Document:

Exhibit 4.31

 

 

NEURALSTEM, INC.

 

 

AMENDED AND RESTATED

INDUCEMENT AWARD

STOCK OPTION PLAN

 

SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS

 

The name of the plan is the Neuralstem, Inc.
Inducement Award Stock Option Plan (the “Plan”). The purpose of the Plan is to provide non-qualified stock options
to individuals not previously employees or non-employee directors of Neuralstem, Inc. (the “Company”) (or following
such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals’
entry into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules. It is anticipated that
providing such persons with a direct stake in the Company’s welfare will assure a closer identification of their interests
with those of the Company and its stockholders, thereby stimulating their efforts on the Company’s behalf and strengthening
their desire to remain with the Company.

 

The following terms shall be defined as set
forth below:

 

“Act” means the Securities
Act of 1933, as amended, and the rules and regulations thereunder.

 

“Administrator” means either
the Board or the compensation committee of the Board or a similar committee performing the functions of the compensation committee
and which is comprised of not less than two Non-Employee Directors who are independent.

 

“Board” means the Board
of Directors of the Company.

 

“Code” means the Internal
Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.

 

“Covered Employee” means
an employee who is a “Covered Employee” within the meaning of Section 162(m) of the Code.

 

“Effective Date” means February
15, 2016.

 

“Eligible Individual” means
any individual who was not previously an employee or a non-employee director of the Company or any of its Subsidiaries (or who
has had a bona fide period of non-employment with the Company and its Subsidiaries) who is hired by the Company or one of its Subsidiaries.

 

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

 

“Fair Market Value” of the
Stock on any given date means the fair market value of the Stock determined in good faith by the Administrator; provided, however,
that if the Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”),
NASDAQ Capital Market or another national securities exchange, the determination shall be made by reference to market quotations.
If there are no market quotations for such date, the determination shall be made by reference to the last date preceding such date
for which there are market quotations; provided further, however, that if the date for which Fair Market Value is determined is
the first day when trading prices for the Stock are reported on a national securities exchange, the Fair Market Value shall be
the “Price to the Public” (or equivalent) set forth on the cover page for the final prospectus relating to the Company’s
Initial Public Offering.

 

     

     

    

“Non-Employee Director”
means a member of the Board who is not also an employee of the Company or any Subsidiary.

 

“Non-Qualified Stock Option”
means a stock option that is not intended to be an “incentive stock option” under Section 422 of the Code.

 

“Option Certificate” means
a written or electronic document setting forth the terms and provisions applicable to a Non-Qualified Stock Option granted under
the Plan. Each Option Certificate is subject to the terms and conditions of the Plan.

 

“Sale Event” shall mean
(i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity,
(ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power
immediately prior to such transaction do not own a majority of the outstanding voting power of the resulting or successor entity
(or its ultimate parent, if applicable) immediately upon completion of such transaction, or (iii) the sale of all of the Stock
of the Company to an unrelated person or entity.

 

“Sale Price” means the value
as determined by the Administrator of the consideration payable, or otherwise to be received by stockholders, per share of Stock
pursuant to a Sale Event.

 

“Section 409A” means Section 409A
of the Code and the regulations and other guidance promulgated thereunder.

 

“Stock” means the common
stock, par value $0.01 per share, of the Company, subject to adjustments pursuant to Section 3.

 

“Subsidiary” means any corporation or other entity
(other than the Company) in which the Company has at least a fifty (50) percent interest, either directly or indirectly.

 

SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY
TO SELECT GRANTEES AND DETERMINE NON-QUALIFIED STOCK OPTIONS

 

(a)        Administration of
Plan. The Plan shall be administered by the Administrator.

 

(b)        Powers of Administrator.
The Administrator shall have the power and authority to grant Non-Qualified Stock Options consistent with the terms of the Plan,
including the power and authority:

 

(i)        to select the individuals
to whom Non-Qualified Stock Options may from time to time be granted;

 

(ii)        to determine the time
or times of grant;

 

(iii)        to determine the number
of shares of Stock to be covered by Non-Qualified Stock Options;

 

(iv)        to determine and modify
from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of Non-Qualified
Stock Options, which terms and conditions may differ among individual Non-Qualified Stock Options and grantees, and to approve
the form of Option Certificates;

 

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(v)        to accelerate at any
time the exercisability or vesting of all or any portion of Non-Qualified Stock Options;

 

(vi)        subject to the provisions
of Section 5(b), to extend at any time the period in which a Non-Qualified Stock Option may be exercised; and

 

(vii)        at
any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Non-Qualified Stock Option (including
related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the administration of the Plan.

 

All decisions and interpretations of the Administrator
shall be binding on all persons, including the Company and Plan grantees.

 

(c)        Delegation
of Authority to Grant Options. Subject to applicable law, the Administrator, in its discretion, may delegate to the Chief Executive
Officer of the Company all or part of the Administrator’s authority and duties with respect to the granting of Non-Qualified
Stock Options. Any such delegation by the Administrator shall include specific limitations as to the number of Non-Qualified Stock
Options that may be granted during the period of the delegation and shall contain specific guidelines as to the number of Non-Qualified
Stock Options that can be made to an Eligible Individual, determination of the exercise price and the vesting criteria. The Administrator
may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator’s
delegate or delegates that were consistent with the terms of the Plan.

 

(d)        Option
Certificate. Non-Qualified Stock Options under the Plan shall be evidenced by Option Certificates that set forth the terms,
conditions and limitations for each Option which may include, without limitation, the term of a Non-Qualified Stock Option and
the provisions applicable in the event employment or service terminates.

 

(e)        Indemnification.
Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and
the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company
in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under the Company’s articles or bylaws or any directors’ and
officers’ liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between
such individual and the Company.

 

(f)        Foreign
Non-Qualified Stock Option Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the
laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Non-Qualified
Stock Options, the Administrator, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries
shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the
Plan; (iii) modify the terms and conditions of any Non-Qualified Stock Option granted to individuals outside the United States
to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures,
to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall
be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share
limitations contained in Section 3(a) hereof; and (v) take any action, before or after an Non-Qualified Stock Option
is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental
regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no
Non-Qualified Stock Options shall be granted, that would violate the Exchange Act or any other applicable United States securities
law, the Code, or any other applicable United States governing statute or law.

 

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SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

 

(a)        Stock
Issuable. The maximum number of shares of Stock reserved and available for issuance under the Plan shall be Two Million (2,000,000)
shares (the “Initial Limit”), subject to adjustment as provided in Section 3(c). For purposes of this limitation,
the shares of Stock underlying any Non-Qualified Stock Options that are forfeited, canceled, held back upon exercise of a Non-Qualified
Stock Option or settlement of a Non-Qualified Stock Option to cover the exercise price or tax withholding, reacquired by the Company
prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) shall be added back
to the shares of Stock available for issuance under the Plan. In the event the Company repurchases shares of Stock on the open
market, such shares shall not be added to the shares of Stock available for issuance under the Plan. The shares available for issuance
under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company.

 

(b)        Changes
in Stock. Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding shares
of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company,
or additional 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 Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially
all of the assets of the Company, the outstanding shares of Stock are converted into or exchanged for securities of the Company
or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment
in (i) the maximum number of shares reserved for issuance under the Plan, (ii) the number and kind of shares or other
securities subject to any then outstanding Non-Qualified Stock Options under the Plan, and (iii) the exercise price for each
share subject to any then outstanding Non-Qualified Stock Options, without changing the aggregate exercise price (i.e., the exercise
price multiplied by the number of Non-Qualified Stock Options) as to which such Non-Qualified Stock Options remain exercisable.
The Administrator shall also make equitable or proportionate adjustments in the number of shares subject to outstanding Non-Qualified
Stock Options and the exercise price and the terms of outstanding Non-Qualified Stock Options to take into consideration cash dividends
paid other than in the ordinary course or any other extraordinary corporate event. The adjustment by the Administrator shall be
final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment,
but the Administrator in its discretion may make a cash payment in lieu of fractional shares.

 

(c)        Mergers
and Other Transactions. Except as the Administrator may otherwise specify with respect to particular Non-Qualified Stock Options
in the relevant Option Certificate, in the case of and subject to the consummation of a Sale Event, all Non-Qualified Stock Options
that are not exercisable immediately prior to the effective time of the Sale Event shall become fully exercisable as of the effective
time of the Sale Event unless the parties to the Sale Event agree that Non-Qualified Stock Options will be assumed or continued
by the successor entity. Upon the effective time of the Sale Event, the Plan and all outstanding Non-Qualified Stock Options granted
hereunder shall terminate, unless provision is made in connection with the Sale Event in the sole discretion of the parties thereto
for the assumption or continuation of Non-Qualified Stock Options theretofore granted by the successor entity, or the substitution
of such Non-Qualified Stock Options with new Non-Qualified Stock Options of the successor entity or parent thereof, with appropriate
adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree
(after taking into account any acceleration hereunder). In the event of such termination, (i) the Company shall have the option
(in its sole discretion) to make or provide for a cash payment to the grantees holding Non-Qualified Stock Options, in exchange
for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the number of
shares of Stock subject to outstanding Non-Qualified Stock Options (to the extent then exercisable (after taking into account any
acceleration hereunder) at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding
Non-Qualified Stock Options; or (ii) each grantee shall be permitted, within a specified period of time prior to the consummation
of the Sale Event as determined by the Administrator, to exercise all outstanding Non-Qualified Stock Options held by such grantee,
including those that will become exercisable upon the consummation of the Sale Event; provided, however, that the exercise of the
Non-Qualified Stock Options not exercisable prior to the Sale Event shall be subject to the consummation of the Sale Event.

 

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(d)        Substitute
Non-Qualified Stock Options. The Administrator may grant Non-Qualified Stock Options under the Plan in substitution for stock
and stock based awards held by employees, directors or other key persons of another corporation in connection with the merger or
consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Administrator may direct that the substitute awards be granted on such terms
and conditions as the Administrator considers appropriate in the circumstances. Any substitute Non-Qualified Stock Options granted
under the Plan shall not count against the share limitation set forth in Section 3(a).

 

SECTION 4. ELIGIBILITY

 

Grantees under the Plan will be such Eligible
Individuals as are selected from time to time by the Administrator in its sole discretion.

 

SECTION 5.NON-QUALIFIED STOCK OPTIONS

 

Any Non-Qualified Stock Option granted under
the Plan shall be in such form as the Administrator may from time to time approve. Non-Qualified Stock Options granted pursuant
to this Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem desirable.

 

(a)        Exercise
Price. The exercise price per share for the Stock covered by a Non-Qualified Stock Option shall be determined by the Administrator
at the time of grant but shall not be less than one hundred (100) percent of the Fair Market Value on the date of grant.

 

(b)        Option
Term. The term of each Non-Qualified Stock Options shall be fixed by the Administrator, but no Stock Option shall be exercisable
more than ten years after the date the Stock Option is granted.

 

(c)        Exercisability;
Rights of a Stockholder. Non-Qualified Stock Options shall become exercisable at such time or times, whether or not in installments,
as shall be determined by the Administrator at or after the grant date. The Administrator may at any time accelerate the exercisability
of all or any portion of any Non-Qualified Stock Option. A grantee shall have the rights of a stockholder only as to shares acquired
upon the exercise of a Non-Qualified Stock Option and not as to unexercised Non-Qualified Stock Options.

 

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(d)        Method
of Exercise. Non-Qualified Stock Options may be exercised in whole or in part, by giving written or electronic notice of exercise
to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the
following methods to the extent provided in the Option Certificate:

 

(i)        In
cash, by certified or bank check or other instrument acceptable to the Administrator;

 

(ii)        Through
the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the grantee on the open market or
that have been beneficially owned by the grantee for at least six months and that are not then subject to restrictions under any
Company plan. Such surrendered shares shall be valued at Fair Market Value on the exercise date;

 

(iii)        By
the grantee delivering to the Company a properly executed exercise notice together 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; provided that in
the event the grantee chooses to pay the purchase price as so provided, the grantee and the broker shall comply with such procedures
and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment
procedure; or

 

(iv)        By
a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon
exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price.

 

Payment instruments will be received subject to collection. The
transfer to the grantee on the records of the Company or of the transfer agent of the shares of Stock to be purchased pursuant
to the exercise of a Non-Qualified Stock Option will be contingent upon receipt from the grantee (or a purchaser acting in his
stead in accordance with the provisions of the Non-Qualified Stock Option) by the Company of the full purchase price for such shares
and the fulfillment of any other requirements contained in the Option Certificate or applicable provisions of laws (including the
satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the grantee). In the event a grantee
chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock
transferred to the grantee upon the exercise of the Non-Qualified Stock Option shall be net of the number of attested shares. In
the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise
of Non-Qualified Stock Options, such as a system using an internet website or interactive voice response, then the paperless exercise
of Non-Qualified Stock Options may be permitted through the use of such an automated system.

 

SECTION 6. TRANSFERABILITY

 

(a)        Transferability.
Except as provided in Section 6(b) below, during a grantee’s lifetime, his or her Non-Qualified Stock Options shall
be exercisable only by the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s
incapacity. No Non-Qualified Stock Options shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee
other than by will or by the laws of descent and distribution or pursuant to a domestic relations order. No Non-Qualified Stock
Options shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation
hereof shall be null and void.

 

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(b)        Administrator
Action. Notwithstanding Section 6(a), the Administrator, in its discretion, may provide either in the Option Certificate
regarding a given Non-Qualified Stock Option or by subsequent written approval that the grantee may transfer his or her Non-Qualified
Stock Options to his or her immediate family members, to trusts for the benefit of such family members, or to partnerships in which
such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of
the terms and conditions of this Plan and the applicable Non-Qualified Stock Option. In no event may a Non-Qualified Stock Option
be transferred by a grantee for value.

 

(c)        Family
Member. For purposes of Section 6(b), “family member” shall mean a grantee’s child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than
a tenant of the grantee), a trust in which these persons (or the grantee) have more than 50 percent of the beneficial interest,
a foundation in which these persons (or the grantee) control the management of assets, and any other entity in which these persons
(or the grantee) own more than 50 percent of the voting interests.

 

(d)       
Designation of Beneficiary. Each grantee to whom a Non-Qualified Stock Option has been made under the Plan may designate
a beneficiary or beneficiaries to exercise any Non-Qualified Stock Option or receive any payment under any Non-Qualified Stock
Option payable on or after the grantee’s death. Any such designation shall be on a form provided for that purpose by the
Administrator and shall not be effective until received by the Administrator. If no beneficiary has been designated by a deceased
grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.

 

SECTION 7. TAX WITHHOLDING

 

(a)        Payment
by Grantee. Each grantee shall, no later than the date as of which the value of a Non-Qualified Stock Option or of any Stock
or other amounts received thereunder first becomes includable in the gross income of the grantee for Federal income tax purposes,
pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes
of any kind required by law to be withheld by the Company with respect to such income. The Company and its Subsidiaries shall,
to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee.
The Company’s obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned
on tax withholding obligations being satisfied by the grantee.

 

(b)        Payment
in Stock. Subject to approval by the Administrator, a grantee may elect to have the Company’s minimum required tax withholding
obligation satisfied, in whole or in part, by authorizing the Company to withhold from shares of Stock to be issued pursuant to
any Non-Qualified Stock Option a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected)
that would satisfy the withholding amount due.

 

SECTION 8. SECTION 409A AWARDS

 

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To the extent that any Non-Qualified Stock
Option is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a
“409A Award ”), the Non-Qualified Stock Option shall be subject to such additional rules and requirements as
specified by the Administrator from time to time in order to comply with Section 409A. In this regard, if any amount under
a 409A Award is payable upon a “separation from service” (within the meaning of Section 409A) to a grantee who
is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be
made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service,
or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject
to interest, penalties and/or additional tax imposed pursuant to Section 409A. Further, the settlement of any such Non-Qualified
Stock Option may not be accelerated except to the extent permitted by Section 409A.

 

SECTION 9. TRANSFER, LEAVE OF ABSENCE, ETC.

 

For purposes of the Plan, the following events shall not be deemed
a termination of employment:

 

(a)        a
transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another;
or

 

(b)        an
approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s
right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence
was granted or if the Administrator otherwise so provides in writing.

 

SECTION 10. AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue
the Plan and the Administrator may, at any time, amend or cancel any outstanding Non-Qualified Stock Option for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding
Non-Qualified Stock Option without the holder’s consent. Except as provided in Section 3(c) or 3(d), without prior stockholder
approval, in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Non-Qualified Stock
Options or effect repricing through cancellation and re-grants or cancellation of Non-Qualified Stock Options in exchange for cash.
To the extent required under the rules of any securities exchange or market system on which the Stock is listed, Plan amendments
shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 10
shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(c) or 3(d).

 

SECTION 11. STATUS OF PLAN

 

With respect to the portion of any Non-Qualified
Stock Option that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee
shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly
determine in connection with any Non-Qualified Stock Option or Non-Qualified Stock Options. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments
with respect to Non-Qualified Stock Options hereunder, provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

 

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SECTION 12. GENERAL PROVISIONS

 

(a)        No
Distribution. The Administrator may require each person acquiring Stock pursuant to a Non-Qualified Stock Option to represent
to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.

 

(b)        Delivery
of Stock Certificates. Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company
or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee,
at the grantee’s last known address on file with the Company. Uncertificated Stock shall be deemed delivered for all purposes
when the Company or a Stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt)
or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice
of issuance and recorded the issuance in its records (which may include electronic “book entry” records). Notwithstanding
anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock
pursuant to the exercise of any Non-Qualified Stock Option, unless and until the Administrator has determined, with advice of counsel
(to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates
is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any
exchange on which the shares of Stock are listed, quoted or traded. All Stock certificates delivered pursuant to the Plan shall
be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with
federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Stock is listed, quoted
or traded. The Administrator may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition
to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements,
and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws,
regulations, or requirements. The Administrator shall have the right to require any individual to comply with any timing or other
restrictions with respect to the settlement or exercise of any Non-Qualified Stock Option, including a window-period limitation,
as may be imposed in the discretion of the Administrator.

 

(c)        Stockholder
Rights. Until Stock is deemed delivered in accordance with Section 12(b), no right to vote or receive dividends or any
other rights of a stockholder will exist with respect to shares of Stock to be issued in connection with a Non-Qualified Stock
Option, notwithstanding the exercise of a Non-Qualified Stock Option or any other action by the grantee with respect to a Non-Qualified
Stock Option.

 

(d)        Other
Compensation Arrangements; No Employment Rights. Nothing contained in this Plan shall prevent the Board from adopting other
or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable
only in specific cases. The adoption of this Plan and the grant of Non-Qualified Stock Options do not confer upon any employee
any right to continued employment with the Company or any Subsidiary.

 

(e)        Trading
Policy Restrictions. Option exercises and other Non-Qualified Stock Options under the Plan shall be subject to the Company’s
insider trading policies and procedures, as in effect from time to time.

 

(f)        Company
Documents and Policies. This Plan and all Non-Qualified Stock Options granted hereunder are subject to the corporate articles
and by-laws of the Company, as they may be amended from time to time, and all other Company policies duly adopted by the Board
or the Administrator and as in effect from time to time regarding the acquisition, ownership or sale of Stock by employees, including
without limitation policies intended to limit the potential for insider trading and to avoid or recover compensation payable or
paid on the basis of inaccurate financial results or statements, employee conduct, and other similar events.

 

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SECTION 13. EFFECTIVE DATE OF PLAN

 

This Plan shall become effective upon the Effective Date.

 

SECTION 14. GOVERNING LAW

 

This Plan and all Non-Qualified Stock Options
and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.

 

 

 

DATE APPROVED BY BOARD OF DIRECTORS: February 15, 2016

 

DATE AMENDED BY BOARD OF DIRECTORS: December 12, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

10Exhibit

                                                                                                                                                                              Ex 10.1

March 22, 2019

Cidara Therapeutics, Inc. 
6310 Nancy Ridge Drive, Suite 101
San Diego, California 92121
Attn: Jessica Oien, General Counsel
Re:     3(a)(9) Exchange Agreement 
Ladies and Gentlemen: 
This letter agreement (this “Agreement”) confirms the agreement of Cidara Therapeutics, Inc., a Delaware corporation (the “Company”), and the holders of the Company’s Common Stock, par value $0.0001 per share (the “Common Stock”), listed on Schedule I attached hereto (the “Stockholders”), pursuant to which the Stockholders have agreed to exchange an aggregate of 1,200,000 shares of Common Stock (the “Shares”) beneficially owned by the Stockholders for an aggregate of 120,000 shares of the Company’s Series X Convertible Preferred Stock, par value $0.0001 per share (the “Preferred Shares”), which have the rights, preferences and privileges set forth in the Certificate of Designation of Preferences, Rights and Limitations of Series X Convertible Preferred Stock set forth on Exhibit A attached hereto (the “COD”).  The Preferred Shares are convertible into an aggregate of 1,200,000 shares of Common Stock (subject to adjustment as provided in the COD), subject to beneficial ownership conversion limitations set forth in the COD. 
In consideration of the foregoing, the Company and the Stockholders agree as follows:
(1)No later than the close of business on the first business day after the date hereof (the “Closing Date”) and subject to the satisfaction or waiver of the conditions set forth herein, the Stockholders shall exchange the Shares for the Preferred Shares (the “Exchange”) in the respective amounts listed on Schedule I.  The Exchange shall be consummated pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”).  On the Closing Date: (a) the Company and the Stockholders shall jointly and irrevocably instruct American Stock Transfer & Trust Company, LLC (the “Transfer Agent”) to cancel the direct registration book-entry statements from the Transfer Agent evidencing the Shares; and (b) the Company shall irrevocably instruct the Transfer Agent to issue and deliver to the Stockholders the Preferred Shares in book-entry form, in the amounts and in the names set forth on Schedule I. 
(2)The Company represents and warrants to each Stockholder as follows: 
(a)Neither the Company nor any of its affiliates nor any person acting on behalf of or for the benefit of any of the foregoing, has paid or given, or agreed to pay or give, directly or indirectly, any commission or other remuneration (within the meaning of Section 3(a)(9) of the Securities Act and the rules and regulations of the U.S. Securities and Exchange Commission (the “Commission”) promulgated thereunder) in connection with the Exchange.  Assuming the representations and warranties of the Stockholders contained herein are true and complete, the Exchange will qualify for the registration exemption contained in Section 3(a)(9) of the Securities Act. 
(b)It has the requisite corporate power and authority and power to enter into this Agreement and to consummate the Exchange and such transactions shall not contravene any contractual, regulatory, statutory or other obligation or restriction applicable to the Company. 

(c)It has reserved a sufficient number of shares of Common Stock as may be necessary to fully permit the issuance of the Common Stock issuable upon conversion of the Preferred Shares, without regard to any beneficial ownership limits. 
(3)Each Stockholder, as to itself only, represents and warrants to the Company as follows: 
(a)It has the requisite power and authority to enter into this Agreement and consummate the Exchange.
(b)It is the record and beneficial owner of, and has valid and marketable title to, the Shares being exchanged by it pursuant to this Agreement, free and clear of any lien, pledge, restriction or other encumbrance (other than restrictions arising pursuant to applicable securities laws), and has the absolute and unrestricted right, power and capacity to surrender and exchange the Shares being exchanged by it pursuant to this Agreement, free and clear of any lien, pledge, restriction or other encumbrance.  It is not a party to or bound by, and the Shares being exchanged by it pursuant to this Agreement are not subject to, any agreement, understanding or other arrangement (i) granting any option, warrant or right of first refusal with respect to such Shares to any person, (ii) restricting its right to surrender and exchange such Shares as contemplated by this Agreement, or (iii) restricting any other of its rights with respect to such Shares. 
(c)Neither it nor any of its affiliates nor any person acting on behalf of or for the benefit of any of the forgoing, has paid or given, or agreed to pay or give, directly or indirectly, any commission or other remuneration (within the meaning of Section 3(a)(9) of the Securities Act and the rules and regulations of the Commission promulgated thereunder) for soliciting the Exchange. 
(4)This Agreement, and any action or proceeding arising out of or relating to this Agreement, shall be exclusively governed by the laws of the State of New York. 
(5)In the event that any part of this agreement is declared by any court or other judicial or administrative body to be null, void or unenforceable, said provision shall survive to the extent it is not so declared, and all of the other provisions of this agreement shall remain in full force and effect. In such an event, the Stockholders and the Company shall endeavor in good faith negotiations to modify this agreement so as to affect the original intent of the parties as closely as possible. 
(6)This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. 
[SIGNATURE PAGE FOLLOWS] 

Please sign to acknowledge agreement with the above terms and return to the undersigned. 
 
	
			
	Common Stockholder:

	 

	Biotechnology Value Fund, L.P.

	 

	By: BVF Partners L.P., General Partner

	 
	 

	By:
	 
	BVF, Inc., General Partner

	 
	 

	By:
	 
	/s/ Mark Lampert

	Name:
	 
	Mark Lampert

	Title:
	 
	President

 
	
			
	Biotechnology Value Fund II, L.P.

	 

	By: BVF Partners L.P., General Partner

	 
	 

	By:
	 
	BVF, Inc., General Partner

	 
	 

	By:
	 
	/s/ Mark Lampert

	Name:
	 
	Mark Lampert

	Title:
	 
	President

	
			
	Biotechnology Value Trading Fund OS, L.P.

	 

	By: BVF Partners OS, Ltd., General Partner

	 

	By: BVF Partners L.P., Sole Member

	 
	 

	By:
	 
	BVF, Inc. General Partner

	 
	 

	By:
	 
	/s/ Mark Lampert

	Name:
	 
	Mark Lampert

	Title:
	 
	President

	
			
	MSI BVF SPV, L.L.C.

	 
	 
	 

	c/o Magnitude Capital

	 
	 
	 

	By:
	 
	/s/ Mark Lampert    

	Name:
	 
	Mark Lampert 

	Title:
	 
	President BVF Inc., itself General Partner of BVF Partners L.P., itself attorney-in-fact for MSI BVF SPV, L.L.C.

Acknowledged and agreed to: 

Cidara Therapeutics, Inc.
	
			
	By:
	 
	/s/ Jessica Oien

	Name:
	 
	Jessica Oien

	Title:
	 
	General Counsel

SCHEDULE I

	
			
	Stockholder
	Shares of Common Stock 
to be Exchanged
	Shares of Series X Preferred Stock
to be Received

	Biotechnology Value Fund, L.P.
	643,600
	64,360

	Biotechnology Value Fund II, L.P.
	383,420
	38,342

	Biotechnology Value Trading Fund OS, L.P.
	103,790
	10,379

	MSI BVF SPV, LLC
	69,190
	6,919

	Total
	1,200,000
	120,000

 

EXHIBIT A

CERTIFICATE OF DESIGNATION OF PREFERENCES, 
RIGHTS AND LIMITATIONS 
OF 
SERIES X CONVERTIBLE PREFERRED STOCK

[ATTACHED]

CIDARA THERAPEUTICS, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES X CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW

CIDARA THERAPEUTICS, INC., a Delaware corporation (the “Corporation”), in accordance with the provisions of Section 103 of the Delaware General Corporation Law (the “DGCL”) does hereby certify that, in accordance with Sections 141(c) and 151 of the DGCL, the following resolution was adopted by a duly authorized committee of the Board of Directors of the Corporation on May 20, 2018:

RESOLVED, pursuant to authority expressly set forth in the Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), the issuance of a series of Preferred Stock designated as the Series X Convertible Preferred Stock, par value $0.0001 per share, of the Corporation is hereby authorized and the designation, number of shares, powers, preferences, rights, qualifications, limitations and restrictions thereof (in addition to any provisions set forth in the Certificate of Incorporation, as amended, that are applicable to the Preferred Stock of all classes and series) are hereby fixed, and the Certificate of Designation of Preferences, Rights and Limitations of Series X Convertible Preferred Stock is hereby approved as follows:

SERIES X CONVERTIBLE PREFERRED STOCK
Section 1. Definitions. For the purposes hereof, the following terms shall have the following meanings:

“Affiliate” means any Person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act. With respect to a Holder, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Holder will be deemed to be an Affiliate of such Holder.

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Closing Sale Price” means, for any security as of any date, the last closing trade price for such security prior to 4:00 p.m., New York City time, on the principal securities exchange or trading market where such security is listed or traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting service mutually acceptable to and hereafter designated by Holders of a majority of the then-outstanding Series X Preferred Stock and the Corporation), or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, L.P., or, if no last trade price is reported for such security by Bloomberg, L.P., the average of the bid prices of any market makers for such security as reported on the OTC Pink Market by OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Corporation.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the Corporation’s common stock, par value $0.0001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities of the Corporation or the subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Conversion Price” shall mean $1.00, as adjusted pursuant to paragraph 7 hereof.

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series X Preferred Stock in accordance with the terms hereof.

“Daily Failure Amount” means the product of (x) .005 multiplied by (y) the Closing Sale Price of the Common Stock on the applicable Share Delivery Date.

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

“Holder” means any holder of Series X Preferred Stock.

“Issuance Date” May 23, 2018.

“Person” means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Stated Value” shall mean $10.00 per share.

“Trading Day” means a day on which the Common Stock is traded for any period on the principal securities exchange or if the Common Stock is not traded on a principal securities exchange, on a day that the Common Stock is traded on another securities market on which the Common Stock is then being traded.

Section 2. Designation, Amount and Par Value; Assignment.

(a) The series of preferred stock designated by this Certificate of Designation shall be designated as the Corporation’s Series X Convertible Preferred Stock (the “Series X Preferred Stock”) and the number of shares so designated shall be 5,000,000. Each share of Series X Preferred Stock shall have a par value of $0.0001 per share. The Series X Preferred Stock may be issued in certificated form or in book-entry form, as requested by a Holder. To the extent that any shares of Series X Preferred Stock are issued in book-entry form, references herein to “certificates” shall instead refer to the book-entry notation relating to such shares.

(b) The Corporation shall register shares of the Series X Preferred Stock, upon records to be maintained by the Corporation for that purpose (the “Series X Preferred Stock Register”), in the name of the Holders thereof from time to time. The Corporation may deem and treat the registered Holder of shares of Series X Preferred Stock as the absolute owner thereof for the purpose of any conversion thereof and for all other purposes. The Corporation shall register the transfer of any shares of Series X Preferred Stock in the Series X Preferred Stock Register, upon surrender of the certificates evidencing such shares to be transferred, duly endorsed by the Holder thereof, to the Corporation at its address specified herein. Upon any such registration or transfer, a new certificate evidencing the shares of Series X Preferred Stock so transferred shall be issued to the transferee and a new certificate evidencing the remaining portion of the shares not so transferred, if any, shall be issued to the transferring Holder, in each case, within two Business Days. The provisions of this Certificate of Designation are intended to be for the benefit of all Holders from time to time and shall be enforceable by any such Holder.

Section 3. Dividends. Holders shall not be entitled to receive any dividends in respect of the Series X Preferred Stock, except to the extent that dividends are paid on the Corporation’s Common Stock, in which case the Holders of the Series X Preferred Stock shall be entitled to participate in such dividends, on an as-converted basis (without regard to the Beneficial Ownership Limitation).

Section 4. Voting Rights Amendments.
(a) Except as otherwise provided herein or as otherwise required by the DGCL, the Series X Preferred Stock shall have no voting rights.

(b) Notwithstanding Section 4(a), so long as at least 50% of the authorized shares of Series X Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Series X Preferred Stock: (a) alter or amend this Certificate of Designation, amend or repeal any provision of, or add any provision to, the Certificate of Incorporation or bylaws of the Corporation, or file any articles of amendment, certificate of designation, preferences, limitations and relative rights of any series of preferred stock, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series X Preferred Stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise, or (b) increase or decrease (other than by conversion) the number of authorized shares of Series X Preferred Stock.

(c) Any vote required or permitted under Section 4(b) may be taken at a meeting of the Holders of the Series X Preferred Stock or through the execution of an action by written consent in lieu of such meeting, provided that the consent is executed by Holders representing a majority of the outstanding shares of Series X Preferred Stock.

Section 5. Rank; Liquidation.

(a) The Series X Preferred Stock shall rank: (i) senior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms junior to any Series X Preferred Stock (“Junior Securities”); (ii) on parity with the Common Stock and any other class or series of capital stock of the Corporation hereafter created specifically ranking by its terms on parity with the Series X Preferred Stock (the “Parity Securities”); and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms senior to any Series X Preferred Stock (“Senior Securities”), in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntarily or involuntarily (all such distributions being referred to collectively as “Distributions”).

(b) Subject to the prior and superior rights of the holders of any Senior Securities of the Corporation, upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, each Holder of shares of Series X Preferred Stock shall be entitled to receive, in preference to any Distributions of any of the assets or surplus funds of the Corporation to the holders of the Junior Securities, and pari passu with any Distribution to the holders of the Parity Securities, an equivalent amount of Distributions as would be paid on the Common Stock underlying the Series X Preferred Stock, determined on an as-converted basis (without regard to the Beneficial Ownership Limitation), plus an additional amount equal to any dividends declared but unpaid on such shares, before any payments shall be made or any assets distributed to holders of any class of Junior Securities. If, upon any such liquidation, dissolution or winding up of the Corporation, the assets of the Corporation shall be insufficient to pay the Holders of shares of the Series X Preferred Stock the amount required under the preceding sentence, then all remaining assets of the Corporation shall be distributed ratably to Holders of the shares of the Series X Preferred Stock and holders of Parity Securities.

Section 6. Conversion.

(a) Conversions at Option of Holder. Each share of Series X Preferred Stock shall be convertible, at any time and from time to time from and after the Issuance Date, at the option of the Holder thereof, into a number of shares of Common Stock equal to the Conversion Ratio. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”), duly completed and executed. Other than a conversion following a Fundamental Transaction or following a notice provided for under Section 7(d)(ii) hereof, the Notice of Conversion must specify at least a number of shares of Series X Preferred Stock to be converted 

equal to the lesser of (x) 100 shares (such number subject to appropriate adjustment following the occurrence of an event specified in Section 7(a) hereof) and (y) the number of shares of Series X Preferred Stock then held by the Holder. Provided the Corporation’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, the Notice of Conversion may specify, at the Holder’s election, whether the applicable Conversion Shares shall be credited to the account of the Holder’s prime broker with DTC through its Deposit Withdrawal Agent Commission system (a “DWAC Delivery”). The “Conversion Date”, or the date on which a conversion shall be deemed effective, shall be defined as the Trading Day that the Notice of Conversion, completed and executed, is sent by facsimile or e-mail to, and received during regular business hours by, the Corporation; provided that the original certificate(s) (if applicable) representing such shares of Series X Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Corporation within two (2) Trading Days thereafter. In all other cases, the Conversion Date shall be defined as the Trading Day on which the original share certificate(s) (if applicable) of Series X Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion, are received by the Corporation. The calculations set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.

(b) Conversion Ratio. The “Conversion Ratio” for each share of Series X Preferred Stock shall be equal to the Stated Value divided by the Conversion Price.

(c) Beneficial Ownership Limitation. Notwithstanding anything herein to the contrary, the Corporation shall not effect any conversion of the Series X Preferred Stock, and a Holder shall not have the right to convert any portion of the Series X Preferred Stock, to the extent that, after giving effect to an attempted conversion set forth on an applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any other Person whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) or Section 16 of the Exchange Act and the applicable regulations of the Commission, including any “group” of which the Holder is a member (the foregoing, “Attribution Parties”)) would beneficially own a number of shares of Common Stock in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of the Series X Preferred Stock subject to the Notice of Conversion with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series X Preferred Stock beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to a limitation on conversion or exercise similar to the limitation contained herein. For purposes of this Section 6(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable regulations of the Commission. For purposes of this Section 6(c), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (A) the Corporation’s most recent periodic or annual filing with the Commission, as the case may be, (B) a more recent public announcement by the Corporation that is filed with the Commission, or (C) a more recent notice by the Corporation or the Corporation’s transfer agent to the Holder setting forth the number of shares of Common Stock then outstanding. Upon the written request of a Holder (which may be by email), the Corporation shall, within two (2) Trading Days thereof, confirm in writing to such Holder (which may be via email) the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to any actual conversion or exercise of securities of the Corporation, including shares of Series X Preferred Stock, by such Holder or its Attribution Parties since the date as of which such number of outstanding shares of Common Stock was last publicly reported or confirmed to the Holder. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock pursuant to such Notice of Conversion (to the extent permitted pursuant to this Section 6(c)). The Corporation shall be entitled to rely on representations made to it by the Holder in any Notice of Conversion regarding its Beneficial Ownership Limitation.

(d) Mechanics of Conversion

i. Delivery of Certificate or Electronic Issuance Upon Conversion. Not later than two Trading Days after the applicable Conversion Date, or if the Holder requests the issuance of physical certificate(s), two Trading Days after receipt by the Corporation of the original certificate(s) representing such shares of Series X Preferred Stock being converted, duly endorsed, and the accompanying Notice of Conversion (the “Share Delivery Date”), the Corporation shall either: (a) deliver, or cause to be delivered, to the converting Holder a physical certificate or certificates representing the number of Conversion Shares being acquired upon the conversion of shares of Series X Preferred Stock; or (b) in the case of a DWAC Delivery, electronically transfer such Conversion Shares by crediting the account of the Holder’s prime broker with DTC through its DWAC system. If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by or, in the case of a DWAC Delivery, such shares are not electronically delivered to or as directed by, the applicable Holder by the Share Delivery Date, the applicable Holder shall be entitled to elect to rescind such Notice of Conversion by written notice to the Corporation at any time on or before its receipt of such certificate or certificates for Conversion Shares or electronic receipt of such shares, as applicable, in which event the Corporation shall promptly return to such Holder any original Series X Preferred Stock certificate delivered to the Corporation and such Holder shall promptly return to the Corporation any Common Stock certificates or otherwise direct the return of any shares of Common Stock delivered to the Holder through the DWAC system, representing the shares of Series X Preferred Stock unsuccessfully tendered for conversion to the Corporation.

ii. Obligation Absolute. Subject to Section 6(c) hereof and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6(d)(i) above, the Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Series X Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares. Subject to Section 6(c) hereof and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6(d)(i) above, in the event a Holder shall elect to convert any or all of its Series X Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder or anyone associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Series X Preferred Stock of such Holder shall have been sought and obtained by the Corporation, and the Corporation posts a surety bond for the benefit of such Holder in the amount of 125% of the value of the Conversion Shares into which would be converted the Series X Preferred Stock which is subject to such injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Corporation shall, subject to Section 6(c) hereof and subject to Holder’s right to rescind a Notice of Conversion pursuant to Section 6(d)(i) above, issue Conversion Shares upon a properly noticed conversion. If the Corporation fails to deliver to a Holder such certificate or certificates, or electronically deliver (or cause its transfer agent to electronically deliver) such shares in the case of a DWAC Delivery, pursuant to Section 6(d)(i) on or prior to the fifth Trading Day after the Share Delivery Date applicable to such conversion (other than a failure caused by incorrect or incomplete information provided by Holder to the Corporation), then, unless the Holder has rescinded the applicable Notice of Conversion pursuant to Section 6(d)(i) above, the Corporation shall pay (as liquidated damages and not as a penalty) to such Holder an amount payable, at the Corporation’s option, either (a) in cash or (b) to the extent that it would not cause the Holder or its Attribution Parties to exceed the Beneficial Ownership Limitation, in shares of Common Stock that are valued for these purposes at the Closing Sale Price on the date of such calculation, in each case equal to the product of (x) the number of Conversion Shares required to have been issued by the Corporation on such Share Delivery Date, (y) an amount equal to the Daily Failure Amount and (z) the number of Trading Days actually lapsed after such fifth Trading Day after the Share Delivery Date during which such certificates have not been delivered, or, in the case of a DWAC Delivery, such shares have not been electronically delivered; provided, however, the Holder shall only receive up to such amount of shares of Common Stock such that Holder and its Attribution Parties and any other persons or entities whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) 

of the Exchange Act (including shares held by any “group” of which the Holder is a member, but excluding shares beneficially owned by virtue of the ownership of securities or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the limitation set forth herein) shall not collectively beneficially own greater than the Beneficial Ownership Limitation. Nothing herein shall limit a Holder’s right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief; provided that Holder shall not receive duplicate damages for the Corporation’s failure to deliver Conversion Shares within the period specified herein. The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

iii. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. If the Corporation fails to deliver to a Holder the applicable certificate or certificates or to effect a DWAC Delivery, as applicable, by the Share Delivery Date pursuant to Section 6(d)(i) (other than a failure caused by incorrect or incomplete information provided by Holder to the Corporation), and if after such Share Delivery Date such Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder) the amount by which (x) such Holder’s total purchase price (including any brokerage commissions) for the shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of Series X Preferred Stock equal to the number of shares of Series X Preferred Stock submitted for conversion or deliver to such Holder the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its delivery requirements under Section 6(d)(i). For example, if a Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Series X Preferred Stock with respect to which the actual sale price (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder $1,000. The Holder shall provide the Corporation written notice, within two (2) Trading Days after the occurrence of a Buy-In, indicating the amounts payable to such Holder in respect of such Buy-In together with applicable confirmations and other evidence reasonably requested by the Corporation. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the shares of Series X Preferred Stock as required pursuant to the terms hereof; provided, however, that the Holder shall not be entitled to both (i) require the reissuance of the shares of Series X Preferred Stock submitted for conversion for which such conversion was not timely honored and (ii) receive the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its delivery requirements under Section 6(d)(i).

iv. Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series X Preferred Stock, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series X Preferred Stock, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments of Section 7) upon the conversion of all outstanding shares of Series X Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and non-assessable.

v. Fractional Shares. No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion of the Series X Preferred Stock. As to any fraction of a share which a Holder would otherwise be entitled to receive upon such conversion, the Corporation shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price.

vi. Transfer Taxes. The issuance of certificates for shares of the Common Stock upon conversion of the Series X Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the registered Holder(s) of such shares of Series X Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

(e) Status as Stockholder. Upon each Conversion Date, (i) the shares of Series X Preferred Stock being converted shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a holder of such converted shares of Series X Preferred Stock shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Corporation to comply with the terms of this Certificate of Designation. In all cases, the Holder shall retain all of its rights and remedies for the Corporation’s failure to convert Series X Preferred Stock.

Section 7. Certain Adjustments.

(a) Stock Dividends and Stock Splits. If the Corporation, at any time while this Series X Preferred Stock is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of this Series X Preferred Stock or upon the exercise of warrants) with respect to the then outstanding shares of Common Stock; (B) subdivides outstanding shares of Common Stock into a larger number of shares; or (C) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event (excluding any treasury shares of the Corporation). Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.

(b) Fundamental Transaction. If, at any time while this Series X Preferred Stock is outstanding, (A) the Corporation effects any merger or consolidation of the Corporation with or into another Person or any stock sale to, or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, share exchange or scheme of arrangement) with or into another Person (other than such a transaction in which the Corporation is the surviving or continuing entity and its Common Stock is not exchanged for or converted into other securities, cash or property), (B) the Corporation effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (C) any tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which more than 50% of the Common Stock not held by the Corporation or such Person is exchanged for or converted into other securities, cash or property, or (D) the Corporation effects any reclassification of the Common Stock or any compulsory share exchange pursuant (other than as a result of a dividend, subdivision or combination covered by Section 7(a) above) to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Series X Preferred Stock the Holders shall have the right to receive, in lieu of the right to receive Conversion Shares, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one share of Common Stock (the “Alternate Consideration”). For purposes of any such subsequent conversion, the determination of the Conversion Ratio shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall adjust the Conversion Ratio in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holders shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Series 

X Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. The terms of any agreement to which the Corporation is a party and pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 7(b) and insuring that this Series X Preferred Stock (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. The Corporation shall cause to be delivered to each Holder, at its last address as it shall appear upon the stock books of the Corporation, written notice of any Fundamental Transaction at least 10 calendar days prior to the date on which such Fundamental Transaction is expected to become effective or close.

(c) Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

(d) Notice to the Holders.

i. Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Ratio after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

ii. Other Notices. If: (A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the approval of any stockholders of the Corporation shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (D) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of this Series X Preferred Stock, and shall cause to be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.

Section 8. Miscellaneous.

(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at 6310 Nancy Ridge Drive, Suite 101, San Diego, California 92121, or by email: corporatesecretary@cidara.com, or such other email address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by email, or sent by a nationally recognized overnight courier service addressed to each Holder at the email address of such Holder appearing on the books of the Corporation, or if no such email address appears on the books of the Corporation, at the principal place of business of such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice 

or communication is delivered via email at the email address specified in this Section prior to 5:30 p.m. (Pacific Time) on any date, (ii) the date immediately following the date of transmission, if such notice or communication is delivered via email at the email address specified in this Section between 5:30 p.m. and 11:59 p.m. (Pacific Time) on any date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

(b) Lost or Mutilated Series X Preferred Stock Certificate. If a Holder’s Series X Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series X Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership thereof, reasonably satisfactory to the Corporation and, in each case, customary and reasonable indemnity, if requested. Applicants for a new certificate under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Corporation may prescribe.

(c) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver by the Corporation or a Holder must be in writing. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the Holders of Series X Preferred Stock granted hereunder may be waived as to all shares of Series X Preferred Stock (and the Holders thereof) upon the written consent of the Holders of not less than a majority of the shares of Series X Preferred Stock then outstanding, unless a higher percentage is required by the DGCL, in which case the written consent of the Holders of not less than such higher percentage shall be required.

(d) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

(e) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(f) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.

(g) Status of Converted Series X Preferred Stock. If any shares of Series X Preferred Stock shall be converted or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series X Preferred Stock.

********************
 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation this 21st day of May 2018.
 
	
	
	 /s/ Jeffrey L. Stein

	Jeffrey L. Stein, Ph.D.

	President and Chief Executive Officer

ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF SERIES X PREFERRED STOCK)

The undersigned Holder hereby irrevocably elects to convert the number of shares of Series X Preferred Stock indicated below, represented by stock certificate No(s).          (the “Preferred Stock Certificates”), into shares of common stock, par value $0.0001 per share (the “Common Stock”), of Cidara Therapeutics, Inc., a Delaware corporation (the “Corporation”), as of the date written below. If securities are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights and Limitations of Series X Convertible Preferred Stock (the “Certificate of Designation”) filed by the Corporation with the Secretary of State of the State of Delaware on May 21, 2018.

As of the date hereof, the number of shares of Common Stock beneficially owned by the undersigned Holder (together with such Holder’s Affiliates, and any other Person whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) or Section 16 of the Exchange Act and the applicable regulations of the Commission, including any “group” of which the Holder is a member (the foregoing, “Attribution Parties”)), including the number of shares of Common Stock issuable upon conversion of the Series X Preferred Stock subject to this Notice of Conversion, but excluding the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series X Preferred Stock beneficially owned by such Holder or any of its Attribution Parties, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder or any of its Attribution Parties that are subject to a limitation on conversion or exercise similar to the limitation contained in Section 6(c) of the Certificate of Designation, is     %. For purposes hereof, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the Commission. In addition, for purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and the applicable regulations of the Commission.

Conversion calculations:	
	
	Date to Effect Conversion:

	 

	Number of shares of Series X Preferred Stock owned prior to Conversion:

	 

	Number of shares of Series X Preferred Stock to be Converted:

	 

	Number of shares of Common Stock to be Issued:

	 

	Address for delivery of physical certificates:

	 

	or

	 

	for DWAC Delivery:

	 

	DWAC Instructions:

	 

	Broker no:

	 

	Account no:

	
			
	HOLDER

	 
	 

	By:
	 
	 

	 
	 
	Name:

	 
	 
	Title:

	 
	 
	Date:

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