificate are subject to certain transfer restrictions, contained in a certain agreement between the record holder hereof and the Company, a copy of which will be mailed to any holder of this certificate without charge upon receipt by the Company of a written request therefor.”

 

(ii)                                  “The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be pledged, hypothecated, sold or otherwise transferred unless such shares have been registered under the Act or unless  the Company has received an opinion of counsel satisfactory to the Company, in form and substance satisfactory to the Company, that such registration is not required.”

 

8.                                      Right of First Refusal to Lapse Upon Registration.  The restrictions imposed by this Appendix A shall terminate in all respects upon the effective date of a registration statement under the Act covering any of the Company’s Common Stock.

 

5

 

STANDARD FORM

 

NON-STATUTORY STOCK OPTION

 

Granted by

 

Morphic Holding, Inc. (the “Company”)

 

Under the 2018 Stock Incentive Plan

 

This Option is and shall be subject in every respect to the provisions of the Company’s 2018 Stock Incentive Plan, as amended from time to time (the “Plan”), which is incorporated herein by reference and made a part hereof.  The holder of this Option (the “Holder”) hereby accepts this Option subject to all the terms and provisions of the Plan and agrees that (a) in the event of any conflict between the terms hereof and those of the Plan, the latter shall prevail, and (b) all decisions under and interpretations of the Plan by the Board or the Committee shall be final, binding and conclusive upon the Holder and his or her heirs and legal representatives.

 

1.                                      Name of Holder:

 

2.                                      Date of Grant:

 

3.                                      Maximum number of shares for  which this Option is exercisable:

 

4.                                      Exercise (purchase) price per share: [must be at least fair market value]

 

5.                                      Method of Exercise:  This Option may be exercised by the delivery of written notice to the Company setting forth the number of shares with respect to which the Option is to be exercised, together with payment by one of the following methods:

 

cash or a personal, certified or bank check or postal money order payable to the order of the Company for an amount equal to the exercise price of the shares being purchased; or

 

with the consent of the Company, any of the other methods set forth in the Plan.

 

[Note:  in the alternative, may specify methods allowed]

 

As an additional condition to exercise of this Option, the Holder shall deliver to the Company an investment letter in form and substance satisfactory to the Company and its counsel.  No such investment letter shall be required as a condition to such exercise at any time when there shall be an effective registration statement under the Securities Act of 1933, as amended (the “Act”) covering the shares for which this Option may be exercised.

 

6.                                      Expiration Date of Option:

 

 

7.                                      Vesting Schedule:  [Note:  Company to elect vesting schedule; following is an example of a standard vesting provision] This Option shall become exercisable for 25% of the maximum number of shares granted on the first anniversary of the Date of Grant, and shall become exercisable for an additional 2.08331/3% of the maximum number of shares granted on the last day of each one month period thereafter; so that the Option shall be fully vested on the fourth anniversary of the Date of Grant.  All vesting shall cease upon the date of termination of employment or provision of services.

 

8.                                      Termination of Employment.  This Option shall terminate on the earliest to occur of:

 

(i)                                     the date of expiration thereof;

 

(ii)                                  [0-90] days after termination of the Holder’s employment with or services to the Company by the Company for Cause (as defined in the Plan);

 

(iii)                               [0-90] days after the date of voluntary termination of employment or services by the Holder (other than for death or permanent and total disability as defined in the Plan);

 

(iv)                              [0-90] days after the date of termination of the Holder’s employment with or services to the Company by the Company without Cause (other than for death or permanent and total disability as defined in the Plan); or

 

(v)                                 [        ] days after the “permanent and total disability”(as defined at Section 10 of the Plan) or death of the Holder.

 

9.                                      Company’s Right of First Refusal.  Prior to the effective date of a registration statement under the Act, any shares of stock issued pursuant to exercise of this Option shall be subject to the Company’s right of first refusal as set forth at Appendix A.

 

10.                               Lock-Up Agreement.  The Holder agrees that upon the request of the Company or the managing underwriter(s) of any offering of securities of the Company that is the subject of a registration statement filed under the Act, for a period of time (not to exceed 180 days) from the effective date of the registration statement under the Act for such offering, the Holder will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any shares of Common Stock issued pursuant to the exercise of this Option, without the prior written consent of the Company and such underwriters.

 

11.                               Tax Withholding.  The Company’s obligation to deliver shares shall be subject to the Holder’s satisfaction of any federal, state and local income and employment tax withholding requirements.

 

12.                               Notice.  Any notice to be given to the Company hereunder shall be deemed sufficient if addressed to the Company and delivered to the office of the Company, Morphic Holding, Inc., 35 Gatehouse Drive A2, Waltham, MA 02451, attention of the president, or such other address as the Company may hereafter designate.

 

2

 

Any notice to be given to the Holder hereunder shall be deemed sufficient if addressed to and delivered in person to the Holder at his or her address furnished to the Company or when deposited in the mail, postage prepaid, addressed to the Holder at such address.

 

IN WITNESS WHEREOF, the parties have executed this Option, or caused this Option to be executed, as of the Date of Grant.

 

	
 
    	
Morphic Holding, Inc.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    

 

The undersigned Holder hereby acknowledges receipt of a copy of the Plan and this Option (including Appendix A hereto), and agrees to the terms of this Option and the Plan.

 

	
 
    	
 
    
	
Holder
    	
 
    

 

3

 

APPENDIX A

 

Right of First Refusal

 

1.                                      General.  Prior to the effective date of a registration statement under the Securities Act of 1933, as amended (the “Act”), covering any shares of the Company’s Common Stock and until such time as the Company shall have effected a public offering of its Common Stock registered under the Act, in the event that, at any time when the Holder (which term for purposes of this section shall mean the Holder and his or her executors, administrators and any other person to whom this Option may be transferred by will or the laws of descent and distribution) is permitted to do so, the Holder desires to sell, assign or otherwise transfer any of the shares issued upon the exercise of this Option, the Holder shall first offer such shares to the Company by giving written notice of the Holder’s desire so to sell, assign or transfer such shares.

 

2.                                      Notice of Intended Transfer.  The notice shall state the number of shares offered, the name of the person or persons to whom it is proposed to sell, assign or transfer such shares and the price at which such shares are intended to be sold, assigned or transferred.  Such notice shall constitute an offer to the Company for the Company to purchase the number of shares set forth in the notice at a price per share equal to the price stated therein.

 

3.                                      Company to Accept or Decline Within 30 Days.  The Company may accept the offer as to all, but not less than all, such shares by notifying the Holder in writing within 30 days after receipt of such notice of its acceptance of the offer.  If the offer is accepted, the Company shall have 60 days after such acceptance within which to purchase the offered shares at a price per share as aforesaid.  If within the applicable time periods the Holder does not receive notice of the Company’s intention to purchase the offered shares, or if payment in full of the purchase price is not made by the Company, the offer shall be deemed to have been rejected and the Holder may transfer title to such shares within 90 days from the date of the Holder’s written notice to the Company of the Holder’s intention to sell, but such transfer shall be made only to the proposed transferee and at the proposed price as stated in such notice and after compliance with any other provisions of this Option applicable to the transfer of such shares.

 

4.                                      Transferred Shares to Remain Subject to Right of First Refusal.  Shares that are so transferred to such transferee shall remain subject to the rights of the Company set forth in this Appendix A.  As a condition to such transfer, such transferee shall execute and deliver all such documents as the Company may require to evidence the binding agreement of such transferee so to remain subject to the rights of the Company.

 

5.                                      Remedies of Company.  No sale, assignment, pledge or other transfer of any of the shares covered by this Option shall be effective or given effect on the books of the Company unless all of the applicable provisions of this Appendix A have been duly complied with, and the Company may inscribe on the face of any certificate representing any of such shares a legend referring to the provisions of this Appendix A.  If any transfer of shares is made or attempted in violation of the foregoing restrictions, or if shares are not offered to the Company as required hereby, the Company shall have the right to purchase such shares from the owner thereof or his transferee at any time before or after the transfer, as herein provided.  In addition to

 

4

 

any other legal or equitable remedies which it may have, the Company may enforce its rights by actions for specific performance (to the extent permitted by law) and may refuse to recognize any transferee as one of its stockholders for any purpose, including, without limitation, for purposes of dividend and voting rights, until all applicable provisions hereof have been complied with.

 

6.                                      Shares Subject to Right of First Refusal.  For purposes of the Right of First Refusal pursuant to this Appendix A, the term “shares” shall mean any and all new, substituted or additional securities or other property issued to the Holder, by reason of his or her ownership of Common Stock pursuant to the exercise of this Option, in connection with any stock dividend, liquidating dividend, stock split or other change in the character or amount of any of the outstanding securities of the Company, or any consolidation, merger or sale of all or substantially all of the assets of the Company.

 

7.                                      Legends on Stock Certificates.  Any certificate representing shares of stock subject to the provisions of this Appendix A may have endorsed thereon one or more legends, substantially as follows:

 

(i)                                     “Any disposition of any interest in the securities represented by this certificate is subject to restrictions, and the securities represented by this certificate are subject to certain options, contained in a certain agreement between the record holder hereof and the Company, a copy of which will be mailed to any holder of this certificate without charge upon receipt by the Company of a written request therefor.”

 

(ii)                                  “The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be pledged, hypothecated, sold or otherwise transferred unless such shares have been registered under the Act or unless  the Company has received an opinion of counsel satisfactory to the Company, in form and substance satisfactory to the Company, that such registration is not required.”

 

8.                                      Right of First Refusal to Lapse Upon Registration.  The restrictions imposed by this Appendix A shall terminate in all respects upon the effective date of a registration statement under the Act covering any of the Company’s Common Stock.

 

5

 

MORPHIC HOLDING, INC.

 

STOCK RESTRICTION AGREEMENT

 

This Stock Restriction Agreement (this “Agreement”) is made by and between Morphic Holding, Inc., a Delaware corporation previously organized as Morphic Holding, LLC, a Delaware limited liability company (the “Company”), and the undersigned Stockholder (the “Stockholder”).

 

WHEREAS, the Company and the Stockholder entered into a certain Incentive Unit Grant Agreement on [                      ] (the “Incentive Unit Grant Agreement”), pursuant to which the Stockholder was granted [                       ] Incentive Units (the “Incentive Units”), as defined pursuant to the Company’s Third Amended and Restated Operating Agreement, as amended (as so amended, the “Operating Agreement”), subject to certain terms and conditions;

 

WHEREAS, the Company made an election on IRS Form 8832 to elect for the Company to be classified as an association taxable as a corporation with an effective date of October 10, 2018; and

 

WHEREAS, the Company is converting, for Delaware state law purposes and not tax law purposes and while retaining the same employer identification number, from a Delaware limited liability company (taxable as a corporation) to a Delaware corporation effective as of the Date of this Agreement and the Incentive Units are being exchanged for shares of Common Stock, par $0.0001 per share (the “Common Stock”), of the Company in the amount specified in the table below (the “Shares”) subject to vesting if and to the extent such Incentive Units were subject to vesting pursuant to the Incentive Unit Grant Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Stockholder and the Company hereby agree that from and after the Date of this Agreement, the Shares shall be subject to the terms and conditions of this Agreement, which shall include the terms and conditions stated below and those attached hereto, all of which terms and conditions are incorporated herein and made a part hereof.

 

	
Name of   Stockholder:

 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address of Stockholder:

 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date of this Agreement:

 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Number of Shares (Same   as Number of Incentive Units):

 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Repurchase Price per   Share:

 
    	
 
    	
$0.0001
    
	
 
    	
 
    	
 
    
	
Number of Shares that   are Vested Shares as of the Vesting Start Date:

 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Number of Shares that   are Unvested Shares as of the Vesting Start Date:

 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vesting Start Date:

 
    	
 
    	
 
    

 

 

Vesting Schedule:

 

The Shares shall vest as follows:

 

25% of the Shares will vest on the first anniversary of the Vesting Start Date and the balance of the total Shares will thereafter vest in equal monthly installments on the last day of each of the next thirty-six (36) one-month periods, all subject to the vesting conditions herein.

 

 

Acknowledgement

 

By signing below, the Stockholder agrees to and accepts the terms and conditions set forth above and attached hereto.

 

Signed as an agreement under seal as of the Date of this Agreement.

 

	
Stockholder:
    	
 
    	
Morphic   Holding, Inc.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
[Name   of Stockholder]
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

MORPHIC HOLDING, INC.

 

Stock Restriction Agreement — Incorporated Terms and Conditions

 

1.                                      Restrictions on Shares.  The term “Shares” (as defined on the first page of this Agreement) shall also include any shares of capital stock of the Company issued to the Stockholder by virtue of Stockholder’s ownership of the Shares, by stock dividend, stock split, recapitalization, merger, combination, reorganization or otherwise.  Shares that are subject to the Company’s repurchase right as described in Section 4 of this Agreement are referred to as “Unvested Shares,” and Shares that are not subject to such repurchase right, or as to which such repurchase right has lapsed, are referred to as “Vested Shares.”

 

2.                                      Representations of Stockholder.  The Stockholder represents and warrants to the Company as follows:

 

(a)                                 The Stockholder understands that the Shares have not been registered under the Securities Act of 1933, as amended (the “Act”), or registered or qualified under the securities or “Blue Sky” laws of any jurisdiction, and are being sold pursuant to exemptions contained in the Act and exemptions contained in other applicable securities or “Blue Sky” laws.  The Stockholder understands further that the Company’s reliance on these exemptions is based in part on the representations made by the Stockholder in this Agreement.  The offer and issuance of the Shares has been made to the Stockholder solely in the state shown in the address set forth below the Stockholder’s name on the first page of this Agreement.

 

(b)                                 The Stockholder has acquired the Shares for the Stockholder’s own account for investment, and not for, with a view to, or in connection with the resale or distribution thereof.  The Stockholder has no present intention to sell, hypothecate, distribute or otherwise transfer (hereafter, “Transfer”) any of the Shares or any interest therein.  The nature and amount of the Stockholder’s investment in the Shares are consistent with the Stockholder’s investment objectives, abilities and resources.  The Stockholder understands that the Shares are an illiquid investment, which will not become freely transferable by reason of any change of circumstances whatsoever.  The Stockholder has adequate means of providing for the Stockholder’s current needs and possible contingencies and has no need for liquidity in the Stockholder’s investment.

 

(c)                                  The Stockholder understands that the Shares will constitute “restricted securities” within the meaning of Rule 144 promulgated under the Act and that, as such, the Shares must be held indefinitely unless they are subsequently registered under the Act or unless an exemption from the registration requirements thereof is available.  The Stockholder has been advised that Rule 144, which permits the resale, subject to various terms and conditions, of such “restricted securities” after they have been held for specified periods of time does not now apply to the Company, because the Company is not now required to file, and does not file, periodic reports under the Securities Exchange Act of 1934, as amended, and because information concerning the Company substantially equivalent to that which would be available if the Company were required to file such reports is not now publicly available.  The Company may become a reporting entity at some future date, but no assurance can be given that it will do so.

 

4

 

(d)                                 The Stockholder accepts the condition that the Company will maintain stop transfer orders with respect to the Shares and that each certificate or other document evidencing the Shares will bear a conspicuous legend in substantially the form set forth in Section 6 of this Agreement.

 

(e)                                  The Stockholder has consulted the Stockholder’s attorney or the Stockholder’s accountant with respect to the issuance of the Shares.  The Stockholder and such attorney or accountant have fully investigated the Company and its business and financial condition and have knowledge of the Company’s current activities.  The Company has granted the Stockholder and the Stockholder’s attorney or accountant access to all information about the Company which they have requested and has offered each of them access to all further information which they deemed relevant to an investment decision with respect to the Shares.  The Stockholder and the Stockholder’s attorney or accountant have had the opportunity to ask questions of, and receive answers from, representatives of the Company concerning such information and the Company’s financial condition and prospects.

 

3.                                      Restrictions on Transfer.  The following restrictions on Transfer of the Shares shall apply.

 

(a)                                 No Shares, or any interest therein, may be Transferred at any time or under any circumstances unless (i) the Shares proposed to be Transferred have been registered under the Act and registered or qualified under applicable state securities laws, or (ii) the Company has received an opinion of counsel acceptable to the Company to the effect that such Transfer may be effected without registration under the Act and registration or qualification under the securities laws of relevant states and the proposed transferee has made such representations and agreements as the Company shall require to assure compliance with the Act and such laws.

 

(b)                                 No Unvested Share, and no interest in an Unvested Share, may be Transferred except to the Company pursuant to Section 4 of this Agreement.

 

(c)                                  Permitted Transfers. If the Stockholder is a natural person, all, or any portion of, the Shares may, without compliance with the provisions of this Section 3, be Transferred by the Stockholder for bona fide estate planning purposes to a member of the Stockholder’s immediate family, to a family partnership or to a family trust or, on the Stockholder’s death, may be Transferred to the Stockholder’s estate or to those entitled to a distribution of the Shares under the laws of descent and distribution; provided, that Shares that are so Transferred shall remain subject to this Agreement and, as a condition to any Transfer, the Stockholder or the Stockholder’s legal representative shall obtain a written agreement from the proposed transferee or transferees by which such transferee agrees or transferees agree to be bound by this Agreement.

 

(d)                                 No Transfer of Shares shall be effective or given effect on the books of the Company unless all of the applicable provisions of this Section 3 have been duly complied with. The Company shall not be required to recognize as one of its stockholders any purported transferee of Shares which have been attempted to have been Transferred in violation of this Agreement, including, without limitation, for purposes of dividend and voting rights.  The restrictions on transfer imposed by this Agreement shall apply not only to voluntary transfers but 

 

5

 

also to involuntary transfers, by operation of law or otherwise.  The Stockholder shall pay all legal fees and expenses of the Company arising out of or relating to any purported sale, assignment or transfer of any Shares in violation of this Agreement.

 

(e)                                  Lock-Up.  The Stockholder agrees that, for a period of up to 180 days from the effective date of any registration of securities of the Company plus up to an additional 35 days to comply with any applicable FINRA requirements (upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities), the Stockholder will not Transfer any Shares held by the Stockholder without the prior written consent of the Company or such underwriters, as the case may be.  The Stockholder further agrees to execute such agreements as may be reasonably requested by the underwriters that are consistent with this Section 3(f) or that are necessary to give further effect thereto.

 

(f)                                   The rights of the Company and the obligations of the Stockholder under this Section 3 are in addition to all rights and obligations which the Stockholder may have under other Sections of this Agreement or under other agreements between the Company and the Stockholder regarding the Shares (the “Other Agreements”), and this Section 3 shall not give the Stockholder any right to make any Transfer of any Shares which is otherwise prohibited by any other Section of this Agreement or the Other Agreements.

 

(g)                                  Notwithstanding anything contained herein to the contrary, at no time shall the Stockholder Transfer any Shares or any interest therein to a competitor of the Company.

 

4.                                      Vesting of Shares; Repurchase of Unvested Shares.

 

(a)                                 If the Stockholder is providing services for the benefit of the Company as an active employee or consultant of the Company or any of its subsidiaries and is in good standing continuously from the date hereof through the vesting dates specified on the first page of this Agreement, Unvested Shares shall become Vested Shares (or shall “vest”) on such dates and in such amounts as are specified on the first page of this Agreement.  For the avoidance of doubt, the Board of Directors of the Company, in its discretion, may accelerate any vesting dates or waive any of the requirements for vesting.

 

(b)                                 In the event that the Stockholder ceases for any reason to provide services for the benefit of the Company as an active employee or consultant of the Company or any of its subsidiaries before all of the Shares have become Vested Shares (a “Termination Event”), then the Company shall have the right to purchase (the “Repurchase Option”) for a period of ninety (90) days from the date of such Termination Event (the “Termination Date”) any or all of the Shares that are Unvested Shares at the Termination Date.  The purchase of each Unvested Share pursuant to this Section 4(b) shall be effected at the Repurchase Price Per Share set forth on the first page of this Agreement, in each case, appropriately adjusted in the event of a stock dividend, stock split, recapitalization, merger, combination, reorganization or exchange of shares or other similar event occurring subsequent to the Date of this Agreement.

 

(c)                                  Unless the Company notifies the Stockholder within ninety (90) days from the Termination Date that it does not intend to exercise its Repurchase Option with respect to some or all of the Unvested Shares, the Repurchase Option shall be deemed automatically exercised by 

 

6

 

the Company as of the ninetieth (90th) day following the Termination Date, provided, that the Company may notify the Stockholder that it is exercising its Repurchase Option as of a date prior to such 90th day.  Unless the Stockholder is otherwise notified by the Company pursuant to the preceding sentence that the Company does not intend to exercise its Repurchase Option as to some  or all of the Unvested Shares to which it applies as of the Termination Date, execution of this Agreement by the Stockholder constitutes written notice to the Stockholder of the Company’s intention to exercise its Repurchase Option with respect to all Unvested Shares to which such Repurchase Option applies.  As a result of any repurchase of Unvested Shares pursuant to this Section 4, the Company shall become the legal and beneficial owner of the Unvested Shares being repurchased and shall have all rights and interest therein or related thereto, and the Company shall have the right to Transfer to its own name the number of Unvested Shares being repurchased by the Company, without further action by the Stockholder.  Any failure by the Company to exercise its Repurchase Option shall in no way affect any rights, including repurchase rights, the Company may have under any of the Other Agreements.

 

(d)                                 Fractional Shares. No fractional shares shall vest under this Agreement. Any calculation of Shares scheduled to vest on any date except for the last date on which vesting is contemplated under this Agreement (the “Final Vesting Date”) that results in a fractional share shall be rounded down to the nearest whole Share. On the Final Vesting Date, all remaining Unvested Shares shall vest and become Vested Shares.

 

5.                                      Custody of Certificates.

 

(a)                                 In order to facilitate the exercise of the Company’s repurchase rights under Section 4 of this Agreement, simultaneously with the execution of this Agreement, the Stockholder shall deposit with the Company or its attorneys the certificate or certificates representing in whole or in part Unvested Shares and shall promptly upon acquisition of any additional Unvested Shares, deposit with the Company the certificate or certificates for such additional shares. To all certificates deposited by the Stockholder with the Company, there shall be attached a stock power or stock powers, duly executed by the Stockholder in blank, constituting and appointing the Company or its designee the Stockholder’s attorney to transfer such stock on the books of the Company. The Stockholder shall continue to be the owner of the Shares, despite such deposit and stock powers, and shall be entitled to exercise all rights of ownership in such Shares, subject, however, to the provisions of this Agreement.

 

(b)                                 In the event that a dispute should arise with respect to the delivery, right to possession, and/or ownership of the certificates held by the Company representing the Shares, the Company is authorized to retain such certificates and evidences in its possession, or any portion thereof, without liability to anyone, until such dispute shall have been settled either by mutual written agreement of the parties concerned or by final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but the Company shall be under no duty whatsoever hereunder to institute or defend any such proceedings.

 

(c)                                  The Company shall have the right to cause Transfers of Unvested Shares to be effected pursuant to Section 4 notwithstanding any failure of the Stockholder to take the action required of the Stockholder pursuant to this Agreement; provided, however, that no Transfer of 

 

7

 

Unvested Shares shall be effected hereunder unless payment therefor has been made or tendered to the Stockholder or the Stockholder’s executor or other legal representative.  The Stockholder hereby appoints each of the President, Treasurer and Secretary of the Company as the Stockholder’s attorney-in-fact for purposes of effecting any such Transfer.

 

6.                                      Legends.  Each certificate representing Shares shall prominently bear legends to the following effect:

 

“The shares represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended.  Such shares may not be sold, transferred, pledged or hypothecated unless the registration provisions of said Act have been complied with or unless the Company has received an opinion of its counsel that such registration is not required.

 

The shares represented by this certificate are subject to restrictions on transfer and repurchase rights pursuant to the terms of a Stock Restriction Agreement, a copy of which will be furnished to the holder hereof without charge upon written request.”

 

7.                                      Miscellaneous.

 

(a)                                 Entire Agreement.  This Agreement, including the signature page hereto and these Incorporated Terms and Conditions, constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes all prior agreements, negotiations, representations and proposals, written or oral, relating to such subject matter.

 

(b)                                 Amendments.  Neither this Agreement nor any provision hereof may be changed or modified except by an agreement in writing executed by the Stockholder and on behalf of the Company.

 

(c)                                  Binding Effect of the Agreement.  This Agreement shall inure to the benefit of, and be binding upon, the Company, the Stockholder and their respective estates, heirs, executors, transferees, successors, assigns and legal representatives.

 

(d)                                 Notices.  All notices to any party under this Agreement shall be contained in a written instrument addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor and shall be deemed given (i) when delivered in person or duly sent by e-mail or fax, with confirmation of receipt, (ii) three days after being duly sent by first class mail postage prepaid (other than in the case of notices to or from any non-U.S. resident, which notices must be sent in the manner specified in clause (i) or (iii)), or (iii) two days after being duly sent by UPS, Federal Express or other recognized express international courier service:

 

(i)                                     if to the Stockholder, to the Address or E-Mail Address of Stockholder set forth on the first page of this Agreement; and

 

(ii)                                  if to the Company, to:

 

8

 

Morphic Holding, Inc.

35 Gatehouse Drive A2

Waltham, MA 02451

 

With a copy to:

 

Foley Hoag LLP

155 Seaport Boulevard

Boston, MA 02210

Attention: Mark A. Haddad, Esq.

Fax:  (617) 832-7000

 

(e)                                  Consent to Electronic Notices.   The Stockholder hereby agrees and consents that the Company may provide the Stockholder, at the Company’s option, all notices which are required to be delivered, whether under this Agreement, pursuant to the General Corporation Law of the State of Delaware or other applicable law or regulation, or otherwise, in electronic form to the E-Mail Address set forth on the signature page of this Agreement.

 

(f)                                   Relationship with Company.  The Company is not by reason of this Agreement or the issuance of any Shares obligated to continue the Stockholder’s relationship with the Company as an employee, consultant, advisor, officer, director, or in any other capacity (other than as a stockholder).

 

(i)                                     Remedies. The Stockholder acknowledges that money damages alone will not adequately compensate the Company for breach of any of the Stockholder’s covenants and agreements herein and, therefore, agrees that in the event of the breach or threatened breach of any such covenant or agreement, in addition to all other remedies available to the Company, at law, in equity or otherwise, the Company shall be entitled to injunctive relief compelling specific performance of, or other compliance with, the terms hereof. The rights and remedies of the Company hereunder shall be cumulative and in addition to all other rights and remedies the Company may have, at law, in equity, by contract or otherwise.

 

(j)                                    Reliance; Liability. In performing its duties under this Agreement, the Company shall be entitled to rely upon any statement, notice, or other writing which it shall in good faith believe to be genuine and to be signed or presented by a proper party or parties or on other evidence or information deemed by the Stockholder to be reliable.  In no event shall the Company be liable for any action taken or omitted in good faith.  The Company may consult with its counsel or counsel of any of the other parties hereto and, without limiting the generality of the preceding sentence, shall not be held liable for any action taken or omitted in good faith on advice of such counsel.

 

(k)                                 Awaiting Final Settlement. If any controversy arises between the parties hereto or with any third person with respect to the Shares, this Agreement or its subject matter, the Company shall not be required to take any actions in the premises, but may await the settlement of any such controversy by final appropriate legal proceedings or otherwise as it may require, notwithstanding anything in this Agreement to the contrary, and, in such event, the Company shall not be liable for interest or damages.

 

9

 

(l)                                     Construction.  The headings and subheadings of this Agreement have been inserted for convenience only, and shall not affect the construction of the provisions hereof.  All references to sections of this Agreement shall be deemed to refer as well to all subsections which form a part of such section. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.”

 

(m)                             Severability. In the event that any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement and all other provisions shall remain in full force and effect. If any provision of this Agreement is held to be excessively broad, it shall be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law.

 

(n)                                 No Waiver. No modification, renewal, extension, waiver or termination of this Agreement or any of the provisions herein contained shall be binding upon the Company unless made in writing and signed by a duly authorized officer of the Company.

 

(o)                                 Further Assurances. The parties agree to execute such further instruments and to take such further actions as may reasonably be necessary to carry out the intent of this Agreement.

 

(p)                                 Counterparts.  This Agreement may be executed in counterparts, each such counterpart shall be deemed to be an original instrument, and all of which together shall for all purposes constitute one Agreement, binding on each of the parties hereto notwithstanding that each such party shall not have signed the same counterpart. A signature of any party to this Agreement transmitted by facsimile, electronic mail (including pdf) or other electronic means shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

(q)                                 Applicable Law.  This Agreement shall be construed and enforced in accordance with the laws of The State of Delaware, without regard to its principles of conflicts of laws. All litigation arising from or relating to this Agreement shall be filed and prosecuted before any court of competent subject matter jurisdiction located in The State of Delaware. The Stockholder consents to service of process in any such action by certified or registered mail, return receipt requested. The Stockholder consents to the jurisdiction of such courts over the Stockholder, stipulates to the convenience, efficiency and fairness of proceeding in such courts, and covenants not to allege or assert the inconvenience, inefficiency or unfairness of proceeding in such courts.

 

(r)                                    Disposition of Shares; Purchase by Nominee or Designee.  Any Shares that the Company elects to purchase hereunder may be disposed of by it in such manner as it deems appropriate with or without restrictions on the transfer thereof, and the Company may require their transfer to a nominee or designee as part of any purchase of Shares from the Stockholder.

 

(s)                                   Withholding Taxes.  The Stockholder agrees that the Stockholder shall be fully liable for any taxes owed by the Stockholder with regard to the issuance of the Shares, whether owed at the time of issuance or at the time that the Shares vest pursuant to the vesting schedule set forth above.  The Stockholder acknowledges and agrees that the Company has the right to 

 

10

 

deduct from payments of any kind otherwise due to the Stockholder any federal, state or local taxes of any kind required by law to be withheld with respect to the issuance, vesting or otherwise as a result of the ownership of the Shares by the Stockholder.  The Stockholder further agrees that, if the Company does not withhold an amount sufficient to satisfy the withholding obligation of the Company with respect to the issuance of the Shares, the Stockholder will make reimbursement on demand, in cash, for the amount underwithheld, provided that the Company has provided the Stockholder with written detail concerning the basis for and amount of the withholding obligation of the Company.

 

* * * * *

 

11

 

STOCK POWER

 

FOR VALUE RECEIVED, [Name of Stockholder], hereby assigns and transfers to Morphic Holding, Inc., a Delaware corporation (the “Company”), a total of                    shares of the Common Stock of the Company standing in the name of the stockholder named above on the books of the Company represented by stock certificate number             to be delivered herewith, and does hereby irrevocably constitute and appoint Foley Hoag LLP as attorney to transfer said shares on the books of the Company with full power of substitution in the premises.

 

	
Dated:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[Name   of Stockholder]
    
	
 
    	
 
    
	
 
    	
 
    
	
In   the Presence of:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Name:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00296-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00296-of-00352.parquet"}]]