Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 

 
 

  Exhibit 10.7    
    

 
    TRANZYME, INC.
  2001 NON-EMPLOYEE STOCK OPTION PLAN    
    
    Adopted August 14, 2001
  Approved by Shareholders August 14, 2001    
    

1.     PURPOSES  

        The purposes of the Tranzyme, Inc. 2001 Non-Employee Stock Option Plan are (i) to align the interests of the Company's shareholders and
recipients of Options under the Plan by increasing the proprietary interest of such recipients in the Company's growth and success and (ii) to advance the interests of the Company by attracting
well-qualified persons by providing such persons with performance-related incentives. 

2.     DEFINITIONS  

        For purposes of the Plan, the following terms shall have the following meanings: 

        "Affiliate"
shall mean any parent corporation or subsidiary corporation of the Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code. 

        "Board"
shall mean the Board of Directors of the Company or a Committee appointed by the Board of Directors of the Company. 

        "Change
in Control" shall mean (a) the acquisition of power to direct, or cause the direction of, the management and policies of the Company by a person (not previously possessing
such power), acting alone or in conjunction with others, whether through the ownership of Common Stock, by contract or otherwise, (b) the acquisition of Common Stock which results in, directly
or indirectly, the power to vote more than 50% of the outstanding Common Stock by any person or by two or more persons acting together, or (c) the election of the Company's Board of Directors,
without the recommendation of the incumbent Board of Directors of the Company, of directors constituting a majority of the number of directors of the Company then in office. For purposes of this
definition, (i) the term "person" means a natural person, corporation, partnership, joint venture, trust, government or instrumentality of a government, and (ii) customary agreements
with or between underwriters and selling group members with respect to a bona fide public offering of Common Stock shall be disregarded. 

        "Code"
shall mean the Internal Revenue Code of 1986, as amended, or any successor legislation. 

        "Committee"
shall mean the members of the Board, or a committee appointed by the Board to administer this Plan (including an "Outside Committee" as defined in Section 6.3), such
committee to at all times consist of two or more members of the Board. The Board may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee shall be filled
by the Board. The Committee shall select one of its members as Chairman and shall hold meetings at such times and places as it may determine. 

        "Common
Stock" shall mean the common stock, $.01 par value per share, of the Company. 

        "Company"
shall mean Tranzyme, Inc., a Delaware corporation, and its Affiliates. 

        "Continuous
Service" shall mean the absence of any disruption or termination of a Participant's service with the Company as an Eligible Person. Service shall not be considered
interrupted in the case of (i) a change in the Participant's capacity as an Eligible Person or entity in which the Participant renders service, so long as such entity is an Affiliate or
(ii) transfers between payroll locations of the Company
or successor. The Board of directors in its discretion shall determine the effect of sick leave, military leave, or other leave of absence approved by the Company. 

        "Disability"
shall mean permanent and total disability as generally determined by the Company. 

 

        "Eligible
Person" shall mean any Person eligible to participate in the Plan pursuant to Section 3 of the Plan. 

        "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended. 

        "Fair
Market Value" shall mean the fair market value of a share of Common Stock as determined in good faith by the Board, using such methodology as it in its sole discretion may deem
appropriate, or, if at any time the Common Stock is publicly traded on any exchange or any over-the-counter market, the closing sales price for such stock (or closing bid if no
sales were reported) as quoted on such exchange or market on the last market trading day prior to the date of determination as reported by the Wall Street
Journal, or such other source as the Board deems reliable. 

        "Non-ISO"
shall mean an Option granted under this Plan to purchase Common Stock which is not intended by the Company to satisfy the requirements of Code Section 422. 

        "Option"
shall mean Non-ISO granted pursuant to Section 7 hereof. 

        "Participant"
shall mean any Person to whom an Option has been granted pursuant to this plan, or if applicable, such other person who holds an outstanding option. 

        "Plan"
shall mean this Tranzyme, Inc. 2001 Non-Employee Stock Option Plan, as amended from time to time. 

        "Retirement"
shall mean attaining age 65 unless otherwise provided by a written agreement between the Participant and the Company or termination of employment under the terms of the
Company's then current retirement policy. 

        "Rule 16b-3"
shall mean Rule 16b-3 promulgated under Section 16(b) of the Exchange Act or any successor to such rule. 

        "Securities
Act" shall mean the Securities Act of 1933, as amended. 

3.     ELIGIBILITY AND PARTICIPATION  

        Directors, advisory board directors, consultants or similar persons associated with the Company who, in the judgment of the Board, are responsible for or
contribute to the management, growth and/or profitability of the business of the Company are eligible to be granted Options under the Plan. Participants shall be selected from time to time by the
Board, in its sole discretion, from among those eligible. 

4.     SHARES AVAILABLE  

        4.1    Number; Limitations.    The total number of shares of Common Stock subject to issuance under the Plan may not
exceed 445,000, subject to adjustment as provided by Section 4.3. The shares to be delivered under the Plan may consist, in whole or in part, of authorized but unissued shares of Common Stock
or treasury Common Stock not reserved for any other purpose. The Company shall at all times reserve a sufficient number of shares to meet the requirements of the Plan. No fractional shares shall be
issued under the Plan, nor shall any cash in lieu of fractional shares be paid. 

        4.2    Unused Stock.    In the event any shares of Common Stock are subject to an Option which, for any reason,
expires, terminates or, with the consent of the Participant, is canceled as to such shares, such Common Stock may again be made available for issuance under the Plan. 

        4.3    Adjustment Provisions.    In the event of any stock split, stock dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization, or any distribution to holders of Common Stock other than a cash
dividend, the number and class of shares available under the Plan, the number and class of shares 

2

 

subject
to each outstanding Option and the purchase price per share, and the number and class of shares subject to each other outstanding Option shall be appropriately adjusted by the Committee, such
adjustments to be made without a change in the aggregate purchase price or reference price set forth in the agreements or other documents describing such Options. 

5.     EFFECTIVE DATE  

        The effective date of this Plan shall be the date it is adopted by the Board, if applicable, provided that the shareholders of the Company shall approve this Plan
in accordance with Rule 16b-3, if applicable. If any Options are granted under the Plan before the date of such shareholder approval, such Options automatically shall be granted
subject to such approval. 

6.     ADMINISTRATION  

        6.1    Administration and Interpretation.    This Plan shall be administered by the Board. The Board acting in its
absolute discretion shall exercise such powers and take such action as expressly called for under this Plan. Further, the Board shall have the power to interpret this Plan and the respective
agreements executed thereunder, to prescribe rules and regulations relating to the Plan as it may deem advisable to carry out the Plan, to take such action in the administration and operation of this
Plan as the Board deems equitable under the circumstances, and to make all other determinations necessary or advisable for administering the Plan. The determination of the Board on matters within its
authority under the Plan shall be conclusive, and such action shall be binding on the Company, on each affected Participant, and on each other person directly or indirectly affected by such action. 

        Each
member of the Board shall be fully justified in relying or acting in good faith upon any report made by the independent public accountants of the Company and upon any other
information furnished in connection with the Plan by any person or persons as the Board may deem advisable. In no event shall any person who is or has been a member of the Board be liable for any
determination made or other action taken by him or any failure by him to act in reliance upon any such report or
information, if in good faith. The members of the Board may be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorney's fees)
arising therefrom to the full extent permitted by law and under any directors' and officers' liability insurance that may be in effect from time to time, in all events as a majority of the Board then
in office may determine from time to time, as evidenced by a written resolution thereof. In addition, no member of the Board and no employee of the Company shall be liable for any act or failure to
act, by any other member or other employee, or by any agent, to whom duties in connection with the administration of this Plan have been delegated, or for any act or failure to act by such member or
employee, except in circumstances involving such member's or employee's bad faith, gross negligence, intentional fraud or violation of a statute. 

        6.2    Options.    The Board shall have full authority, consistent with the terms of the Plan, to grant Options to
Eligible Persons. In particular, and without limitation, the Board shall have the authority: 

        (a)   to
determine the Participants to whom Options may from time to time be granted hereunder and the number of shares of Common Stock to be covered by each Option granted
hereunder; 

        (b)   to
determine the terms and conditions, not inconsistent with the terms of this Plan, of any Option granted hereunder (which need not be identical) including, but not
limited to, any restriction or limitation on exercise or transfer, any vesting schedule or acceleration thereof, or any forfeiture provisions or waiver thereof, regarding any Option and the shares of
Common Stock relating thereto, based on such factors as the Board shall determine in its sole discretion; 

3

 

        (c)   to
modify or waive any restrictions or limitations contained in, and grant extensions to or accelerate the vesting of, any outstanding Options as long as such
modifications, waivers, extensions or accelerations are consistent with the terms of this Plan. 

        6.3    Compliance With Code §162(m).    In the event the Company, a "parent" or a "subsidiary" becomes a
"publicly-held company" as such terms are defined for purposes of Section 162(m)(2) of the Code, the Board may establish a committee of outside directors ("Outside Committee")
meeting the requirements of Code §162(m) to (i) approve the grant of Options which might reasonably be anticipated to result in the payment of employee remuneration that would
otherwise exceed the limit on employee remuneration deductible for income tax purposes by the Company pursuant to Code §162(m) and (ii) administer the Plan. In such event, the
powers reserved to the Board in the Plan shall be exercised by such committee. In addition, Options granted under the Plan shall be granted upon satisfaction of the conditions to such grants provided
pursuant to Code §162(m) and any applicable regulations promulgated thereunder. 

        6.4    Delegation to Committee.    The Board may delegate administration of the Plan to the Committee. If
administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate
to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the
Board the administration of the Plan. 

7.     OPTIONS  

        7.1(a)    Grants.    Options shall be Non-ISOs and a separate certificate or certificates will be issued
for shares purchased on exercise of each Option. The Board shall have the authority to grant to any Eligible Person one or more Non-ISOs. 

        7.2    Terms of Options.    Options granted under this Plan shall be subject to the following terms and conditions and
shall be in such form and contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Board shall deem desirable: 

        (a)    Exercise Price.    The exercise price per share of Common Stock purchasable under an Option shall be determined
by the Committee at the time of grant. 

        (b)    Option Term.    The term of each Option shall be fixed by the Board, but no Option shall be exercisable more
than ten (10) years after the date the Option is granted. 

        (c)    Vesting and Exercisability.    Except as provided in Sections 6 and 10 hereof, all Options granted under
this Plan shall vest as provided in the Option Agreement pursuant to Section 7.3. The Option may be subject to such other terms and conditions on the time or times when it may be exercised
(which may be based on performance or other criteria) as the Board may deem appropriate. 

        (d)    Exercisability Upon Termination.    In the event of the termination of a Participant's Continuous Service with
the Company, the Participant may exercise his or her Option (to the extent exercisable on the date of termination) but only within the period of time ending upon the earlier of (i) the
expiration date of the Option, (ii) the date three (3) months following such date of termination, or (iii) such longer or
shorter period specified in the Option Agreement. If the Option is not exercised within the time specified herein, the Option shall terminate. 

4

 

 

        (e)    Method of Exercise.    An Option may be exercised (i) by giving written notice to the Company specifying
the number of whole shares of Common Stock to be purchased with the purchase price therefor to be payable in full either (A) in cash, (B) in previously owned whole shares of Common Stock
(for which the holder of the Option has good title free and clear of all liens and encumbrances) with their Fair Market Value determined as of the date of exercise, (C) by authorizing the
Company to retain whole shares of Common Stock which would otherwise be issuable upon exercise of the Option with their Fair Market Value determined as of the date of exercise, or (D) a
combination of (A), (B) and (C), in each case to the extent determined by the Board at the time of grant of the Option, and (ii) by executing such documents as the Company may reasonably
request. No shares of Common Stock shall be issued until the full purchase price has been paid. The Corporation will, as soon as is reasonably possible, notify the Optionee of the amount of
withholding tax, if any, that must be paid under federal, state and local law due to exercise of the Option. The Corporation shall have no obligation to deliver certificates for the shares purchased
until Optionee pays to the Corporation the amount of withholding specified in the Corporation's notice in cash or in Common Stock. Optionee may direct the Corporation to withhold that number of shares
of Common Stock (valued according to the procedures set forth in this section on the date of withholding) sufficient to satisfy such obligation. 

        7.3    Option Agreement.    As determined by the Board on the date of grant, each Option shall be evidenced by a
written option agreement and no such Option shall be valid until so evidenced ("Option Agreement"). Such agreement shall specify, among other things, the type of Option granted, the Option price, the
duration of the Option, the number of shares of Common Stock to which the Option pertains, and the schedule on which such Options become exercisable. 

8.     REPURCHASE; RESTRICTIONS ON TRANSFER  

        8.1    Repurchase.    The Option Agreement or written employment agreement with the Company ("Employment Agreement")
may provide for terms under which the Company shall have the right and option to repurchase all of the shares of Common Stock held by the Participant which were acquired pursuant to Options granted
under this Plan. In addition, the Board may at any time offer to buy out an Option previously granted or shares acquired pursuant to an Option, based on such terms and conditions as the Board shall
establish and communicate to the Participant at the time such offer is made. 

        8.2    Restrictions on Transfer.    

        (a)   Any
attempted transfer of an Option or Common Stock issued pursuant to the exercise of any Option in violation of the terms of this Plan or the Option Agreement unless
waived by the Board of Directors shall be ineffective to vest any legal or beneficial interest in such Common Stock in any transferee and shall be null and void. The Participant hereby accepts any
Option subject to all terms, provisions and restrictions of the Plan and the Option Agreement. No Option shall, except as otherwise specifically provided by this Plan, bylaws of the Company or, in the
case of NQSOs, by the Option Agreement, be transferable in any manner other than by will or the laws of descent and distribution, and any attempt to transfer any such benefit shall be void.
Notwithstanding the foregoing, the Participant may, in form acceptable to the Company, designate a third party who, in the event of death of the Participant, shall thereafter be entitled to exercise
the Option. Options may only be exercised or settled during the Participant's lifetime by the Participant or his or her guardian, conservator or other legal representative. Options shall not in any
manner be subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such benefit, nor shall they be subject to attachment or legal process for or
against such person. 

5

 

9.     TERMINATION OR AMENDMENT  

        This Plan may be amended, suspended or terminated by the Board from time to time to the extent that the Board deems necessary or appropriate; provided, however,
that no amendment shall be made without shareholder approval to the extent such approval is required by Rule 16b-3 or any securities exchange listing requirements. The Board may in
its sole discretion submit any other amendment for shareholder approval. 

        The
Board also may suspend the granting of Options under this Plan at any time and may terminate this Plan at any time; provided, however, rights under any Option granted before any
amendment, suspension or termination of the Plan shall not be impaired by such action unless (i) the Participant
consents in writing to such action or (ii) such action is pursuant to a dissolution or liquidation of the Company or a transaction described in Sections 4.3 or 10 of this Plan. 

        The
Board at any time, and from time to time, may amend, modify or cancel the terms of any one or more Options; provided, however, that the rights under any Option shall not be impaired
by any such amendment modification or cancellation except as provided in clause (i) or (ii) above. 

10.   CHANGE IN CONTROL AND OTHER CORPORATE EVENTS  

        10.1    Sale, Merger or Consolidation.    Unless the Option Agreement or Employment Agreement provide otherwise, in
the event that the Company is a party to (i) a sale of all or substantially all of the assets of the Company other than to an Affiliate, (ii) a merger or consolidation in which the
Company is not the surviving corporation, or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger
are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, outstanding Options shall be subject to the agreement of sale, merger or consolidation,
which agreement may provide without the affected Participant's consent for: 

        (a)   The
continuation of such outstanding Options by the Company (if the Company is the surviving corporation); 

        (b)   The
assumption of the Plan and such outstanding Options by the surviving corporation or its parent; 

        (c)   The
substitution by the surviving corporation or its parent of options with substantially the same terms for such outstanding Options; or 

        (d)   The
cancellation of each outstanding Option after payment to the Participant of an amount in cash or cash equivalents equal to (i) the Fair Market Value of the
Common Stock subject to such Option at the time of the sale, merger or consolidation minus (ii) the exercise price of the Common Stock subject to such Option, or 

        (e)   The
acceleration of vesting of Options and termination of such Options if not exercised at or prior to such event. 

        A
transaction shall not be subject to this Section if the sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company's securities immediately before such transaction. 

        10.2    Change in Control.    Unless the Option Agreement or Employment Agreement provide otherwise, if there is a
Change in Control of the Company, the Board thereafter shall have the right to take such action with respect to any outstanding Options as the Board deems appropriate under the circumstances to
protect the interest of the Company in maintaining the integrity of such Options under this Plan, including entering into an agreement providing for the terms permitted by Section 10.1 in the
event of a sale or merger of the Company. The Board shall have the right to take different 

6

 

action
under this Section 10.2 with respect to different Participants or different groups of Participants, as the Board deems appropriate under the circumstances. Except for the terms permitted
by Section 10.1, in no event shall the Board take any action under this Section 10.2 which would impair the value of such Options, without the affected Participant's consent. 

        10.3.    Dissolution or Liquidation.    In the event of dissolution or liquidation of the Company, then all
outstanding Options shall terminate immediately prior to such event. 

11.   DURATION OF THE PLAN  

        No Option shall be granted under this Plan on or after the earlier of: 

        (a)   the
tenth anniversary of the effective date of this Plan (as determined under Section 5 of this Plan), in which event this Plan thereafter shall continue in
effect until all outstanding Options have been exercised in full and/or became fully vested or no longer are exercisable; or 

        (b)   the
date on which all of the Common Stock reserved under Section 4.1 of this Plan has (as a result of the exercise and/or vesting of Options granted under this
Plan) been issued or no longer is available for use under this Plan, in which event this Plan also shall terminate on such date. 

        Except
as provided herein, this Plan shall remain in effect until all Options granted under the Plan have been exercised or expired by reason of lapse of time. 

12.   GENERAL PROVISIONS  

        12.1    Unfunded Status of Plan.    This Plan is intended to be unfunded. With respect to any payments as to which a
Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those
of a general creditor of the Company. 

        12.2    No Right to Option or Continuous Service.    Neither this Plan nor the grant of any Option hereunder shall
give any Participant any right with respect to (i) an Option or any other rights except as evidenced by a written agreement related to an Option, or (ii) Continuous Service with the
Company, nor shall this Plan or the grant of an Option hereunder be a limitation in any way on the right of the Company to terminate his or her employment or other relationship with the Company at any
time. 

        12.3    Use of Proceeds.    The proceeds received by the Company from the sale of Common Stock pursuant to the
exercise of Options under the Plan shall be added to the Company's general funds and used for general corporate purposes. 

        12.4    Other Plans.    In no event shall the value of, or income arising from, any Options under this Plan be treated
as compensation for purposes of any pension, profit sharing, life insurance, disability or any other retirement or welfare benefit plan now maintained or hereafter adopted by the Company, unless such
plan specifically provides to the contrary. 

        12.5    Section 16.    It is intended that the Plan and any Options granted to a person subject to
Section 16 of the Exchange Act meet all of the requirements of Rule 16b-3 to the extent applicable. If any provision of the Plan or any Option grant would disqualify the Plan
or such Option, or would otherwise not comply with Rule 16b-3 to the extent applicable, such provision or Option shall be construed or deemed amended to conform to
Rule 16b-3. 

        12.6    No Restriction on Right of Company to Effect Corporate Changes.    Nothing in the Plan shall affect the right
or power of the Company or its shareholders to make or authorize any adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or 

7

 

any
merger or consolidation of the Company, or any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are
superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, 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. 

        12.7    Shareholder Rights.    A Participant shall have no rights as a shareholder with respect to any shares issued
or issuable with respect to an Option until a certificate or certificates evidencing such shares shall have been issued to or for the benefit of such Participant, and no adjustment shall be made for
dividends or distributions or other rights in respect of any share for which the record date is prior to the date upon which the Participant shall become the holder of record thereof. 

        12.8    Governing Law.    This Plan and actions taken in connection herewith shall be governed and construed in
accordance with the laws of the State of Delaware (without regard to applicable Delaware principles of conflict of laws). 

        12.9    Construction.    Wherever any words are used in this Plan in the masculine gender, they shall be construed as
though they were also used in the feminine gender in all cases where they would so apply, and wherever any words are used herein in the singular form, they shall be construed as though they were also
used in the plural form in all cases where they would so apply. 

        12.10    Securities Laws.    (a) The Company shall not be obligated to issue any Common Stock pursuant to any Option
granted under the Plan at any time when the offering of the shares covered by such Option has not been registered (or exempted) under the Securities Act and such other state and federal laws, rules or
regulations as the Company or the Board deems applicable and, in the opinion of legal counsel for the Company, there is no exemption from the registration requirements of such laws, rules or
regulations available for the issuance and sale of such shares. If after reasonable efforts, the Company is unable to obtain from any regulatory commission or agency having jurisdiction over the Plan
such authority as may be required to issue Common Stock pursuant to any Option, the Company shall be relieved from any liability for failure to issue such stock unless and until such authority is
obtained. Nothing shall require the Company to register under the Securities Act the Plan, any Option or any Common Stock issued or issuable pursuant to any Option. The Company may require a
Participant, as a condition of exercising or acquiring stock under any Option, (i) to give written assurances satisfactory to the Company as to the Participant's knowledge and experience in
financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or
she is capable of
evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option, and (ii) to give written assurances satisfactory to the Company stating that the
Participant is acquiring the stock subject to the Option for the Participant's own account and not with any present intention of selling or otherwise distributing the stock. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock. To the extent required by California law, Participants who are California residents shall receive financial statements
annually in the form available from the Company. 

        12.11    No Adjustment.    Except as hereinbefore expressly provided, issuance by the Company of shares of stock of
any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warranty to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason 

8

 

thereof
shall be made with respect to, the number of shares of Common Stock subject to Options theretofore granted, or the purchase price per share of Common Stock subject to Options. 

        12.12    Substitution.    Options may be granted under the Plan from time to time in substitution for stock awards of
other corporations held by persons who become Eligible Persons as a result of a merger or consolidation of such other corporation with the Company or an Affiliate, the acquisition by the Company of
all or a portion of the assets of such other corporation, or the acquisition by the Company of stock of such other corporation with the result that such other corporation becomes an Affiliate. 

9

 

 
 

  FIRST AMENDMENT OF
  TRANZYME, INC. 2001 EMPLOYEE STOCK OPTION PLAN
  AND
  TRANZYME, INC. 2001 NON-EMPLOYEE STOCK OPTION PLAN    
    

        THIS FIRST AMENDMENT of Tranzyme, Inc. 2001 Employee Stock Option Plan and Tranzyme, Inc. 2001 Non-Employee
Stock Option Plan (together, the "2001 Plan") is dated as of December 17, 2003. 

        WHEREAS,
the Board of Directors of Tranzyme, Inc. (the "Company") deems it to be in the best interest of the Company to amend the 2001 Plan in order to change the class of shares
issuable pursuant to options granted under such 2001 Plan from Common Stock to Class B Nonvoting Common Stock. 

        NOW,
THEREFORE, the 2001 Plan shall be amended as follows: 

        1.     The
words "Common Stock" as they appear throughout the 2001 Plan, and all exhibits thereto, shall be changed to "Class B Stock". 

        2.     The
definition of "Common Stock" as it appears in Section 2 of the 2001 Plan shall be deleted in its entirety and the following definition substituted in lieu
thereof: 

        "Class B
Stock" shall mean the Class B Nonvoting Common Stock, $0.001 par value per share, of the Company." 

        2.     Except
as herein amended, the terms and provisions of the 2001 Plan shall remain in full force and effect as originally adopted and approved. 

        IN
WITNESS WHEREOF, the undersigned hereby certifies that this First Amendment was duly adopted by the Board of Directors of the Company on December 15, 2003. 

 

 

					
	 
	 	TRANZYME, INC.
	 
	 	 By:
	 	 /s/ Vipin K. Garg, Ph.D.

 
	 
	 	Name:	 	Vipin K. Garg, Ph.D.

 
	 
	 	Title:	 	President and Chief Executive Officer

 

 

 

 

 
 

  SECOND AMENDMENT OF
  TRANZYME, INC. 2001 EMPLOYEE STOCK OPTION PLAN
  AND
  TRANZYME, INC. 2001 NON-EMPLOYEE STOCK OPTION PLAN    
    

        THIS SECOND AMENDMENT of Tranzyme, Inc. 2001 Employee Stock Option Plan and Tranzyme, Inc. 2001 Non-Employee
Stock Option Plan (together, as previously amended by the First Amendment thereto dated as of December 17, 2003, the "2001 Plans") is dated as of May 12, 2005. 

        WHEREAS,
the Board of Directors of Tranzyme, Inc. (the "Company") deems it to be in the best interest of the Company to further amend the 2001 Plans in order to change the class
of shares issuable pursuant to options granted under such 2001 Plans from Class B Nonvoting Common Stock to Class A Voting Common Stock, par value $0.00001 per share. 

        NOW,
THEREFORE, the 2001 Plans shall be amended as follows: 

        1.     The
words "Class B Stock" as they appear throughout the 2001 Plans, and all exhibits thereto, shall be changed to "Class A Stock". 

        2.     The
definition of "Class B Stock" as it appears in Section 2 of the 2001 Plans shall be deleted in its entirety and the following definition substituted in
lieu thereof: 

        "Class A
Stock" shall mean the Class A Voting Common Stock, $0.00001 par value per share, of the Company." 

        2.     Except
as herein amended, the terms and provisions of the 2001 Plans shall remain in full force and effect as originally adopted and approved. 

        IN
WITNESS WHEREOF, the undersigned hereby certifies that this Second Amendment was duly adopted by the Board of Directors of the Company on April 26, 2005 and is effective as of
May 12, 2005. 

 

 

					
	 
	 	TRANZYME, INC.
	 
	 	 By:
	 	 /s/ Vipin K. Garg

 
	 
	 	Name:	 	Vipin K. Garg, Ph.D.

 
	 
	 	Title:	 	President and Chief Executive Officer

 

 

 

 

 
 

  FORM OF STOCK OPTION AGREEMENT
  (Incentive or Non-Statutory Stock Options)
  Pursuant to the Tranzyme, Inc. 2001 Employee Stock Option Plan or
  2001 Non-Employee Stock Option Plan    

        This STOCK OPTION AGREEMENT (this "Agreement") is made as of the      day
of                        , 2010, by and between
Tranzyme, Inc., a Delaware Company (the "Company"),
and                                    ("Participant"). 

WITNESSETH:

        The
Company has determined that it is in the best interests of the Company and its shareholders to encourage ownership in the Company by qualified persons associated with the Company
thereby providing additional incentive for them to continue in the service to the Company or its Affiliates. To that end, an Option is granted by the Board to Participant pursuant, and subject to, the
Tranzyme, Inc. 2001 Employee Stock Option Plan or 2001 Non-Employee Stock Option Plan as designated in Exhibit A (the "Plan") on the terms and conditions provided herein.
Unless otherwise defined herein or, unless the context requires a different definition, capitalized terms used herein shall have the meanings assigned to them in the Plan. 

1.     SHARES OPTIONED, OPTION PRICE, AND TIME OF EXERCISE  

        Effective as of the date hereof, the Company grants to Participant, subject to the terms and provisions set forth hereinafter and in the Plan, an Option to
purchase all or any part of the number of shares set forth in Exhibit A of the Common Stock of the Company at the purchase price per share set forth as the Exercise Price in Exhibit A. 

        The
Option shall not be considered granted (as of the effective date described above) or become exercisable unless and until Participant delivers to the Company a fully executed
counterpart hereof. Thereafter, the Option shall be exercisable in accordance with the Exercise Schedule set forth on Exhibit A, subject to any termination, acceleration or change in such
Exercise Schedule set forth in this Agreement. 

        Neither
the Option nor any other rights granted under this Agreement may be exercised after the Expiration Date set forth on Exhibit A and, before that time, the Option may be
terminated as hereinafter provided. If Participant does not purchase tire full number of shares to which he or she is entitled in any one year, he or she may purchase such shares in the next year
specified in the Exercise Schedule hereto, in addition to the shares which he or she is otherwise entitled to purchase in the next year. 

2.     TERMINATION OF SERVICE  

        Unless an engagement letter provides otherwise, if a Participant's Continuous Service with the Company terminates for any reason, Options under the Plan must be
exercised not later than three months after such termination. The Options, to the extent not previously exercised, will terminate after such period. The Board may extend the period for exercise in its
sole discretion. Options may be exercised only to the extent the Options were exercisable on the date of termination, and in no event after the earlier of Expiration Date set forth in Exhibit A
or ten (10) years from the date of granting thereof. If an Option is exercised after three months following termination, such Option shall not receive favorable tax treatment under Code
Section 421(a), except that if additional time for exercise is permitted by the Board in the event of death or disability, such Options must be exercised within 12 months of the date of
termination caused by disability to receive such tax treatment. The Board of Directors, in its sole discretion, shall have the authority to accelerate the date upon which an Option becomes
exercisable. 

 

3.     MISCELLANEOUS  

	(a)
	Successor to Option Holder.    Subject to compliance with applicable federal and state securities
laws, this Option may be transferred by the Participant with respect to any or all of the shares purchasable hereunder to a successor to the Participant.

	(b)
	Incorporation of the Plan.    The terms and provisions of the Plan are hereby incorporated in this
Agreement. Unless otherwise specifically stated herein, such terms and provisions shall control in the event of any inconsistency between the Plan and this Agreement.

	(c)
	Governing Law.    THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE AND ALL
APPLICABLE FEDERAL LAWS.

	(d)
	Counterparts.    This Agreement may be executed in one or more counterparts, which shall together
constitute a valid and binding agreement.

	(e)
	Successors or Assigns of the Company.    The terms of this Agreement shall be binding upon and
shall inure to the benefit of any successor of the Company and the executors, administrators, heirs, successors, and assigns of the Participant.

	(f)
	Notices.    If the Option is an ISO, by exercising your option the Participant agrees to notify
the Company in writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of the Option that occurs within two
(2) years after the date of the Option grant or within one (1) year after such shares of Common Stock are transferred upon exercise of the Option. Any notice to be given hereunder shall
be in writing and shall be addressed to the Company in care of the Chief Executive Officer at 500 Beacon Parkway West, Birmingham, Alabama 35209, and any notice to be given to Participant shall be
addressed to the address designated below the signature appearing hereinafter, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall have been
deemed duly given upon three (3) days of sending such notice enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified and deposited (with the proper postage and
registration or certificate fee prepaid) in the United States mail.

	(g)
	Securities Laws.    By exercising an Option, the Participant agrees that the Company (or a
representative of the underwriters) may, in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that the Participant
not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of
Common Stock or other securities of the Company held by the Participant, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the
effective date of the registration statement of the Company filed under the Securities Act. The Participant further agrees to execute and deliver such other agreements as may be reasonably requested
by the Company and/or the underwriter(s) which are consistent with the foregoing or which are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to such Common Stock until the end of such period. 

2

 

        IN
WITNESS WHEREOF, this Agreement has been executed by the Company and the Participant as of the date and year first written above. 

 

 

							
	Dated:	 	  

 	 	Tranzyme, Inc.,
	

 	
 	
 	
 	
a Delaware corporation
	

 	
 	
 	
 	
By:	
 	
  

 
	 	 	 	 	Title:	 	  

 

 

         The
Participant acknowledges receipt of a copy of the Plan, a copy of which is annexed hereto, and represents that he is familiar with the terms and provisions thereof. The Participant
hereby accepts this Option subject to all the terms and provisions of the Plan. The Participant hereby agrees to accept as binding, conclusive, and final all decisions and interpretations of the Board
and, where applicable the Committee, upon any questions arising under the Plan. As a condition to the issuance of shares of Common Stock of the Company under this Option, the Participant authorizes
the Company to withhold in accordance with applicable law from any regular cash compensation payable to him or her any taxes required to be withheld by the Company under federal, state, or local law
as a result of his or her exercise of this Option. 

 

 

							
	Dated:	 	  

 	 	Participant:	 	    

 
	

 	
 	
 	
 	
Address:	
 	
  

 
	 	 	 	 	 	 	  

 

 

 3

QuickLinks

Exhibit 10.7

TRANZYME, INC. 2001 NON-EMPLOYEE STOCK OPTION PLAN Adopted August 14, 2001 Approved by Shareholders August 14, 2001

FIRST AMENDMENT OF TRANZYME, INC. 2001 EMPLOYEE STOCK OPTION PLAN AND TRANZYME, INC. 2001 NON-EMPLOYEE STOCK OPTION PLAN

SECOND AMENDMENT OF TRANZYME, INC. 2001 EMPLOYEE STOCK OPTION PLAN AND TRANZYME, INC. 2001 NON-EMPLOYEE STOCK OPTION PLAN

FORM OF STOCK OPTION AGREEMENT (Incentive or Non-Statutory Stock Options) Pursuant to the Tranzyme, Inc. 2001 Employee Stock Option Plan or 2001 Non-Employee Stock Option PlanQuickLinks
 -- Click here to rapidly navigate through this document

 

 
 

  Exhibit 10.8    
    

 
    TRANZYME, INC.
  AMENDED AND RESTATED 2003 STOCK OPTION PLAN    
    

	1.
	Purpose.    The Tranzyme, Inc. Amended and Restated 2003 Stock Option Plan (the "Plan") is
established to create an additional incentive for key employees, directors and consultants or advisors of Tranzyme, Inc. and any successor corporations or any present or future subsidiary
corporations of such corporation (collectively, the "Company") to promote the financial success and progress of the Company. For purposes of the Plan, a subsidiary corporation shall be as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code").

	2.
	Administration.    The Plan shall be administered by the Board of Directors of the Company (the
"Board") and/or by a duly appointed committee of the Board having such powers as shall be specified by the Board. Any subsequent references herein to the Board shall also mean the committee if such
committee has been appointed and, unless the powers of the committee have been specifically limited, the committee shall have all of the powers of the Board granted herein, other than power to
terminate or amend the Plan as provided in Paragraph 11 hereof, subject to the terms of the Plan and any applicable limitations imposed by law. All questions of interpretation of the Plan or of
any award granted under the Plan shall be determined by the Board, and such determinations shall be final and binding upon all persons having an interest in the Plan and/or any Option (as defined
below). Any officer of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation or election which is the responsibility of or which is
allocated to the Company herein, provided the officer has apparent authority with respect to such matter, right, obligation or election.

	3.
	Eligibility.    The Board may grant options (each an "Option") to purchase shares of the authorized
but unissued common stock of the Company (the "Stock"), which Options may be either incentive stock options as defined in Section 422 of the Code (an "Incentive Stock Option") or nonqualified
stock options (a "Nonqualified Stock Option"). Options may be granted to employees, officers, directors, consultants, advisors or other independent contractors (collectively "persons"). The Board, in
its sole discretion, shall determine to whom Options are granted (each an "Optionee"). An Option that the Board intends to be an Incentive Stock Option shall only be granted to an employee of the
Company and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to an Optionee, if an Option (or any
part thereof) which is intended to be an Incentive Stock Option does not qualify as an Incentive Stock Option. An Optionee may, if otherwise eligible, be granted additional Options.

	4.
	Shares Subject to Option.    Subject to adjustment as provided in Paragraph 9 below, the
maximum number of shares of Stock which may be issued pursuant to Options granted under the Plan shall be Eight Million One Thousand Two Hundred Seventy-Two (8,001,272) shares. If any
outstanding Option for any reason expires or is terminated or cancelled, the shares of Stock allocable to the unexercised portion of such Option, may again be subject to an Option. It is intended that
the Plan shall constitute a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act of 1933, as amended ("Rule 701"), to the extent
applicable, and that the Plan shall otherwise be administered in compliance with the requirements of Rule 701. To ensure such compliance, the Company shall maintain a record of shares subject
to outstanding Options under the Plan and the exercise price of the Options, plus a record of all shares of Stock issued upon the exercise of the Options and the exercise price of the Options. The
Company shall not be required to issue fractional shares upon the exercise of the Options and any fraction of a share shall be rounded down.

	4A.
	Tranzyme Pharma Options and Prior Plan Options.    For so long as the Company is a party to that
certain Amended and Restated Put and Support Agreement, dated as of May 12, 2005, by and among the Company, Tranzyme Pharma Inc., f/k/a Neokimia Inc. ("Tranzyme Pharma"), and
certain other parties named therein (the "Put Agreement"), the Company shall not grant options 

 

under
the Plan for that number of shares of Stock equal to that number of shares of stock in Tranzyme Pharma that are subject to options outstanding (as adjusted for any cancellations) or exercised,
on or after October 23, 2007, under each of that certain Tranzyme Pharma Inc. Second Amended and Restated 2003 Stock Option Plan and that certain Tranzyme Pharma Inc. Second
Amended and Restated 2004 Stock Option Plan (the "Tranzyme Pharma Options"), as such plans may be further amended from time to time. In addition, the Company shall not grant options for that number of
shares of Stock equal to that number of shares of stock in the Company that are subject to options outstanding (as adjusted for any cancellations) or exercised, on or after October 23, 2007,
under each of that certain 1998 Equity Incentive Plan, as amended to date, that certain 2001 Employee Stock Option Plan, as amended to date, and that certain 2001 Non-Employee Stock Option
Plan, as amended to date (the "Prior Plan Options"). If any outstanding Prior Plan Option or Tranzyme Pharma Option for any reason expires or is terminated or cancelled, the preceding sentence shall
no longer apply to the unexercised portion of such Prior Plan Option or Tranzyme Pharma Option, as the case may be, under the Plan. At no time may the total number of shares of Stock subject to
Options and the number of shares of stock subject to Prior Plan Options and Tranzyme Pharma Options exceed the maximum number of shares of Stock specified in Paragraph 4 above. 

	5.
	Time for Granting Options.    All Options shall be granted, if at all, within ten (10) years
from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company.

	6.
	Terms, Conditions and Form of Options.    Subject to the provisions of the Plan, the Board shall
determine for each Option the number of shares of Stock into which the Option is exercisable, whether the Option is to be treated as an Incentive Stock Option or as a nonqualified stock option and all
other terms and conditions of the Option. Each Option granted pursuant to the Plan shall comply with and be subject to the following terms and conditions:

	(a)
	Exercise Price.    The exercise price for each Option shall be established in the sole discretion
of the Board; provided, however, that: (i) the exercise price per share for an Incentive Stock Option shall be not less than the fair market value of a share of Stock on the date of grant;
(ii) the exercise price per share of an Incentive Stock Option granted to an Optionee who on the date of the grant owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company within the meaning of Section 422(b)(6) of the Code (a "Ten Percent Owner Optionee") shall be not less than one hundred ten percent (110%) of the
fair market value of a share of Stock on the date of grant; and (iii) the exercise price per share of a Nonqualified Stock Option shall be not less than the fair market value of a share of
Stock on the date of grant unless the Board otherwise expressly determines to grant a below-market Option. For this purpose, "fair market value" means the value assigned to the Stock by the Board for
any date of grant, as determined pursuant to a reasonable method established by the Board that is consistent with the applicable requirements of Sections 409A, 422 and 424 of the Code and the
regulations thereunder (which method may be changed from time to time to the extent consistent with the Code). Notwithstanding the foregoing, an Option may be granted by the Board in its discretion
with an exercise price lower than the minimum exercise price set forth above if, in the case of an Incentive Stock Option, such Option is granted pursuant to an assumption or substitution for another
option in accordance with the provisions of Section 424(a) of the Code. The foregoing shall not require that any such assumption or modification will result in the Option having the same
characteristics, attributes or tax treatment as the Option for which it is substituted.

	(b)
	Exercise Period of Options.    The Board shall have the power to set the times on or within which
an Option shall be exercisable or the events upon which an Option shall be exercisable 

2

 

and
the term of an Option; provided, however, that (i) no Incentive Stock Option shall be exercisable after the expiration of ten (10) years after the date of grant, (ii) no
Incentive Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after the expiration of five (5) years after the date of grant, (iii) no Option shall be exercisable
after the date the Optionee's employment with the Company is terminated for cause (as determined in the sole discretion of the Board unless cause is defined in an employment agreement between the
Optionee and the Company in which case such definition shall be used); and (iv) each Incentive Stock Option shall terminate and cease to be exercisable no later than three (3) months
after the date on which the Optionee terminates employment with the Company, unless the Optionee's employment with the Company was terminated as a result of the Optionee's death or disability (within
the meaning of Section 22(e)(3) of the Code), in which event the Incentive Stock Option shall terminate and cease to be exercisable no later than twelve (12) months from the date on
which the Optionee's employment terminated. For this purpose, an Optionee's employment shall be deemed to have terminated as a result of death if the Optionee dies within three (3) months
following the Optionee's termination of employment.  

	(c)
	Payment of Exercise Price.    Payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made in cash, by check, cash equivalent or in any other manner as may be permitted by the Board in its discretion.

	(d)
	$100,000 Limitation.    The aggregate fair market value, determined as of the date of grant of the
shares of the Stock with respect to which an Incentive Stock Option (determined without regard to this subparagraph) is first exercisable during any calendar year (under this Plan or under any other
plan of the Company) by any Optionee shall not exceed $100,000. If such limitation would be exceeded with respect to an Optionee for a calendar year, the Incentive Stock Option shall be deemed a
nonqualified stock option to the extent of such excess.

	7.
	Forms of Stock Option Agreements.    All Options shall be evidenced by a written agreement
substantially in such form or forms as may be approved by the Board consistent with the terms of this Plan. The Board shall have the authority from time to time to vary the terms of the form Option
Agreements either in connection with the grant of an Option or in connection with the authorization of a new standard form or forms; provided, however, that the terms and conditions of such revised or
amended standard form or forms of stock option agreement shall be in accordance with the terms of the Plan.

	8.
	Transfer of Control    Upon a merger, consolidation, corporate reorganization, or any transaction
in which all or substantially all of the assets or stock of the Company are sold, leased, transferred or otherwise disposed of (other than a mere reincorporation transaction or one in which the
holders of voting capital stock of the Company immediately prior to such merger or consolidations continue to hold at least a majority of the voting power of the surviving corporation) (a "Transfer of
Control"), then, except as otherwise provided in a particular stock option agreement approved by the Board, any unexercisable portion of an outstanding Option shall become immediately exercisable as
of a date prior to the Transfer of Control, which date shall be determined by the Board. Upon the occurrence of a Transfer of Control, each outstanding Option, to the extent not exercised prior to the
Transfer of Control, shall terminate as of the effective time of the Transfer of Control, unless such Option is assumed by the successor corporation (or parent thereof) or replaced with a comparable
option to purchase shares of the capital stock of the successor corporation (or parent thereof). The exercise of any Option that was permissible solely by reason of this Paragraph 8 shall be
conditioned upon the consummation of the Transfer of Control.

	9.
	Effect of Change in Stock Subject to Plan.    The Board shall make appropriate adjustments in the
number and class of shares of the Stock subject to the Plan and to any outstanding Options and in 

3

 

the
option price of any outstanding Options in the event of a stock dividend, stock split, reverse stock split, combination, reclassification or similar change in the capital structure of the Company. 

	10.
	Options Non-Transferable.    Except as otherwise provided in a stock option agreement,
no Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution. During the lifetime of an Optionee, an Option shall be exercisable only by
such Optionee.

	11.
	Termination or Amendment.    The Board may amend, suspend or terminate the Plan or any portion
thereof at any time. The Board may amend, modify or terminate any outstanding Option; provided, however, that no amendment authorized hereby may adversely affect the rights of any Optionee under any
then outstanding Option without the consent of the Optionee, unless such amendment is required to enable an Option designated as an Incentive Stock Option to qualify as an Incentive Stock Option. The
Board shall be entitled to create, amend or delete appendices to this Plan as specified herein.

	12.
	Withholding.    Each Optionee shall pay to the Company, or make provision satisfactory to the
Board for payment of, any taxes required by law to be withheld in connection with Options to such Optionee no later than the date of the event creating the tax liability. Except as the Board may
otherwise provide in an award, when the Stock is registered under the Securities Exchange Act of 1934, as amended, Optionees may satisfy such tax obligations in whole or in part by delivery of shares
of Stock, including shares retained from the Option creating the tax obligation, valued at their fair market value as determined by, or in a manner approved by, the Board in good faith; provided,
however, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company's minimum statutory withholding obligations (based on minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). The Company may, to the extent permitted by law, deduct any
such tax obligations from any payment of any kind otherwise due to an Optionee.

	13.
	Conditions on Delivery of Stock.    The Company will not be obligated to deliver any shares of
Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Option have been met or removed to the satisfaction
of the Company, (ii) in the opinion of the Company's counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Optionee has executed and delivered to the Company such representations or agreements as
the Company may consider appropriate to satisfy the requirements of any applicable laws, rules, regulations or contractual obligations.

	14.
	Right of First Refusal.

	(a)
	Right of First Refusal.    If any Optionee proposes to sell, pledge or otherwise transfer any
shares of Stock acquired upon exercise of an Option (the "Exercise Shares"), the Company shall have the right to repurchase the Exercise Shares under the terms and subject to the conditions set forth
in this Paragraph 14 (the "Right of First Refusal").

	(b)
	Notice of Proposed Transfer.    Prior to any proposed transfer of the Exercise Shares, the
Optionee shall give a written notice (the "Transfer Notice") to the Company describing fully the proposed transfer, including the number of Exercise Shares, the name and address of the proposed
transferee (the "Proposed Transferee"), the proposed transfer price and all other material terms and conditions of the proposed transfer.

	(c)
	Exercise of the Right of First Refusal.    The Company shall have the right to purchase all, but
not less than all, of the Exercise Shares at the purchase price and on the terms set forth in 

4

 

the
Transfer Notice by delivery to the Optionee of a notice of exercise of the Right of First Refusal within thirty (30) days after the date the Transfer Notice is delivered to the Company. The
Company's exercise or failure to exercise the Right of First Refusal with respect to any proposed transfer described in a Transfer Notice shall not affect the Company's ability to exercise the Right
of First Refusal with respect to any proposed transfer described in any other Transfer Notice, whether or not such other Transfer Notice is issued by the Optionee or issued by any other person with
respect to a proposed transfer to the same Proposed Transferee. If the Company exercises the Right of First Refusal, the Company and the Optionee shall thereupon consummate the sale of the Exercise
Shares to the Company on the terms set forth in the Transfer Notice; provided however, that if the Transfer Notice provides for the payment for the Exercise Shares other than in cash, the Company
shall have the option of paying for the Exercise Shares by the discounted cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Company. For purposes of
the foregoing, cancellation of any indebtedness of the Optionee to the Company shall be treated as payment to the Optionee in cash to the extent of the unpaid principal and any accrued interest
cancelled.  

	(d)
	Failure to Exercise the Right of First Refusal.    If the Company fails to exercise the Right of
First Refusal within the period specified in Paragraph 14(c) above, the Optionee may conclude a transfer to the Proposed Transferee of the Exercise Shares on the terms and conditions described
in the Transfer Notice, provided such transfer occurs not later than one hundred twenty (120) days following delivery to the Company of the Transfer Notice. Any proposed transfer on terms and
conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, also shall be subject to the Right of First Refusal and shall require
compliance by the Optionee with the procedure described in this Paragraph 14.

	(e)
	Transferees of the Transfer Shares.    All transferees of the Exercise Shares or any interest
therein, other than the Company, shall be required as a condition of such transfer to agree in writing (in a form satisfactory to the Company) that such transferee shall receive and hold such Exercise
Shares or interests subject to the provisions of this Paragraph 14 providing for the Right of First Refusal with respect to any subsequent transfer.

	(f)
	Transfers Not Subject to the Right of First Refusal.    The Right of First Refusal shall not apply
to any transfer or exchange of the Exercise Shares if: (i) such transfer is in connection with a Transfer of Control; (ii) such transfer is to one or more members of the Optionee's
immediate family (or a trust for their benefit) provided all such transferees agree in writing to the restrictions of Paragraph 14(e); or (iii) such transfer has been approved by the
Board, which approval may be granted or withheld in its complete discretion.

	(g)
	Assignment of the Right of First Refusal.    The Company shall have the right to assign the Right
of First Refusal at any time.

	(h)
	Stock Dividends Subject to First Refusal Right.    If, from time to time, there is any stock
dividend, stock split, recapitalization, reclassification or other change in the character or amount of any of the outstanding stock of the Company, the stock of which is subject to the provisions of
an option agreement issued pursuant to the Plan, then, in such event, any and all new substituted or additional securities to which the Optionee is entitled by reason of the Optionee's ownership of
the shares acquired upon exercise of an Option shall be immediately subject to the Right of First Refusal with the same force and effect as the shares subject to the Right of First Refusal immediately
before such event.

	(i)
	Early Termination of the Right of First Refusal.    The other provisions of this
Paragraph 14 notwithstanding, the Right of First Refusal shall terminate, and be of no further force and 

5

 

effect,
upon the earlier of (i) the occurrence of a Transfer of Control, unless the surviving, continuing, successor, or purchasing corporation, as the case may be, assumes the Company's rights
and obligations under the Plan or (ii) the existence of a public market for the class of shares subject to the Right of First Refusal. A "public market" shall be deemed to exist if
(x) such stock is listed on a national securities exchange (as that term is used in the Exchange Act) or (y) such stock is traded on the over-the-counter market
and prices therefor are published daily on business days in a recognized financial journal.  

	(j)
	Escrow.    To ensure shares of Stock subject to Right of First Refusal will be available for
repurchase, the Company may require an Optionee to deposit certificates evidencing the Exercise Shares in escrow with the Company or an agent of the Company.

	(k)
	Conflict.    To the extent that any conflict may exist between any term or provision of this Plan
and any term or provision of any then existing Shareholders' Agreement of the Company (the "Shareholders' Agreement") and the Put Agreement then the term or provision of the Shareholders' Agreement or
Put Agreement shall control.

	15.
	Legends.    The Company may at any time place legends referencing any applicable federal or state
securities law restriction on all certificates representing shares of stock subject to the provisions of an Option Agreement. The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Optionee in order to effectuate the provisions of this Paragraph. Unless otherwise
specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following:

	(a)
	THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SHARES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER
THE ACT, OR THE CORPORATION RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SHARES REASONABLY SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

	(b)
	THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS
ASSIGNEE SET FORTH IN THE CORPORATION'S STOCK OPTION PLAN AND AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL OFFICE OF THIS CORPORATION.

	(c)
	THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN INCENTIVE STOCK
OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY
TRANSFER OF THE SHARES BY THE REGISTERED HOLDER HEREOF MADE ON OR BEFORE THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE OPTION IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF
ANY NOMINEE) FOR A PERIOD OF ONE YEAR FROM THE DATE OF EXERCISE OF THE OPTION OR TWO YEARS FROM THE DATE OF GRANT OF THE OPTION.

6

 
	16.
	Initial Public Offering.    In the event of an initial public offering of stock made by the
Company under the Securities Act, Optionee shall not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or make any short sale of, or otherwise dispose of any shares of
stock of the Company or any rights to acquire stock of the Company for such period of time as may be established by the underwriter for such initial public offering; provided, however, that such
period of time shall not exceed one hundred eighty (180) days from the effective date of the registration statement to be filed in connection with such initial public offering.

	17.
	Miscellaneous

	(a)
	Nothing
in this Plan or any Option granted hereunder shall confer upon any Optionee any right to continue in the employ of the Company, or to serve as a
director, consultant or advisor thereof, or interfere in any way with the right of the Company to terminate such Optionee's employment at any time. Unless specifically provided otherwise, no grant of
an Option shall be deemed salary or compensation for the purpose of computing benefits under any employee benefit plan or other arrangement of the Company for the benefit of its employees unless the
Company shall determine otherwise. No Optionee shall have any claim to an Option until it is actually granted under the Plan. To the extent that any person acquires a right to receive payments from
the Company under the Plan, such right shall, except as otherwise provided by the Board, be no greater than the right of an unsecured general creditor of the Company.

	(b)
	The
Plan and the grant of Options hereunder shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals by any
United States government or regulatory agency as may be required.

	(c)
	The
terms of the Plan shall be binding upon the Company, and its successors and assigns.

	(d)
	This
Plan and all awards taken hereunder shall be governed by the laws of the State of Delaware, without regard to the conflicts of laws of Delaware.

	(e)
	If
any provision of this Plan or a form Option Agreement is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any form Option Agreement under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan or the form Option Agreement, it shall be stricken and the remainder of the Plan or
the form Option Agreement shall remain in full force and effect.

	(f)
	The
Board may incorporate additional or alternative provisions for this Plan with respect to residents of one or more individual states to the extent
necessary or desirable under state securities laws. Such provisions shall be set out in one or more appendices hereto which may be amended or deleted by the Board from time to time.

	(g)
	It
is intended that all Options granted hereunder be either exempt from, or issued in compliance with, Section 409A of the Code. The Company shall
have no liability to an Optionee, or any other party, if an Option that is intended to be exempt from, or compliant with, Section 409A of the Code, is not so exempt or compliant, or for any
action taken by the Board. 

7

 

        IN
WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing Plan, as amended and restated, was duly adopted by the Board of Directors of the Company on the
23rd day of October, 2007 and approved by the stockholders of the Company on the 23rd day of October, 2007. 

 

 

					
	 
	 	 TRANZYME, INC.
	 
	 	 By:
	 	 /s/ Richard I. Eisenstadt

  Richard I. Eisenstadt, Secretary

 

 8

 

 
 

  APPENDIX A    
    
    TRANZYME, INC.
  AMENDED AND RESTATED 2003 STOCK OPTION PLAN (the "Plan")    
    
    Provisions Applicable to California Residents    
    

        Notwithstanding anything to the contrary otherwise appearing in the Plan, the following provisions shall apply to any stock option or
other award granted under the Plan to a resident of the State of California and, in the event of any conflict or inconsistency between the following provisions and the provisions otherwise appearing
in the Plan, the following provisions shall control, solely with respect to options or other awards granted under the Plan to residents of the State of California: 

	•
	The exercise period of a stock option granted to a California resident shall be no longer than 120 months from the
date the option is granted.   

	•
	An option granted to a California resident shall not be transferable, other than by will or the laws of descent and
distribution, or as permitted by Rule 701 of the Securities Act of 1933, as amended ("Rule 701").   

	•
	Unless employment is terminated for cause as defined by applicable law, the terms of the Plan or stock option agreement or
a contract of employment, the right to exercise an option granted to a California resident in the event of termination of such optionee's employment (to the extent that such optionee is otherwise
entitled to exercise on the date of termination of employment) shall terminate as follows:  

	•
	At least 6 months from the date of termination if termination was caused by death or disability; or  

	•
	At least 30 days from the date of termination if termination was caused by an event other than death or disability.  

	•
	The Plan shall terminate with respect to California residents on the earlier of ten years after the date the Plan is
adopted or the date the Plan is approved by the shareholders of the Company.   

	•
	The Plan shall be available to California residents only if the stockholders of the Company approve the Plan within
12 months before or after the date the Plan is adopted. Any option exercised by a California resident before such stockholder approval is obtained shall be rescinded if such stockholder
approval is not subsequently obtained and such shares shall not be counted in determining whether the required stockholder approval is obtained.   

	•
	Each California resident participating in the Plan will be provided with such disclosure information as may be required
pursuant to Rule 701. 

9

Optionee: 

THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.

 
 

  TRANZYME, INC.
  INCENTIVE STOCK OPTION AGREEMENT    
    

        Tranzyme, Inc., a Delaware corporation (the "Company"), hereby grants to the individual named below an option (the "Option") to
purchase certain shares of common stock of the Company pursuant to the Tranzyme, Inc. 2003 Amended and Restated Stock Option Plan in the manner and subject to the provisions of this Option
Agreement.  

	1.
	Definitions:

	(a)
	"Code"
shall mean the Internal Revenue Code of 1986, as amended. (All citations to Sections of the Code are to such Sections as they may from time to time
be amended or renumbered.)

	(b)
	"Company"
shall mean Tranzyme, Inc., a Delaware corporation, and any successor corporation thereto.

	(c)
	"Date
of Option Grant" shall mean                    .

	(d)
	"Disability"
shall mean disability within the meaning of Section 22(e)(3) of the Code, as determined by the Board of Directors of the Company (the
"Board") in its discretion under procedures established by the Board.

	(e)
	"Exercise
Price" shall mean                    (      ) per share as adjusted from time to time pursuant to Paragraph 9 of
the Plan.

	(f)
	"Number
of Option Shares" shall mean                                
(        ) shares of common stock of the Company as adjusted from time to time pursuant to
Paragraph 9 of the Plan.

	(g)
	"Option
Term Date" shall mean the date ten (10) years after the Date of Option Grant.

	(h)
	"Optionee"
shall mean                        .

	(i)
	"Plan"
shall mean the Tranzyme, Inc. 2003 Stock Option Plan, as amended.

	2.
	Status of the Option.    The Option is intended to be an incentive stock option as described in
Section 422 of the Code, but the Company does not represent or warrant that the Option qualifies as such. The Optionee should consult with the Optionee's own tax advisors regarding the tax
effects of the Option and the requirements necessary to obtain favorable income tax treatment under Section 422 of the Code.

	3.
	Administration.    All questions of interpretation concerning the Option shall be determined by the
Board and shall be final and binding upon all persons having an interest in the Option.

	4.
	Exercise of the Option.

	(a)
	Right to Exercise.    The Option shall become exercisable as set forth below, from subject to the
termination provisions of Paragraphs 6 and 7 hereof, the Optionee's acknowledgement and agreement that any shares purchased upon exercise are subject to the Company's repurchase rights set
forth in the Company's Bylaws and the Optionee's agreement that any shares 

 

purchased
upon exercise are subject to the Company's Shareholders' Agreement as described in Paragraph 10 hereof: 

On
or after                , the Option may be exercised to purchase up to                of
the Number of Option Shares. 

On
or after the last day of each successive full calendar quarter of service as an employee of a Participating Company following                , the Option may be exercised
to purchase up to 6.25% of
the Number of Option Shares. 

This
provision shall be interpreted such that on or after                the option may be exercised to purchase up to 100% of the Number of Option Shares. 

The
schedule set forth above is cumulative, so that shares as to which the Option has become exercisable on and after a date indicated by the schedule may be purchased pursuant to exercise of the
Option at any subsequent date prior to termination of the Option pursuant to Paragraph 6 hereof. The Option may be exercised at any time and from time to time to purchase up to the number of
shares as to which it is then exercisable. 

Notwithstanding
the foregoing, if the aggregate fair market value, determined as of the Date of Option Grant, of the stock with respect to which the Option may be exercised (determined without regard
to this provision) for the first time during any calendar year (under this Plan), as determined in accordance with Section 422(d) of the Code, shall exceed one hundred thousand dollars
($100,000), the Option shall be deemed a nonqualified stock option to the extent of such excess.  

	(b)
	Method of Exercise.    The Option shall be exercised by written notice to the Company in the form
of Exhibit A hereto.

	(c)
	Restrictions on Grant of the Option and Issuance of Shares.    The grant of the Option and the
issuance of the shares upon exercise of the Option shall be subject to compliance with all applicable requirements of federal or state law with respect to such securities. The Option may not be
exercised if the issuance of shares upon such exercise would constitute a violation of any applicable federal or state securities laws or other law or regulations. In addition, no Option may be
exercised unless (i) a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), shall at the time of exercise of the Option be in effect with respect to the
shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of
an applicable exemption from the registration requirements of the Securities Act. 

THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS EXERCISABLE PURSUANT TO THE TERMS HEREOF.

As
a condition to the exercise of the Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as may be requested by the Company.  

	(d)
	Fractional Shares.    The Company shall not be required to issue fractional shares upon the
exercise of the Option and any fraction of a share shall be rounded down.

	5.
	Non-Transferability of the Option.    The Option and may not be assigned or transferred
in any manner except by will or by the laws of descent and distribution. 

2

 
	6.
	Termination of the Option.    The Option shall terminate upon on the first to occur of:
(a) the Option Term Date; (b) the last date for exercising the Option following termination of employment as described in Paragraph 7 hereof, or (c) upon a Transfer of
Control as described in Paragraph 8 of the Plan.

	7.
	Termination of Employment.

	(a)
	Termination of the Option.    If the Optionee ceases to be an employee of the Company for any
reason except death or Disability, the Option, to the extent exercisable by the Optionee on the date on which the Optionee ceased to be an employee, may be exercised by the Optionee until the earlier
of (i) three (3) months after the date on which the Optionee's employment terminates or (ii) the Option Term Date. Notwithstanding the foregoing, if the Optionee's employment with
the Company is terminated for cause (as determined in the sole discretion of the Board), the Option may not be exercised after the date on which the Optionee's employment terminates. If the Optionee's
employment with the Company is terminated because of the death or Disability of the Optionee, the Option, to the extent exercisable by the Optionee on the date on which the Optionee ceased to be an
employee, may be exercised by the Optionee (or the Optionee's legal representative) until the earlier of (i) the expiration of twelve (12) months from the date the Optionee's employment
terminated, (ii) the Option Term Date. The Optionee's employment shall be deemed to have terminated on account of death if the Optionee dies within three (3) months after the Optionee's
termination of employment. This Paragraph shall be interpreted such that the Option shall not become exercisable as to any additional number of Option Shares after the date on which the Optionee
ceases to be an employee of the Participating Company Group (pursuant to this Paragraph 7) for any reason, notwithstanding any period after such cessation of employment during which the Option
may remain exercisable as provided in this Paragraph 7.

	(b)
	Exercise Prevented by Law.    Except as provided in this Paragraph 7, the Option shall
terminate and may not be exercised after the Optionee's employment with the Company terminates unless the exercise of the Option in accordance with this Paragraph 7 is prevented by the
provisions of Paragraph 4(c) hereof. If the exercise of the Option is so prevented, the Option shall remain exercisable until the earlier of (i) three (3) months after the date
the Optionee is notified by the Company that the Option is exercisable or (ii) the Option Term Date.

	(c)
	Optionee Subject to Section 16(b).    Notwithstanding the foregoing, if the exercise of the
Option within the applicable time periods set forth above would subject the Optionee to suit under Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which the Optionee would no longer be subject to such suit, (ii) the one
hundred and ninetieth (190th) day after the Optionee's termination of employment, or (iii) the Option Term Date.

	(d)
	Leave of Absence.    For purposes hereof, the Optionee's employment with the Company shall not be
deemed to terminate if the Optionee takes any military leave, sick leave, or other bona fide leave of absence approved by the Company of ninety (90) days or less. In the event of a leave in
excess of ninety (90) days, the Optionee's employment shall be deemed to terminate on the ninety-first (91st) day of the leave unless the Optionee's right to reemployment with the Company
remains guaranteed by statute or contract.

	8.
	Rights as a Stockholder or Employee.    The Optionee shall have no rights as a stockholder with
respect to any shares covered by the Option until the date of the issuance of a certificate or certificates for the shares for which the Option has been exercised. Nothing in the Option shall confer
upon the Optionee any right to continue in the employ of the Company or interfere in any way with any right of the Company to terminate the Optionee's employment at any time. 

3

 
	9.
	Notice of Sales Upon Disqualifying Disposition.    The Optionee shall dispose of the shares
acquired pursuant to the Option only in accordance with the provisions of this Option Agreement. In addition, the Optionee shall promptly notify the Chief Financial Officer of the Company if the
Optionee disposes of any of the shares acquired pursuant to the Option within one (1) year from the date the Optionee exercises all or part of the Option or within two (2) years of the
date of grant of the Option. Until such time as the Optionee disposes of such shares in a manner consistent with the provisions of this Option Agreement, the Optionee shall hold all shares acquired
pursuant to the Option in the Optionee's name (and not in the name of any nominee) for the one-year period immediately after exercise of the Option and the two-year period
immediately after grant of the Option. At any time during the one-year or two-year periods set forth above, the Company may place a legend or legends on any certificate or
certificates representing shares acquired pursuant to the Option requesting the transfer agent for the Company's stock to notify the Company of any such transfers. The obligation of the Optionee to
notify the Company of any such transfer shall continue notwithstanding that a legend has been placed on the certificate or certificates pursuant to the preceding sentence.

	10.
	Shareholders' Agreement.    Optionee hereby agrees that Optionee's right to exercise the Option
pursuant to this Option Agreement and purchase stock of the Company is contingent upon Optionee signing and becoming a party to any then existing Shareholders' Agreement of the Company (the
"Shareholders' Agreement") and the Put and Support Agreement (if then existing) between the Company and the parties named therein dated as of May 12, 2005 (the "Put and Support Agreement"). A
copy of the currently existing Shareholders' Agreement of the Company and Put and Support Agreement has been provided to Optionee.

	11.
	Binding Effect.    This Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors and assigns.

	12.
	Termination or Amendment.    The Board may terminate or amend this Option Agreement at any time;
provided, however, that no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Optionee unless such amendment is required to
enable the Option to qualify as an Incentive Stock Option.

	13.
	Integrated Agreement.    This Option Agreement, together with the Plan, the Company's bylaws, the
Shareholders' Agreement and the Put and Support Agreement, constitute the entire understanding and agreement of the Optionee and the Company with respect to the subject matter contained herein, and
there are no other agreements, understandings, restrictions, representations, or warranties among the Optionee and the Company with respect to the subject matter contained herein other than those as
set forth or provided for herein and therein. To the extent contemplated herein, the provisions of this Option Agreement shall survive any exercise of the Option and shall remain in full force and
effect. The terms and conditions included in the Plan are incorporated by reference herein, and to the extent that any conflict may exist between any term or provision of this Option Agreement and any
term or provision of the Plan, the term or provision of the Plan shall control.

	14.
	Applicable Law.    This Option Agreement shall be governed by the laws of the State of Delaware as
such laws are applied to agreements between Delaware residents entered into and to be performed entirely within the State of Delaware.

	15.
	Effect of Certain Transactions.    Notwithstanding anything to contrary in this Option Agreement,
in the event that the Optionee has entered into a nondisclosure, invention and/or non-competition agreement with the Company and the Optionee is determined, in the reasonable judgment of
the Company's Board of Directors, to have materially breached such agreement, the Optionee shall 

4

 

forfeit
any shares acquired pursuant to the Option and 100% of the Option granted pursuant to this Option Agreement, whether or not exercisable. 

 

 

							
	 
	 	 TRANZYME, INC.
	 
	 	 By:
	 	 

 
	 
	 	 	 	Name:	 	

 
	 
	 	 	 	Title:	 	

 

 

         The
Optionee represents that the Optionee is familiar with the terms and provisions of this Option Agreement, including the right of first refusal set forth in the Company's bylaws, the
Shareholders' Agreement and the Put and Support Agreement, and hereby accepts the Option subject to all of the terms and provisions thereof. The Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board of Directors of the Company made in good faith upon any questions arising under this Option Agreement. 

        The
undersigned hereby acknowledges receipt of a copy of the Plan. 

 

 

					
	Date:	 	

  	 	

  (Signature of Optionee)
	

 	
 	
 	
 	

  (Printed Name of Optionee)

 

 5

 
 

  EXHIBIT A    
    

[Date]

Tranzyme, Inc.

4819 Emperor Blvd., Suite 400

Durham, North Carolina 27703

P.O. Box 13097

Research Triangle Park, North Carolina 27709 

        Re:    Exercise
of Incentive Stock Option 

Ladies
and Gentlemen: 

        Pursuant
to the terms and conditions of the Incentive Stock Option Award Agreement dated as of                    , 200    (the
"Agreement"), between                    ("Optionee")
and Tranzyme, Inc. (the "Company"), Optionee hereby agrees to purchase        shares (the "Shares") of the Common Stock of the Company and tender payment in full for such shares in
accordance with the terms of the Agreement. 

        The
Shares are being issued to Optionee in a transaction not involving a public offering and pursuant to an exemption from registration under the Securities Act of 1933, as amended (the
"1933 Act"). In connection with such purchase, Optionee represents, warrants and agrees as follows: 

	1.
	The
Shares are being purchased for the Optionee's own account and not for the account of any other person, with the intent of holding the Shares for
investment and not with the intent of participating, directly or indirectly, in a distribution or resale of the Shares or any portion thereof.

	2.
	The
Optionee is not acquiring the Shares based upon any representation, oral or written, by any person with respect to the future value of, or income from,
the Shares, but rather upon independent examination and judgment as to the prospects of the Company.

	3.
	The
Optionee has had complete access to and the opportunity to review all material documents related to the business of the Company, has examined all such
documents as the Optionee desired, is familiar with the business and affairs of the Company and realizes that any purchase of the Shares is a speculative investment and that any possible profit
therefrom is uncertain.

	4.
	The
Optionee has had the opportunity to ask questions of and receive answers from the Company and its executive officers and to obtain all information
necessary for the Optionee to make an informed decision with respect to the investment in the Company represented by the Shares.

	5.
	The
Optionee is able to bear the economic risk of any investment in the Shares, including the risk of a complete loss of the investment, and the Optionee
acknowledges that he or she may need to continue to bear the economic risk of the investment in the Shares for an indefinite period.

	6.
	The
Optionee understands and agrees that the Shares are being issued and sold to the Optionee without registration under any state or federal laws relating
to the registration of securities, in reliance upon exemptions from registration under appropriate state and federal laws based in part upon the representations of the Optionee made herein.

	7.
	The
Company is under no obligation to register the Shares or to comply with any exemption available for sale of the Shares by the Optionee without
registration, and the Company is under no obligation to act in any manner so as to make Rule 144 promulgated under the 1933 Act available with respect to any sale of the Shares by the Optionee.

	8.
	The
Optionee has not relied upon the Company or an employee or agent of the Company with respect to any tax consequences related to exercise of this Option
or the disposition of 

the
Shares. The Optionee assumes full responsibility for all such tax consequences and the filing of all tax returns and elections the Optionee may be required to or find desirable to file in
connection therewith. 

 

 

					
	 	 	Very truly yours,
	

 	
 	
  

 
	

 	
 	
Print Name:	
 	
  

 
	

 	
 	
  

 
	 	 	 

 
	 	 	 

 
	 	 	(Address)

 

 

Optionee: 

THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.

 
 

  TRANZYME, INC.
  NONQUALIFIED STOCK OPTION AGREEMENT    
    

        Tranzyme, Inc., a Delaware corporation (the "Company"), hereby grants to the individual named below an option (the "Option") to
purchase certain shares of common stock of the Company pursuant to the Tranzyme, Inc. 2003 Amended and Restated Stock Option Plan in the manner and subject to the provisions of this Option
Agreement.  

	1.
	Definitions:

	(a)
	"Code"
shall mean the Internal Revenue Code of 1986, as amended. (All citations to Sections of the Code are to such Sections as they may from time to time
be amended or renumbered.)

	(b)
	"Company"
shall mean Tranzyme, Inc., a Delaware corporation, and any successor corporation thereto.

	(c)
	"Date
of Option Grant" shall mean

	(d)
	"Exercise
Price" shall mean        ($    ) per share, as adjusted from time to time pursuant to Paragraph 9 of the Plan.

	(e)
	"Number
of Option Shares" shall mean                    (        ) shares of common stock of the Company as adjusted
from time to time pursuant to
Paragraph 9 of the Plan.

	(f)
	"Option
Term Date" shall mean the date ten (10) years after the Date of Option Grant.

	(g)
	"Optionee"
shall mean.

	(h)
	"Plan"
shall mean the Tranzyme, Inc. 2003 Stock Option Plan, as amended.

	(i)
	"Transfer
of Control" shall mean a merger, consolidation, corporate reorganization or any transaction in which all or substantially all of the assets of the
Company are sold, leased, transferred or otherwise disposed of (other than a mere reincorporation transaction or one in which the holders of capital stock of the Company immediately prior to such
merger or consolidation continue to hold at least a majority of the voting power of the surviving corporation).

	2.
	Nonqualified Stock Option.    The Option is intended to be a nonqualified stock option. The
Optionee should consult with the Optionee's own tax advisors regarding the tax effects of this Option.

	3.
	Administration.    All questions of interpretation concerning this Option Agreement shall be
determined by the Board of Directors (the "Board") and shall be final and binding upon all persons having an interest in the Option.

	4.
	Exercise of the Option.

	(a)
	Right to Exercise.    The Option shall become exercisable from time to time, subject to the
schedule set forth below, in whole or in part, and subject to the termination provisions of Paragraphs 6 and 7 hereof, the Optionee's acknowledgement and agreement that any shares purchased
upon exercise are subject to the Company's repurchase rights set forth in the 

 

Company's
Bylaws and the Optionee's agreement that any shares purchased upon exercise are subject to the Company's Shareholders' Agreement as described in Paragraph 11 hereof: 

On
or after January 1, 2004 the Option may be exercised to purchase up to 25.00% of the Number of Option Shares. 

On
or after the last day of each successive full calendar year of service as an employee of a Participating Company following January 1, 2004, the Option may be exercised to purchase up to
25.00% of the Number of Option Shares. 

This
provision shall be interpreted such that on or after January 1, 2007, the Option may be exercised to purchase up to 100% of the Number of Option Shares. 

The
schedule set forth above is cumulative, so that shares as to which the Option has become exercisable on and after a date indicated by the schedule may be purchased pursuant to exercise of the
Option at any subsequent date prior to termination of the Option pursuant to Paragraph 6 hereof. The
Option may be exercised at any time and from time to time to purchase up to the number of shares as to which it is then exercisable.  

	(b)
	Method of Exercise.    The Option shall be exercised by written notice to the Company in the form
of Exhibit A hereto.

	(c)
	Restrictions on Grant of the Option and Issuance of Shares.    The grant of the Option and the
issuance of the shares upon exercise of the Option shall be subject to compliance with all applicable requirements of federal or state law with respect to such securities. The Option may not be
exercised if the issuance of shares upon such exercise would constitute a violation of any applicable federal or state securities laws or other law or regulations. In addition, no Option may be
exercised unless (i) a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), shall at the time of exercise of the Option be in effect with respect to the
shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of
an applicable exemption from the registration requirements of the Securities Act. 

THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISABLE UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS EXERCISABLE PURSUANT TO THE TERMS HEREOF.

As
a condition to the exercise of the Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as may be requested by the Company.  

	(d)
	Fractional Shares.    The Company shall not be required to issue fractional shares upon the
exercise of the Option and any fraction of a share shall be rounded down.

	5.
	Non-Transferability of the Option.    The Option may not be assigned or transferred in
any manner except by will or by the laws of descent and distribution.

	6.
	Termination of the Option.    The Option shall terminate upon the first to occur of: (a) the
Option Term Date; (b) the last date for exercising the Option following termination of engagement as described in Paragraph 7 below; or (c) upon a Transfer of Control as described
in Paragraph 8 of the Plan. 

2

 
	7.
	Termination of Engagement.

	(a)
	Termination of the Option.    If the Optionee ceases for any reason to be engaged with the
Company, the Option, to the extent exercisable by the Optionee on the date on which the Optionee ceased to be so engaged, may be exercised by the Optionee until the earlier of (i) three
(3) months after the date on which the Optionee's engagement terminates or (ii) the Option Term Date. Notwithstanding the foregoing, if the Optionee's engagement is terminated for cause
(as determined in the sole discretion of the Board) the Option may not be exercised after the date on which the engagement is so terminated. This Option Agreement shall be interpreted such that the
Option shall not become exercisable as to any additional Option Shares after the date on which the Optionee ceases to be engaged with the Company.

	(b)
	Exercise Prevented by Law.    Except as provided in this Paragraph 7, the Option shall
terminate and may not be exercised after the Optionee's employment with the Company terminates unless the exercise of the Option in accordance with this Paragraph 7 is prevented by the
provisions of Paragraph 4(c) above. If the exercise of the Option is so prevented, the Option shall remain exercisable until the earlier of (i) three (3) months after the date the
Optionee is notified by the Company that the Option is exercisable or (ii) the Option Term Date.

	(c)
	Optionee Subject to Section 16(b).    Notwithstanding the foregoing, if the exercise of the
Option within the applicable time periods set forth above would subject the Optionee to suit under Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which the Optionee would no longer be subject to such suit, (ii) the one
hundred and ninetieth (190th) day after the Optionee's termination of employment, or (iii) the Option Term Date.

	(d)
	Engagement with the Company.    For purposes of this Option Agreement, "engagement with the
Company" shall mean service as a director, consultant or advisor to the Company.

	8.
	Rights as a Stockholder or Employee.    The Optionee shall have no rights as a stockholder with
respect to any shares covered by the Option until the date of the issuance of a certificate or certificates for the shares for which the Option has been exercised. Nothing in the Option shall confer
upon the Optionee any right to engagement with the Company or interfere in any way with any right of the Company to terminate the Optionee's engagement at any time.

	9.
	Binding Effect.    This Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors and assigns.

	10.
	Termination or Amendment.    The Board may terminate or amend this Option Agreement at any time;
provided, however, that no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Optionee.

	11.
	Shareholders' Agreement.    Optionee hereby agrees that Optionee's right to exercise the Option
pursuant to this Option Agreement and purchase stock of the Company is contingent upon Optionee signing and becoming a party to any then existing Shareholders' Agreement of the Company (the
"Shareholders' Agreement") and the Put and Support Agreement (if then existing) between the Company and the parties named therein dated as of May 12, 2005 (the "Put and Support Agreement"). A
copy of the currently existing Shareholders' Agreement of the Company and Put and Support Agreement has been provided to Optionee.

	12.
	Integrated Agreement.    This Option Agreement, together with the Plan, the Company's bylaws, the
Shareholders' Agreement and the Supplemental Put Agreement, constitute the entire understanding and agreement of the Optionee and the Company with respect to the subject matter contained herein, and
there are no other agreements, understandings, restrictions, representations, 

3

 

or
warranties among the Optionee and the Company with respect to the subject matter contained herein other than those as set forth or provided for herein and therein. To the extent contemplated
herein, the provisions of this Option Agreement shall survive any exercise of the Option and shall remain in full force and effect. The terms and conditions included in the Plan are incorporated by
reference herein, and to the extent that any conflict may exist between any term or provision of this Option Agreement and any term or provision of the Plan, the term or provision of the Plan shall
control.  

	13.
	Applicable Law.    This Option Agreement shall be governed by the laws of the State of Delaware as
such laws are applied to agreements between Delaware residents entered into and to be performed entirely within the State of Delaware.

	14.
	Effect of Certain Transactions.    Notwithstanding anything to contrary in this Option Agreement,
in the event that the Optionee has entered into a nondisclosure, invention and/or non-competition agreement with the Company and the Optionee is determined, in the reasonable judgment of
the Company's Board of Directors, to have materially breached any such agreement, the Optionee shall forfeit any shares acquired pursuant to the Option and 100% of the Option granted pursuant to this
Option Agreement, whether or not exercisable. 

 

 

							
	 	 	 TRANZYME, INC.
	

 	
 	
By:	
 	

 
	 	 	 	 	Name:	 	

 
	 	 	 	 	Title:	 	

 

 

 4

 

        The
Optionee represents that the Optionee is familiar with the terms and provisions of this Option Agreement, including the right of first refusal set forth in the Company's Bylaws, the
Shareholders' Agreement and the Put and Support Agreement, and hereby accepts the Option subject to all of the terms and provisions thereof. The Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board of Directors of the Company made in good faith upon any questions arising under this Option Agreement. 

        The
undersigned hereby acknowledges receipt of a copy of the Plan. 

 

 

					
	Date:	 	

  	 	

  (Signature of Optionee)
	

 	
 	
 	
 	

  (Printed Name of Optionee)

 

 5

 
 

  EXHIBIT A    
    

[Date]

Tranzyme, Inc.

4819 Emperor Blvd., Suite 400

Durham, North Carolina 27703

P.O. Box 13097

Research Triangle Park, North Carolina 27709  

	Re:
	Exercise
of Non-Qualified Stock Option 

Ladies
and Gentlemen: 

        Pursuant
to the terms and conditions of the Nonqualified Stock Option Award Agreement dated as of                    , 200    (the
"Agreement"), between                    
("Optionee") and Tranzyme, Inc. (the "Company"), the Optionee hereby agrees to purchase            shares (the "Shares") of the Common Stock of the Company and tender payment in full
for
such shares in accordance with the terms of the Agreement. 

        The
Shares are being issued to Optionee in a transaction not involving a public offering and pursuant to an exemption from registration under the Securities Act of 1933, as amended (the
"1933 Act"). In connection with such purchase, Optionee represents, warrants and agrees as follows: 

	1.
	The
Shares are being purchased for the Optionee's own account, and not for the account of any other person, with the intent of holding the Shares for
investment and not with the intent of participating, directly or indirectly, in a distribution or resale of the Shares or any portion thereof.

	2.
	The
Optionee is not acquiring the Shares based upon any representation, oral or written, by any person with respect to the future value of, or income from,
the Shares, but rather upon independent examination and judgment as to the prospects of the Company.

	3.
	The
Optionee has had complete access to and the opportunity to review all material documents related to the business of the Company, has examined all such
documents as the Optionee desired, is familiar with the business and affairs of the Company and realizes that any purchase of the Shares is a speculative investment and that any possible profit
therefrom is uncertain.

	4.
	The
Optionee has had the opportunity to ask questions of and receive answers from the Company and its executive officers and to obtain all information
necessary for the Optionee to make an informed decision with respect to the investment in the Company represented by the Shares.

	5.
	The
Optionee is able to bear the economic risk of any investment in the Shares, including the risk of a complete loss of the investment, and the Optionee
acknowledges that he or she may need to continue to bear the economic risk of the investment in the Shares for an indefinite period.

	6.
	The
Optionee understands and agrees that the Shares are being issued and sold to the Optionee without registration under any state or federal laws relating
to the registration of securities, in reliance upon exemptions from registration under appropriate state and federal laws based in part upon the representations of the Optionee made herein.

	7.
	The
Company is under no obligation to register the Shares or to comply with any exemption available for sale of the Shares by the Optionee without
registration, and the Company is under no obligation to act in any manner so as to make Rule 144 promulgated under the 1933 Act available with respect to any sale of the Shares by the Optionee.

	8.
	The
Optionee has not relied upon the Company or an employee or agent of the Company with respect to any tax consequences related to exercise of this Option
or the disposition of 

 

the
Shares. The Optionee assumes full responsibility for all such tax consequences and the filing of all tax returns and elections the Optionee may be required to or find desirable to file in
connection therewith. 

 

 

					
	 	 	Very truly yours,
	

 	
 	
  

 
	

 	
 	
Print Name:	
 	
  

 
	

 	
 	
  

 
	

 	
 	
 

 
	

 	
 	
  

 
	 	 	(Address)

 

 2

QuickLinks

Exhibit 10.8

TRANZYME, INC. AMENDED AND RESTATED 2003 STOCK OPTION PLAN

APPENDIX A TRANZYME, INC. AMENDED AND RESTATED 2003 STOCK OPTION PLAN (the "Plan") Provisions Applicable to California Residents

TRANZYME, INC. INCENTIVE STOCK OPTION AGREEMENT

EXHIBIT A

TRANZYME, INC. NONQUALIFIED STOCK OPTION AGREEMENT

EXHIBIT A

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}]]