Document:

Exhibit
10.4

 

IKARIA HOLDINGS, INC.

 

2007 STOCK OPTION PLAN

 

1.             Purposes of
the Plan.  The purposes of this 2007 Stock Option Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees and
Consultants and to promote the success of the business of the Company and any
Subsidiary, Parent or Affiliate.  Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code and
the regulations and interpretations promulgated thereunder.

 

2.             Definitions.  As used herein, the following
definitions shall apply:

 

(a)           “Administrator” means the
Board or its Committee appointed pursuant to Section 4 of the Plan.

 

(b)           “Affiliate” means an
entity other than a Subsidiary (as defined below) which, together with the
Company, is under common control of a third person or entity.

 

(c)           “Applicable
Laws” means the legal requirements relating to the
administration of stock option and restricted stock purchase plans, including
under applicable U.S. state corporate laws, U.S. federal and applicable state
securities laws, other U.S. federal and state laws, the Code, any Stock
Exchange rules or regulations and the applicable laws, rules and
regulations of any other country or jurisdiction where Options are granted
under the Plan, as such laws, rules, regulations and requirements shall be in place
from time to time.

 

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

 

(e)           “Cause” for
termination of a Participant’s Continuous Service Status will exist if the
Participant is terminated by the Company for any of the following reasons:  (i) Participant’s willful failure
substantially to perform his or her duties and responsibilities to the Company
or deliberate violation of a Company policy; (ii) Participant’s commission
of any act of fraud, embezzlement, dishonesty or any other willful misconduct
that has caused or is reasonably expected to result in material injury to the
Company; (iii) unauthorized use or disclosure by Participant of any
proprietary information or trade secrets of the Company or any other party to
whom the Participant owes an obligation of nondisclosure as a result of his or
her relationship with the Company; or (iv) Participant’s willful breach of
any of his or her obligations under any written agreement or covenant with the
Company.  The determination as to whether
a Participant is being terminated for Cause shall be made in good faith by the
Company and shall be final and binding on the Participant.  The foregoing definition does not in any way
limit the Company’s ability to terminate a Participant’s employment or
consulting relationship at any time as provided in Section 5(d) below,
and the term “Company” will be interpreted to include any Subsidiary, Parent or
Affiliate, as appropriate.

 

(f)            “Change
of Control” means (1) a sale of all or substantially all
of the Company’s assets, or (2) any merger, consolidation or other
business combination transaction of the Company with or into another
corporation, entity or person, other than a transaction in which

 

1

 

the
holders of at least a majority of the shares of voting capital stock of the
Company outstanding immediately prior to such transaction continue to hold
(either by such shares remaining outstanding or by their being converted into
shares of voting capital stock of the surviving entity) a majority of the total
voting power represented by the shares of voting capital stock of the Company
(or the surviving entity) outstanding immediately after such transaction, or (3) the
direct or indirect acquisition (including by way of a tender or exchange offer)
by any person, or persons acting as a group, of beneficial ownership or a right
to acquire beneficial ownership of shares representing a majority of the voting
power of the then outstanding shares of capital stock of the Company; provided,
however, that none of the following shall be considered a Change of Control: (i) a
merger effected exclusively for the purpose of changing the domicile of the
Company, (ii) an equity financing in which the Company is the surviving
corporation, or (iii) a transaction in which the stockholders of the
Company immediately prior to the transaction own 50% or more of the voting
power of the surviving corporation immediately following the transaction.  For avoidance of doubt, the term “Change of
Control” does not include the Company’s Series B Preferred Stock
financing, the merger of a wholly owned subsidiary of the Company with Ikaria, Inc.,
or the acquisition of INO Therapeutics LLC by an Affiliate of the Company
(collectively, the “Ikaria-INO Transactions”).

 

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

 

(h)           “Committee” means one or
more committees or subcommittees of the Board appointed by the Board to
administer the Plan in accordance with Section 4 below.

 

(i)            Prior to an Initial Public
Offering (as such term is defined in the Company’s Amended and Restated
Certificate of Incorporation as may be amended from time to time), the term “Common Stock” shall mean the
Non-Voting Common Stock, par value $0.01 per share, of the Company.  Upon and following an Initial Public
Offering, the term “Common Stock”
shall mean the Voting Common Stock, par value $0.01 per share, of the Company
and all Options outstanding at the time of the Initial Public Offering (to the
extent not previously exercised) shall automatically convert into options to
purchase an equivalent number of shares of the Company’s Voting Common Stock
without any further action on the part of the Company or any Optionee.

 

(j)            “Company” means Ikaria
Holdings, Inc., a Delaware corporation.

 

(k)           “Consultant” means any
person, including an advisor, who is engaged by the Company or any Parent,
Subsidiary or Affiliate to render services and is compensated for such
services, and any director of the Company whether compensated for such services
or not.

 

(l)            “Continuous
Service Status” means the absence of any interruption or
termination of service as an Employee or Consultant.  Continuous Service Status as an Employee or
Consultant shall not be considered interrupted in the case of:  (i) sick leave; (ii) military
leave; (iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than ninety (90) days,
unless reemployment upon the expiration of such leave is guaranteed by contract
or statute, or unless provided otherwise pursuant to any policy of the Company
or any Subsidiary, Parent or Affiliate thereof that may be adopted from time to
time; or (iv) in the case of transfers between locations of the Company or
between the Company, its

 

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Parents,
Subsidiaries, Affiliates or their respective successors.  A change in status from an Employee to a
Consultant or from a Consultant to an Employee will not constitute an
interruption of Continuous Service Status.

 

(m)          “Corporate
Transaction” means a sale of all or substantially all of the
Company’s assets, or a merger, consolidation or other capital reorganization or
business combination transaction of the Company with or into another
corporation, entity or person, or the direct or indirect acquisition (including
by way of a tender or exchange offer) by any person, or persons acting as a
group, of beneficial ownership or a right to acquire beneficial ownership of
shares representing a majority of the voting power of the then outstanding
shares of capital stock of the Company.

 

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

 

(o)           “Employee” means any
person employed by the Company or any Parent, Subsidiary or Affiliate, with the
status of employment determined based upon such factors as are deemed
appropriate by the Administrator in its discretion, subject to any requirements
of the Code or the Applicable Laws.  The
payment by the Company of a director’s fee to a Director shall not be
sufficient to constitute “employment” of such Director by the Company.

 

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

 

(q)           “Fair
Market Value” means, as of any date, the fair market value of the
Common Stock, as determined by the Administrator in good faith on such basis as
it deems appropriate and applied consistently with respect to
Participants.  Whenever possible, the
determination of Fair Market Value shall be based upon the closing price for
the Shares as reported in the Wall Street Journal for the applicable
date.

 

(r)            “Incentive
Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code, as designated
in the applicable Option Agreement.

 

(s)           “Listed
Security” means any security of the Company that is listed or
approved for listing on a national securities exchange or designated or
approved for designation as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.

 

(t)            “Named
Executive” means any individual who, on the last day of the
Company’s fiscal year, is the chief executive officer of the Company (or is
acting in such capacity) or among the four most highly compensated officers of
the Company (other than the chief executive officer).  Such officer status shall be determined
pursuant to the executive compensation disclosure rules under the Exchange
Act.

 

(u)           “Nonstatutory
Stock Option” means an Option not intended to qualify as an
Incentive Stock Option, as designated in the applicable Option Agreement.

 

(v)           “Option” means a stock
option granted pursuant to the Plan.

 

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(w)          “Option
Agreement” means a written document, the form(s) of which
shall be approved from time to time by the Administrator, reflecting the terms
of an Option granted under the Plan and includes any documents attached to or
incorporated into such Option Agreement, including, but not limited to, a
notice of stock option grant and a form of exercise notice.

 

(x)            “Option
Exchange Program” means a program approved by the
Administrator whereby outstanding Options are exchanged for Options with a
lower exercise price or are amended to decrease the exercise price as a result
of a decline in the Fair Market Value of the Common Stock.

 

(y)           “Optioned
Stock” means the Common Stock subject to an Option,

 

(z)            “Optionee” means an
Employee or Consultant who receives an Option.

 

(aa)         “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code, or any successor provision.

 

(bb)         “Participant” means any
holder of one or more Options, or the Shares issuable or issued upon exercise
of such Options, under the Plan.

 

(cc)         “Plan” means this
2007 Stock Option Plan.

 

(dd)         “Reporting
Person” means an officer, Director, or greater than ten
percent stockholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3
under the Exchange Act.

 

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

 

(ff)           “Share” means a share
of the Common Stock, as adjusted in accordance with Section 13 of the
Plan.

 

(gg)         “Stock
Exchange” means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.

 

(hh)         “Subsidiary” means a “subsidiary
corporation,” whether now or hereafter existing, as defined in Section 424(f) of
the Code, or any successor provision.

 

(ii)           “Ten
Percent Holder” means a person who owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary.

 

3.             Stock
Subject to the Plan.  Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of Shares that may be sold under the
Plan is 8,058,834 Shares of Common Stock, of which number (i) 1,504,088
Shares relate to outstanding options originally granted under the Ikaria, Inc.
2004 Stock Option Plan (the “Existing Options”), which options were
exchanged for options under this Plan in connection with consummation of the
Ikaria-INO

 

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Transactions,
and (ii) the remaining 6,554,746 Shares do not relate to the Existing
Options.  The Shares may be authorized,
but unissued, or reacquired Common Stock. 
If an award should expire or become unexercisable for any reason without
having been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares that were subject thereto shall, unless the
Plan shall have been terminated, become available for future grant under the
Plan.  In addition, any Shares of Common
Stock which are retained by the Company upon exercise of an award in order to
satisfy the exercise or purchase price for such award or any withholding taxes
due with respect to such exercise or purchase shall be treated as not issued
and shall continue to be available under the Plan.  Shares issued under the Plan and later
repurchased by the Company pursuant to any repurchase right which the Company
may have shall not be available for future grant under the Plan.

 

4.             Administration
of the Plan.

 

(a)           General.  The Plan shall be administered
by the Board or a Committee, or a combination thereof, as determined by the
Board.  The Plan may be administered by
different administrative bodies with respect to different classes of
Participants and, if permitted by the Applicable Laws, the Board may authorize
one or more officers to make awards under the Plan.

 

(b)           Committee
Composition.  If a Committee has been appointed pursuant to
this Section 4, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. 
From time to time the Board may increase the size of any Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies (however caused)
and remove all members of a Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws and, in the case of a
Committee administering the Plan in accordance with the requirements of Rule 16b-3
or Section 162(m) of the Code, to the extent permitted or required by
such provisions.  The Committee shall in
all events conform to any requirements of the Applicable Laws.

 

(c)           Powers of
the Administrator.  Subject to the provisions of the Plan and in
the case of a Committee, the specific duties delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:

 

(i)            to determine the Fair Market
Value of the Common Stock, in accordance with Section 2(q) of the
Plan, provided that such determination shall be applied consistently with
respect to Participants under the Plan;

 

(ii)           to select the Employees and
Consultants to whom Options may from time to time be granted;

 

(iii)          to determine whether and to
what extent Options are granted;

 

(iv)          to determine the number of
Shares of Common Stock to be covered by each award granted;

 

(v)           to approve the form(s) of
agreement(s) used under the Plan;

 

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(vi)          to determine the terms and
conditions, not inconsistent with the terms of the Plan, of any award granted
hereunder, which terms and conditions include but are not limited to the
exercise or purchase price, the time or times when awards may be exercised
(which may be based on performance criteria), any vesting acceleration or
waiver of forfeiture restrictions, any pro rata adjustment to vesting as a
result of a Participant’s transitioning from full- to part-time service (or
vice versa), and any restriction or limitation regarding any Option, Optioned
Stock or restricted stock issued upon exercise of an Option, based in each case
on such factors as the Administrator, in its sole discretion, shall determine;

 

(vii)         to determine whether and
under what circumstances an Option may be settled in cash under Section 10(c) instead
of Common Stock;

 

(viii)        to implement an Option
Exchange Program on such terms and conditions as the Administrator in its
discretion deems appropriate, provided that no amendment or adjustment to an
Option that would materially and adversely affect the rights of any Optionee
shall be made without the prior written consent of the Optionee;

 

(ix)           to adjust the vesting of an
Option held by an Employee or Consultant as a result of a change in the terms
or conditions under which such person is providing services to the Company or
any Subsidiary, Parent or Affiliate thereof;

 

(x)            to construe and interpret
the terms of the Plan and awards granted under the Plan, which constructions,
interpretations and decisions shall be final and binding on all Participants;
and

 

(xi)           in order to fulfill the
purposes of the Plan and without amending the Plan, to modify grants of Options
to Participants who are foreign nationals or employed outside of the United
States in order to recognize differences in local law, tax policies or customs.

 

5.             Eligibility.

 

(a)           Recipients
of Grants.  Nonstatutory Stock Options may be granted to
Employees and Consultants.  Incentive
Stock Options may be granted only to Employees, provided that Employees of
Affiliates shall not be eligible to receive Incentive Stock Options.

 

(b)           Type of
Option.  Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.

 

(c)           ISO
$100,000 Limitation.  Notwithstanding any designation under Section 5(b),
to the extent that the aggregate Fair Market Value of Shares with respect to
which Options designated as Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under all plans of the
Company or any Parent or Subsidiary) exceeds $100,000, such excess Options
shall be treated as Nonstatutory Stock Options. 
For purposes of this Section 5(c), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares subject to an Incentive Stock Option shall be determined as
of the date of the grant of such Option.

 

6

 

(d)           No
Employment Rights.  The Plan shall not confer upon any
Participant any right with respect to continuation of an employment or
consulting relationship with the Company or any Subsidiary, Parent or Affiliate
thereof, nor shall it interfere in any way with such Participant’s right or the
right of the Company or any Subsidiary, Parent or Affiliate thereof to
terminate the employment or consulting relationship at any time for any reason.

 

6.             Term of
Plan.  The Plan shall become effective upon its
adoption by the Board of Directors.  It
shall continue in effect for a term often (10) years unless sooner
terminated under Section 15 of the Plan.

 

7.             Term of
Option.  The term of each Option shall be the term
stated in the Option Agreement; provided that the term shall be no more than
ten years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement and provided further that, in the case of an
Incentive Stock Option granted to a person who at the time of such grant is a
Ten Percent Holder, the term of the Option shall be five years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.

 

8.             [Reserved.]

 

9.             Option
Exercise Price and Consideration.

 

(a)           Exercise
Price.  The per Share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be such price as is
determined by the Administrator and set forth in the Option Agreement, but
shall be subject to the following:

 

(i)            In the case of an Incentive
Stock Option

 

(A)          granted to an Employee who
at the time of grant is a Ten Percent Holder, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share on the date of
grant; or

 

(B)           granted to any other
Employee, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant.

 

(ii)           In the case of a Nonstatutory
Stock Option, the per share Exercise Price shall be such price as determined by
the Administrator provided that if such eligible person is, at the time of the
grant of such Option, a Named Executive of the Company, the per share Exercise
Price shall be no less than 100% of the Fair Market Value on the date of grant
if such Option is intended to qualify as performance-based compensation under Section 162(m) of
the Code.

 

(iii)          Notwithstanding the
foregoing, Options may be granted with a per Share exercise price other than as
required above pursuant to a merger or other corporate transaction.

 

(b)           Permissible
Consideration.  The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the

 

7

 

time
of grant) and may consist entirely of (1) cash; (2) check; (3) subject
to any requirements of the Applicable Laws (including without limitation Section 153
of the Delaware General Corporation Law), delivery of Optionee’s promissory
note having such recourse, interest, security and redemption provisions as the
Administrator determines to be appropriate after taking into account the
potential accounting consequences of permitting an Optionee to deliver a
promissory note; (4) cancellation of indebtedness; (5) other Shares
that have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which the Option is exercised, provided that
in the case of Shares acquired, directly or indirectly, from the Company, such
Shares must have been owned by the Optionee for more than six months on the
date of surrender (or such shorter or longer period of time as may be deemed
necessary in the Administrator’s sole discretion to avoid risk of the
incurrence of adverse accounting charges by the Company); provided, however,
that this clause (5) shall only apply to Options granted after March 28,
2007 if permitted by the Administrator at the time of exercise in its sole
discretion; (6) if, as of the date of exercise of an Option the Company
then is permitting employees to engage in a “same-day sale” cashless brokered
exercise program involving one or more brokers, through such a program that
complies with the Applicable Laws (including without limitation the
requirements of Regulation T and other applicable regulations promulgated by
the Federal Reserve Board) and that ensures prompt delivery to the Company of
the amount required to pay the exercise price and any applicable withholding
taxes; or (7) any combination of the foregoing methods of payment.  In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration maybe reasonably expected to benefit the Company and the
Administrator may, in its sole discretion, refuse to accept a particular form
of consideration at the time of any Option exercise.

 

10.           Exercise of
Option.

 

(a)           General.

 

(i)            Exercisability.  Any Option granted hereunder
shall be exercisable at such times and under such conditions as determined by
the Administrator, consistent with the term of the Plan and reflected in the
Option Agreement, including vesting requirements and/or performance criteria
with respect to the Company and/or the Optionee.

 

(ii)           Leave of
Absence.  The Administrator shall have the discretion
to determine whether and to what extent the vesting of Options shall be tolled
during any unpaid leave of absence; provided, however, that in the absence of
such determination, vesting of Options shall be tolled during any such unpaid
leave (unless otherwise required by the Applicable Laws).  In the event of military leave, vesting shall
toll during any unpaid portion of such leave, provided that, upon a Participant’s
returning from military leave (under conditions that would entitle him or her
to protection upon such return under the Uniform Services Employment and
Reemployment Rights Act), he or she shall be given vesting credit with respect
to Options to the same extent as would have applied had the Participant
continued to provide services to the Company or any Subsidiary, Parent or
Affiliate thereof throughout the leave on the same terms as he or she was
providing services immediately prior to such leave.

 

(iii)          Minimum
Exercise Requirements.  An Option may not be exercised for a fraction
of a Share.  The Administrator may
require that an Option be exercised

 

8

 

as
to a minimum number of Shares, provided that such requirement shall not prevent
an Optionee from exercising the full number of Shares as to which the Option is
then exercisable.

 

(iv)          Procedures
for and Results of Exercise.  An Option shall be deemed exercised when
written notice of such exercise has been given to the Company in accordance
with the terms of the Option by the person entitled to exercise the Option and
the Company has received full payment for the Shares with respect to which the
Option is exercised.  Full payment may,
as authorized by the Administrator, consist of any consideration and method of
payment allowable under Section 9(b) of the Plan, provided that the
Administrator may, in its sole discretion, refuse to accept any form of
consideration at the time of any Option exercise.  If required by the Option Agreement, it shall
be a condition precedent to the exercise of an Option that the Optionee (and
such Optionee’s spouse, if applicable) execute and deliver to the Company a
counterpart signature page indicating such Optionee’s agreement to be
bound as a “Stockholder” by the Company’s Common Stockholders Agreement
attached to the Option Agreement or that is in use by the Company from time to
time (the “Common Stockholders Agreement”).

 

Exercise of an Option in any
manner shall result in a decrease in the number of Shares that thereafter may
be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.

 

(v)           Rights as
Stockholder.  Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) and, if required by the Stock Option
Agreement, a counterpart signature page to the Common Stockholders
Agreement, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option.  No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 13
of the Plan.

 

(b)           Termination
of Employment or Consulting Relationship.  Except as otherwise set forth in this Section 10(b),
the Administrator shall establish and set forth in the applicable Option
Agreement the terms and conditions upon which an Option shall remain
exercisable, if at all, following termination of an Optionee’s Continuous
Service Status, which provisions may be waived or modified by the Administrator
at any time.  Unless the Administrator
otherwise provides in the Option Agreement, to the extent that the Optionee is
not vested in Optioned Stock at the date of termination of his or her
Continuous Service Status, or if the Optionee (or other person entitled to
exercise the Option) does not exercise the Option to the extent so entitled
within the time specified in the Option Agreement or below (as applicable), the
Option shall terminate and the Optioned Stock underlying the unexercised
portion of the Option shall revert to the Plan. 
In no event may any Option be exercised after the expiration of the
Option term as set forth in the Option Agreement (and subject to Section 7).

 

The following provisions (1) shall
apply to the extent an Option Agreement does not specify the terms and
conditions upon which an Option shall terminate upon termination of an Optionee’s
Continuous Service Status, and (2) establish the minimum post-termination
exercise periods that may be set forth in an Option Agreement:

 

9

 

(i)            Termination
other than Upon Disability or Death or for Cause.  In the event of termination of
Optionee’s Continuous Service Status other than under the circumstances set forth
in subsections (ii) through (iv) below, such Optionee may exercise an
Option for ninety (90) days following such termination to the extent the
Optionee was vested in the Optioned Stock as of the date of such
termination.  No termination shall be deemed
to occur and this Section 10(b)(i) shall not apply if (i) the
Optionee is a Consultant who becomes an Employee, or (ii) the Optionee is
an Employee who becomes a Consultant.

 

(ii)           Disability
of Optionee.  In the event of termination of an Optionee’s
Continuous Service Status as a result of his or her disability (including a
disability within the meaning of Section 22(e)(3) of the Code), such
Optionee may exercise an Option at any time within six months following such
termination to the extent the Optionee was vested in the Optioned Stock as of
the date of such termination.

 

(iii)          Death of
Optionee.  In the event of the death of an Optionee
during the period of Continuous Service Status since the date of grant of the
Option, or within ninety (90) days following termination of Optionee’s
Continuous Service Status, the Option may be exercised by Optionee’s estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance at any time within six months following the date of death, but only
to the extent the Optionee was vested in the Optioned Stock as of the date of
death or, if earlier, the date the Optionee’s Continuous Service Status
terminated.

 

(iv)          Termination
for Cause.  In the event of termination of an Optionee’s
Continuous Service Status for Cause, any Option (including any exercisable
portion thereof) held by such Optionee shall immediately terminate in its
entirety upon first notification to the Optionee of termination of the Optionee’s
Continuous Service Status.  If an Optionee’s
employment or consulting relationship with the Company or any Subsidiary,
Parent or Affiliate thereof is suspended pending an investigation of whether
the Optionee shall be terminated for Cause, all the Optionee’s rights under any
Option likewise shall be suspended during the investigation period and the
Optionee shall have no right to exercise any Option.  Nothing in this Section 10(b)(iv) shall
in any way limit the Company’s right to purchase unvested Shares issued upon
exercise of an Option as set forth in the applicable Option Agreement.

 

(c)           Buyout
Provisions.  The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted under the
Plan based on such terms and conditions as the Administrator shall establish
and communicate to the Optionee at the time that such offer is made.

 

11.           Taxes.

 

(a)           As a condition of the grant,
vesting or exercise of an Option granted under the Plan, the Participant (or in
the case of the Participant’s death, the person exercising the Option) shall
make such arrangements as the Administrator may require for the satisfaction of
any applicable federal, state, local or foreign withholding tax obligations
that may arise in connection with such grant, vesting or exercise of the Option
or the issuance of Shares.  The Company
shall not be required to issue any Shares under the Plan until such obligations
are satisfied.  If the Administrator
allows the withholding or surrender of Shares to satisfy a

 

10

 

Participant’s
tax withholding obligations under this Section 11 (whether pursuant to
Section11(c), (d) or (e), or otherwise), the Administrator shall not allow
Shares to be withheld in an amount that exceeds the minimum statutory withholding
rates for federal and state tax purposes, including payroll taxes.

 

(b)           In the case of an Employee
and in the absence of any other arrangement, the Employee shall be deemed to
have directed the Company or a Subsidiary, Parent or Affiliate thereof, as applicable,
to withhold or collect from his or her compensation an amount sufficient to
satisfy such tax obligations from the next payroll payment otherwise payable
after the date of an exercise of the Option.

 

(c)           This Section 11(c) shall
apply only after the date, if any, upon which the Common Stock becomes a Listed
Security.  In the case of Participant
other than an Employee (or in the case of an Employee where the next payroll
payment is not sufficient to satisfy such tax obligations, with respect to any
remaining tax obligations), in the absence of any other arrangement and to the
extent permitted under the Applicable Laws, the Participant shall be deemed to
have elected to have the Company withhold from the Shares to be issued upon
exercise of the Option that number of Shares having a Fair Market Value
determined as of the applicable Tax Date (as defined below) equal to the amount
required to be withheld; provided, however, that that this
sentence shall only apply to Options granted after March 28, 2007 if
permitted by the Administrator at the time of exercise in its sole
discretion.  For purposes of this Section 11,
the Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined under the
Applicable Laws (the “Tax Date”).

 

(d)           If permitted by the
Administrator, in its discretion, a Participant may satisfy his or her tax
withholding obligations upon exercise of an Option by surrendering to the
Company Shares that have a Fair Market Value determined as of the applicable
Tax Date equal to the amount required to be withheld.  In the case of shares previously acquired
from the Company that are surrendered under this Section 11 (d), such
Shares must have been owned by the Participant for more than six (6) months
on the date of surrender (or such other period of time as is required for the
Company to avoid adverse accounting charges).

 

(e)           Any election or deemed
election by a Participant to have Shares withheld to satisfy tax withholding
obligations under Section 11(c) or (d) above shall be
irrevocable as to the particular Shares as to which the election is made and
shall be subject to the consent or disapproval of the Administrator.  Any election by a Participant under Section 11(d) above
must be made on or prior to the applicable Tax Date.

 

(f)            In the event an election to
have Shares withheld is made by a Participant and the Tax Date is deferred
under Section 83 of the Code because no election is filed under Section 83(b) of
the Code, the Participant shall receive the full number of Shares with respect
to which the Option is exercised but such Participant shall be unconditionally
obligated to tender back to the Company the proper number of Shares on the Tax
Date.

 

11

 

12.           Non-Transferability
of Options.

 

(a)           General.  Except as set forth in this Section 12,
Options may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent or
distribution.  The designation of a
beneficiary by an Optionee will not constitute a transfer.  An Option may be exercised, during the
lifetime of the holder of an Option, only by such holder or a transferee
permitted by this Section 12.

 

(b)           Limited
Transferability Rights. 
Notwithstanding anything else in this Section 12, the Administrator
may in its discretion grant Nonstatutory Stock Options that may be transferred
by instrument to an inter vivos or testamentary trust in which the Options are
to be passed to beneficiaries upon the death of the trustor (settlor) or by
gift or pursuant to domestic relations orders to “Immediate Family Members” (as
defined below) of the Optionee.  “Immediate
Family” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law
(including adoptive relationships), a trust in which these persons have more
than fifty percent of the beneficial interest, a foundation in which these
persons (or the Optionee) control the management of assets, and any other
entity in which these persons (or the Optionee) own more than fifty percent of
the voting interests.

 

13.           Adjustments
Upon Changes in Capitalization, Merger or Certain Other Transactions.

 

(a)           Changes
in Capitalization. 
Subject to any action required under Applicable Laws by the stockholders
of the Company, the number of Shares of Common Stock covered by each
outstanding Option, and the number of Shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or that have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per Share of Common Stock covered by each
such outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination, recapitalization or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares of Common Stock effected without receipt of
consideration by the Company; provided, 
however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive.  Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares of Common Stock subject to an Option. 
In the event of an “Initial Public Offering” (as such term is defined in
the Company’s Amended and Restated Certificate of Incorporation as may be
amended from time to time) or any other conversion of all of the outstanding
shares of the Company’s Non-Voting Common Stock, all outstanding Options shall
automatically convert into options to purchase an equivalent number of shares
of the Company’s Voting Common Stock without any further action on the part of
the Company or any Optionee.

 

12

 

(b)           Dissolution
or Liquidation.  In the
event of the dissolution or liquidation of the Company, each Option will
terminate immediately prior to the consummation of such action, unless
otherwise determined by the Administrator.

 

(c)           Corporate
Transaction.  In the event
of a Corporate Transaction (including without limitation a Change of Control),
each outstanding Option shall be assumed or an equivalent option or right shall
be substituted by such successor corporation or a parent or subsidiary of such
successor corporation (the “Successor Corporation”), unless the
Successor Corporation does not agree to assume the award or to substitute an
equivalent option or right, in which case such Option shall terminate upon the
consummation of the transaction.

 

For purposes of this Section 13(c),
an Option shall be considered assumed, without limitation, if, at the time of
issuance of the stock or other consideration upon a Corporate Transaction or a
Change of Control, as the case may be, each holder of an Option would be
entitled to receive upon exercise of the award the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the transaction
if the holder had been, immediately prior to such transaction, the holder of
the number of Shares of Common Stock covered by the award at such time (after
giving effect to any adjustments in the number of Shares covered by the Option
as provided for in this Section 13); provided that if such consideration
received in the transaction is not solely common stock of the Successor
Corporation, the Administrator may, with the consent of the Successor
Corporation, provide for the consideration to be received upon exercise of the
award to be solely common stock of the Successor Corporation equal to the Fair
Market Value of the per Share consideration received by holders of Common Stock
in the transaction.

 

(d)           Certain
Distributions.  In the
event of any distribution to the Company’s stockholders of securities of any
other entity or other assets (other than dividends payable in cash or stock of
the Company) without receipt of consideration by the Company, the Administrator
may, in its discretion, appropriately adjust the price per Share of Common
Stock covered by each outstanding Option to reflect the effect of such
distribution.

 

14.           Time
of Granting Options.  The
date of grant of an Option shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option, or such other date
as is determined by the Administrator, provided that in the case of any
Incentive Stock Option, the grant date shall be the later of the date on which
the Administrator makes the determination granting such Incentive Stock Option
or the date of commencement of the Optionee’s employment relationship with the
Company or any Subsidiary, Parent or Affiliate thereof.  Notice of the determination shall be given to
each Employee or Consultant to whom an Option is so granted within a reasonable
time after the date of such grant.

 

15.           Amendment
and Termination of the Plan.

 

(a)           Authority
to Amend or Terminate. 
The Board may at any time amend, alter, suspend or discontinue the Plan,
but no amendment, alteration, suspension or discontinuation (other than an
adjustment pursuant to Section 13 above) shall be made that would
materially and adversely affect the rights of any Optionee under any
outstanding grant, without his or her consent. 
In addition, to the extent necessary and desirable to comply with the

 

13

 

Applicable
Laws, the Company shall obtain stockholder approval of any Plan amendment in
such a manner and to such a degree as required.

 

(b)           Effect
of Amendment or Termination. 
Except as to amendments which the Administrator has the authority under
the Plan to make unilaterally, no amendment or termination of the Plan shall
materially and adversely affect Options already granted, unless mutually agreed
otherwise between the Optionee and the Administrator, which agreement must be
in writing and signed by the Optionee and the Company.

 

16.           Conditions
Upon Issuance of Shares. 
Notwithstanding any other provision of the Plan or any agreement entered
into by the Company pursuant to the Plan, the Company shall not be obligated,
and shall have no liability for failure, to issue or deliver any Shares under
the Plan unless such issuance or delivery would comply with the Applicable
Laws, with such compliance determined by the Company in consultation with its
legal counsel.  As a condition to the
exercise of an Option, the Company may require the person exercising the award
to represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell
or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required by law. 
Shares issued upon exercise of Options granted prior to the date on
which the Common Stock becomes a Listed Security shall be subject to a right of
first refusal in favor of the Company pursuant to which the Participant will be
required to offer Shares to the Company before selling or transferring them to
any third party on such terms and subject to such conditions as is reflected in
the applicable Option Agreement.

 

17.           Reservation
of Shares.  The Company,
during the term of this Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the
Plan.

 

18.           Agreements.  Options shall be evidenced by Option
Agreements in such form(s) as the Administrator shall from time to time
approve.

 

19.           Stockholder
Approval.  If required by
the Applicable Laws, continuance of the Plan shall be subject to approval by
the stockholders of the Company within twelve (12) months before or after the
date the Plan is adopted.  Such
stockholder approval shall be obtained in the manner and to the degree required
under the Applicable Laws.

 

20.           Information
and Documents to Optionees. 
Prior to the date, if any, upon which the Common Stock becomes a Listed
Security and if required by the Applicable Laws, the Company shall provide
financial statements at least annually to each Optionee and to each individual
who acquired Shares pursuant to the Plan, during the period such Optionee has
one or more Options outstanding, and in the case of an individual who acquired
Shares pursuant to the Plan, during the period such individual owns such
Shares.  The Company shall not be
required to provide such information if the issuance of Options under the Plan
is limited to key employees whose duties in connection with the Company or any
Subsidiary, Parent or Affiliate thereof assure their access to equivalent
information.

 

14

 

21.           Awards
Granted to California Residents. 
Options granted under the Plan on any date on which the Common Stock is
not a Listed Security to persons resident in California shall be subject to the
provisions set forth in Attachment A hereto.  To the extent the provisions of the Plan
conflict with the provisions set forth on Attachment A.  the provisions on Attachment A
shall govern the terms of such Options.

 

15

 

Attachment A

Provisions Applicable to Option Recipients

Resident in California

 

The following additional
terms shall apply if required by the Applicable Laws to (i) Options
granted on any date the Common Stock is not a Listed Security, and (ii) any
Shares issued upon exercise of such Options on any date the Common Stock is not
a Listed Security, which are granted or issued to persons resident in
California as of the date of grant or issuance, as applicable (each such
person, a “California recipient”):

 

1.             In the case of an Option, whether
an Incentive Stock Option or a Nonqualified Stock Option, that is granted to a
California Recipient who, at the time of the grant of such Option, owns stock
representing more than 10% of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the Fair Market Value on the grant date.

 

2.             In the case of a Nonqualified Stock
Option that is granted to any other California Recipient, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the grant date.

 

3.             With respect to an Option issued to
any California Recipient who is not an Officer, Director or Consultant, such
Option shall become exercisable, or any repurchase option in favor of the
Company shall lapse, at the rate of at least 20% per year over five years from
the grant date.

 

4.             The following rules shall
apply to an Option issued to any California Recipient or to stock issued to a
California Recipient upon exercise of an Option, in the event of termination of
the California Recipient’s employment or services with the Company or any
Subsidiary, Parent or Affiliate thereof:

 

(a)           If such termination was for reasons
other than death or disability, the California Recipient shall have at least 30
days after the date of such termination (but in no event later than the
expiration of the term of such Option established by the Plan Administrator as
of the grant date) to exercise such Option.

 

(b)           If such termination was on account of
the death or disability of the California Recipient, the holder of the Option
may, but only within six months from the date of such termination (but in no
event later than the expiration date of the term of such Option established by
the Plan Administrator as of the grant date), exercise the Option to the extent
the California Recipient was otherwise entitled to exercise it at the date of
such termination.  To the extent that the
California Recipient was not entitled to exercise the Option at the date of
termination, or if the holder does not exercise such Option to the extent so
entitled within six months from the date of termination, the Option shall
terminate and the Common Stock underlying the unexercised portion of the Option
shall revert to the Plan.

 

(c)           Section 10(b)(iv) of the
Plan shall apply with equal effect to vested Shares acquired upon exercise of
an Option granted prior to the date, if any, upon which the Common Stock
becomes a Listed Security to a person other than an Officer, Director or
Consultant, in that 

 

A1

 

the
Company shall have the right to repurchase such Shares from the Participant
upon the following terms:  (A) the
repurchase is made within 90 days of termination of the Participant’s
Continuous Service for Cause at the Fair Market Value of the Shares as of the
date of termination, (B) consideration for the repurchase consists of cash
or cancellation of purchase money indebtedness, and (C) the repurchase
right terminates upon the effective date of the Company’s initial public
offering of its Common Stock.  With
respect to vested Shares issued upon exercise of an Option granted to any
Officer, Director or Consultant, the Company’s right to repurchase such Shares
upon termination of the Participant’s Continuous Service for Cause shall be
made at the Participant’s original cost for the Shares and shall be effected
pursuant to such terms and conditions, and at such time, as the Administrator
shall determine.  Nothing in this Section 10(b)(iv) shall
in any way limit the Company’s right to purchase unvested Shares issued upon
exercise of an Option as set forth in the applicable Option Agreement.

 

5.             The Company shall provide financial
statements at least annually to each California Recipient during the period
such person has one or more Options outstanding, and in the case of an
individual who acquired Shares pursuant to the Plan, during the period such
individual owns such Shares.  The Company
shall not be required to provide such information if the issuance of awards
under the Plan is limited to key employees whose duties in connection with the
Company or any Subsidiary, Parent or Affiliate thereof assure their access to
equivalent information.

 

6.             Unless defined below or otherwise
in this Attachment, Capitalized terms shall have the meanings set forth in the
Plan.  For purposes of this Attachment, “Officer”
means a person who is an officer of the Company within the meaning of Section 16(a) of
the Exchange Act and the rules and regulations promulgated thereunder.

 

A2

 

Amendment No. 1 to the Ikaria Holdings, Inc. 

2007 Stock Option Plan

 

WHEREAS, Ikaria
Holdings, Inc. a Delaware corporation (the “Company”), has adopted
the Ikaria Holdings, Inc. 2007 Stock Option Plan (the “Plan”) for
the purpose of granting options to purchase shares of common stock, par value
$0.01 per share, of the Company (the “Common Stock”) to the employees
and consultants of the Company or its subsidiaries or affiliates;

 

WHEREAS, Section 15(a) of
the Plan provides that the Board of Directors of the Company (the “Board”)
may amend the Plan, subject, in the case of an amendment that materially and
adversely affects the rights of an optionee under any option granted prior to
such amendment, to such optionee’s consent;

 

WHEREAS, by resolution
dated April 18, 2007, the Compensation Committee of the Board (the “Compensation
Committee”), pursuant to authority granted to it by the Board, amended Section 2(e) of
the Plan to provide that an option agreement may include a definition of “Cause”
that differs from the definition included in the Plan; and

 

WHEREAS, by resolution
dated April 18, 2007, the Compensation Committee, pursuant to authority
granted to it by the Board, amended Section 9(b) of the Plan to
provide that the consideration to be paid for the shares of Common Stock to be
issued upon exercise of an option  may be
paid with the shares underlying such option.

 

NOW
THEREFORE, the Plan is amended as follows:

 

1.             Section 2(e) of
the Plan is amended to insert the following sentence after the last sentence
thereof:

 

“Notwithstanding the
foregoing, an Option Agreement may include a definition of Cause that is
different from the foregoing definition.”

 

2.             Section 9(b) of
the Plan is amended and restated in its entirety to read as follows:

 

“Permissible
Consideration.  The
consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash; (2) check;
(3) subject to any requirements of the Applicable Laws (including without
limitation Section 153 of the Delaware General Corporation Law), delivery
of Optionee’s promissory note having such recourse, interest, security and
redemption provisions as the Administrator determines to be appropriate after
taking into account the potential accounting consequences of permitting an
Optionee to deliver a promissory note; (4) cancellation of indebtedness; (5) other
Shares that have a Fair Market Value on the date of surrender equal to the  aggregate exercise price of the Shares as to
which the Option is exercised, provided that in the case of Shares acquired,
directly or indirectly, from the Company, such Shares must have been owned by
the Optionee for more than six months on the date of surrender (or such shorter
or longer period of time as may be deemed necessary in the Administrator’s sole
discretion to avoid risk of the incurrence of adverse accounting 

 

 

charges by the Company); (6) Shares
of Optioned Stock that have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which the applicable Option
is exercised; provided, however, that clauses (5) and (6) shall
apply only to Options granted after March 28, 2007, if permitted by the
Administrator at the time of exercise in its sole discretion; and provided,
further, however, that clause (6) shall apply only to
Nonstatutory Stock Options; (7) if, as of the date of exercise of an
Option the Company then is permitting employees to engage in a “same-day sale”
cashless brokered exercise program involving one or more brokers, through such
a program that complies with the Applicable Laws (including without limitation
the requirements of Regulation T and other applicable regulations promulgated
by the Federal Reserve Board) and that ensures prompt delivery to the Company
of the amount required to pay the exercise price and any applicable withholding
taxes; or (8) any combination of the foregoing methods of payment.  In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company and the
Administrator may, in its sole discretion, refuse to accept a particular form
of consideration at the time of any Option exercise.

 

IN WITNESS WHEREOF, this
Amendment has been executed by the undersigned, thereunto duly authorized,
effective as of May 14, 2007.

 

 

	
   

  	
  IKARIA HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Elizabeth A. Larkin

  
	
   

  	
  Name: Elizabeth A. Larkin

  
	
   

  	
  Title:   Chief Financial Officer

  

 

2

 

Amendment No. 2 to the Ikaria Holdings, Inc. 

2007 Stock Option Plan

 

WHEREAS, Ikaria
Holdings, Inc. a Delaware corporation (the “Company”), has adopted
the Ikaria Holdings, Inc. 2007 Stock Option Plan (the “Plan”) for
the purpose of granting options to purchase shares of common stock, par value
$0.01 per share, of the Company (the “Common Stock”) to the employees
and consultants of the Company or its subsidiaries or affiliates;

 

WHEREAS, Section 15(a) of
the Plan provides that the Board of Directors of the Company (the “Board”)
may amend the Plan, subject, in the case of an amendment that materially and
adversely affects the rights of an optionee under any option granted prior to
such amendment, to such optionee’s consent; and

 

WHEREAS, by resolution
dated January 21, 2008, the Board amended Section 9(b) of the
Plan to clarify the authority of the Administrator (as such term is defined in
the Plan) to determine of the type of consideration to be paid for the shares
of Common Stock to be issued upon exercise of an option.

 

NOW
THEREFORE, Section 9(b) of the Plan is amended and
restated in its entirety to read as follows:

 

“Permissible
Consideration.  The
consideration to be paid for the Shares to be issued upon exercise of an Option,
including the method of payment, shall be 
determined by the Administrator in its sole discretion at the time of
grant or, with  respect to a Nonstatutory
Stock Option, at that time or at any time thereafter and may consist entirely
of (1) cash; (2) check; (3) subject to any requirements of the
Applicable Laws (including without limitation Section 153 of the Delaware
General Corporation Law), delivery of Optionee’s promissory note having such
recourse, interest, security and redemption provisions as the Administrator
determines to be appropriate after taking into account the potential accounting
consequences of permitting an Optionee to deliver a promissory note; (4) cancellation
of indebtedness; (5) other Shares that have a Fair Market Value on the date
of surrender equal to the aggregate exercise price of the Shares as to which
the Option is exercised, provided that in the case of Shares acquired, directly
or indirectly, from the Company, such Shares must have been owned by the
Optionee for more than six months on the date of surrender (or such shorter or
longer period of time as may be deemed necessary in the Administrator’s sole
discretion to avoid risk of the incurrence of adverse accounting charges by the
Company); (6) Shares of Optioned Stock that have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which the applicable Option is exercised; provided, however, that
clauses (5) and (6) shall apply only to Options granted after March 28,
2007; and provided, further, however, that clause (6) shall
apply only to Nonstatutory Stock Options; (7) if, as of the date of
exercise of an Option the Company then is permitting employees to engage in a “same-day
sale” cashless brokered exercise program involving one or more brokers, through
such a program that complies with the Applicable Laws (including without
limitation the requirements of Regulation T and other with applicable
regulations promulgated by the Federal Reserve Board) and that ensures prompt
delivery to the 

 

 

Company of the amount
required to pay the exercise price and any applicable withholding taxes; or (8) any
combination of the foregoing methods of payment.  In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company and the
Administrator may, in its sole discretion, refuse to accept a particular form
of consideration at the time of any Option exercise.”

 

IN WITNESS WHEREOF, this
Amendment has been executed by the undersigned, thereunto duly authorized,
effective as of January 21, 2008.

 

 

	
   

  	
  IKARIA HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Elizabeth A. Larkin

  
	
   

  	
  Name: Elizabeth A. Larkin

  
	
   

  	
  Title:   Chief Financial Officer

  

 

2

 

Amendment No. 3
to the Ikaria Holdings, Inc.

2007 Stock
Option Plan

 

WHEREAS, Ikaria
Holdings, Inc. a Delaware corporation (the “Company”), has adopted
the Ikaria Holdings, Inc. 2007 Stock Option Plan (the “Plan”) for
the purpose of granting options to purchase shares of common stock, par value
$0.01 per share, of the Company (the “Common Stock”) to the employees
and consultants of the Company or its subsidiaries or affiliates;

 

WHEREAS, Section 15(a) of
the Plan provides that the Board of Directors of the Company (the “Board”)
may amend the Plan, subject, in the case of an amendment that materially and
adversely affects the rights of an optionee under any option granted prior to
such amendment, to such optionee’s consent; and

 

WHEREAS, by resolution
dated May 4, 2010, the Board amended Section 9(b) of the Plan to
clarify the authority of the Administrator (as such term is defined in the
Plan) to determine of the type of consideration to be paid for the shares of
Common Stock to be issued upon exercise of an option.

 

NOW THEREFORE, Section 9(b) of
the Plan is amended and restated in its entirety to read as follows:

 

“Permissible Consideration.  The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
may consist entirely of (1) cash; (2) check; (3) subject to any
requirements of the Applicable Laws (including without limitation Section 153
of the Delaware General Corporation Law), delivery of Optionee’s promissory
note having such recourse, interest, security and redemption provisions as the
Administrator determines to be appropriate after taking into account the
potential accounting consequences of permitting an Optionee to deliver a
promissory note; (4) cancellation of indebtedness; (5) other Shares
that have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which the Option is exercised; (6) Shares
of Optioned Stock that have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which the applicable Option
is exercised; provided, however, that clauses (5) and (6) shall
apply only to Options granted after March 28, 2007; and provided, further,
however, that clause (6) shall apply only to Nonstatutory Stock
Options; (7) through a “same-day sale” cashless brokered exercise program
involving one or more brokers that complies with the Applicable Laws (including
without limitation the requirements of Regulation T and other applicable
regulations promulgated by the Federal Reserve Board) and that ensures prompt
delivery to the Company of the amount required to pay the exercise price and
any applicable withholding taxes; or (8) any combination of the foregoing
methods of payment.  Notwithstanding the
foregoing, (i) clauses (3) through (6) shall only apply prior to
an Initial Public Offering (as such term is defined in the Company’s Amended
and Restated Certificate of Incorporation as may be amended from time to time)
as determined by the Administrator at the time of grant or with respect to a 

 

 

NonStatutory Stock Option, at any time thereafter, (ii) clause
(7) shall only apply while the Company’s Shares are publicly traded and (iii) the
availability of any method of payment shall be subject to the terms and conditions
of the Company’s credit facilities as in effect from time to time.”

 

IN WITNESS WHEREOF, this Amendment has been executed
by the undersigned, thereunto duly authorized, effective as of May 4, 2010.

 

	
   

  	
  IKARIA
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Matthew M. Bennett

  
	
   

  	
  Name:
  

  	
  Matthew
  M. Bennett

  
	
   

  	
  Title:

  	
  Senior
  Vice President and Secretary

  

 

2Exhibit
10.5

 

IKARIA HOLDINGS, INC.

 

2007 STOCK OPTION PLAN

 

NOTICE OF STOCK OPTION GRANT

 

«Optionee» (“Optionee”)

«OptioneeAddress1»

«Optionee Address2»

 

You have been granted an
option (this “Option”) to purchase Common Stock of Ikaria Holdings, Inc.
(the “Company”), as follows:

 

	
  Board
  Approval Date:

  	
   

  	
  «GrantDate»

  
	
   

  	
   

  	
   

  
	
  Date
  of Grant (Later of
  Board Approval Date or Commencement of Employment/Consulting):

  	
   

  	
  «GrantDate»

  
	
   

  	
   

  	
   

  
	
  Exercise
  Price per Share: 

  	
   

  	
  «ExercisePrice»

  
	
   

  	
   

  	
   

  
	
  Type
  of Shares:

  	
   

  	
  Prior
  to an “Initial Public Offering” (as such term is defined in the Company’s
  Amended and Restated Certificate of Incorporation as may be amended from time
  to time), this Option shall be exercisable for shares of Non-Voting
  Common Stock of the Company.  Upon and
  following an “Initial Public Offering” any unexercised portion of this Option
  shall automatically become exercisable instead for an equivalent number of
  shares of the Company’s Voting Common
  Stock without any further action on the part of the Company or Optionee.

  
	
   

  	
   

  	
   

  
	
  Total
  Number of Shares Granted:   

  	
   

  	
  «NoofShares»

  
	
   

  	
   

  	
   

  
	
  Total
  Exercise Price:

  	
   

  	
  «TotalPrice»

  
	
   

  	
   

  	
   

  
	
  Type
  of Option:

  	
   

  	
  «TypeOfShare»

  
	
   

  	
   

  	
   

  
	
  Expiration
  Date:

  	
   

  	
  «ExpirDate»

  
	
   

  	
   

  	
   

  
	
  Vesting
  Commencement Date:

  	
   

  	
  «VestingCommenceDate»

  
	
   

  	
   

  	
   

  
	
  Vesting/Exercise
  Schedule:

  	
   

  	
  This
  Option shall vest and become exercisable as follows: 25% of the total number
  of shares that may be purchased pursuant to the Option shall be vested and
  become exercisable on each of the first four (4)

  

 

 

	
   

  	
   

  	
  anniversaries
  of the Vesting Commencement Date for so long as Optionee remains an employee
  of or consultant to the Company, such that the total number of shares shall
  be fully vested on the four-year anniversary of the Vesting Commencement
  Date.

  
	
   

  	
   

  	
   

  
	
  Termination
  Period:

  	
   

  	
  This
  Option may be exercised for ninety (90) days after termination of employment
  or consulting relationship, except as set out in Section 5 of the Stock
  Option Agreement (but in no event later than the Expiration Date).  Optionee is responsible for keeping track
  of these exercise periods following termination for any reason of his or her
  service relationship with the Company. 
  The Company will not provide further notice of such periods.

  
	
   

  	
   

  	
   

  
	
  Transferability:

  	
   

  	
  This
  Option may not be transferred.

  

 

By your signature and the
signature of the Company’s representative below, you and the Company agree that
this Option is granted under and governed by the terms and conditions of the
Ikaria Holdings, Inc. 2007 Stock Option Plan, as amended, and the Stock
Option Agreement, both of which are attached to and made a part of this
document.

 

In addition, it is a
condition precedent to the exercise of this Option that you sign and return to
the Company a counterpart signature page indicating your agreement to be
bound as a “Stockholder” by the Company’s Common Stockholders Agreement dated
as of February 22, 2007, as may be amended from time to time.

 

In addition, you agree and
acknowledge that your rights to any Shares underlying this Option will be
earned only as you provide services to the Company over time, that the grant of
this Option is not consideration for services you rendered to the Company prior
to your Vesting Commencement Date and that nothing in this Notice or the
attached documents confers upon you any right to continue your employment or consulting
relationship with the Company for any period of time, nor does it interfere in
any way with your right or the Company’s right to terminate that relationship
at any time, for any reason, with or without cause.

 

	
   

  	
  IKARIA
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  «Optionee»

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

 

IKARIA HOLDINGS, INC.

 

STOCK OPTION AGREEMENT

 

1.             Grant of Option.  Ikaria Holdings, Inc., a Delaware
corporation (the “Company”), hereby grants to
                            
(“Optionee”), an option (the “Option”) to purchase the total
number of shares of Common Stock (the “Shares”) set forth in the Notice
of Stock Option Grant (the “Notice”), at the exercise price per Share
set forth in the Notice (the “Exercise Price”) subject to the terms,
definitions and provisions of the Ikaria Holdings, Inc. 2007 Stock Option
Plan (the “Plan”) adopted by the Company, which is incorporated in this
Agreement by reference.  Unless otherwise
defined in this Agreement, the terms used in this Agreement shall have the
meanings defined in the Plan.  This
Option shall initially be exercisable for shares of Non-Voting
Common Stock of the Company; provided, however, that in the event of an “Initial
Public Offering” (as such term is defined in the Company’s Amended and Restated
Certificate of Incorporation as may be amended from time to time), this Option
shall automatically become exercisable instead for shares of the Company’s Voting Common Stock without any further action on the part
of the Company or Optionee.

 

2.             Designation of Option.  This Option is intended to be an Incentive
Stock Option as defined in Section 422 of the Code only to the extent so
designated in the Notice, and to the extent it is not so designated or to the
extent the Option does not qualify as an Incentive Stock Option, it is intended
to be a Nonstatutory Stock Option.

 

Notwithstanding the above,
if designated as an Incentive Stock Option, in the event that the Shares
subject to this Option (and all other Incentive Stock Options granted to
Optionee by the Company or any Parent or Subsidiary, including under other
plans of the Company) that first become exercisable in any calendar year have
an aggregate fair market value (determined for each Share as of the date of
grant of the option covering such Share) in excess of $100,000, the Shares in
excess of $100,000 shall be treated as subject to a Nonstatutory Stock Option,
in accordance with Section 5(c) of the Plan.

 

3.             Exercise of Option.  This Option shall be exercisable during its
term in accordance with the Vesting/Exercise Schedule set out in the Notice and
with the provisions of Section 10 of the Plan as follows:

 

(a)           Right to Exercise.

 

(i)            This Option may not be
exercised for a fraction of a share.

 

(ii)           In the event of Optionee’s
death, disability or other termination of employment, the exercisability of the
Option is governed by Section 5 below, subject to the limitations
contained in this Section 3.

 

(iii)          In no event may this Option
be exercised after the Expiration Date of the Option as set forth in the
Notice.

 

 

(b)           Method of Exercise.

 

(i)            This Option shall be
exercisable by execution and delivery of (A) the Exercise Notice and
Restricted Stock Purchase Agreement attached hereto as Exhibit A
(the “Exercise Agreement”) or of any other form of written notice
approved for such purpose by the Company which shall state Optionee’s election
to exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the holder’s
investment intent with respect to such Shares as may be required by the Company
pursuant to the provisions of the Plan and (B) a counterpart signature page to
the Company’s Common Stockholders Agreement, a copy of which is attached hereto
as Exhibit B.  Such written
notice shall be signed by Optionee and shall be delivered to the Company by
such means as are determined by the Plan Administrator in its discretion to
constitute adequate delivery.  The
written notice shall be accompanied by payment of the Exercise Price.  This Option shall be deemed to be exercised
upon receipt by the Company of such written notice accompanied by the Exercise
Price and the counterpart signature page to the Common Stockholders
Agreement.

 

(ii)           As a condition to the
exercise of this Option and as further set forth in Section 12 of the
Plan, Optionee agrees to make adequate provision for federal, state or other
tax withholding obligations, if any, which arise upon the vesting or exercise
of the Option, or disposition of Shares, whether by withholding, direct payment
to the Company, or otherwise.

 

(iii)          The Company is not
obligated, and will have no liability for failure, to issue or deliver any
Shares upon exercise of the Option unless such issuance or delivery would
comply with the Applicable Laws, with such compliance determined by the Company
in consultation with its legal counsel. 
This Option may not be exercised until such time as the Plan has been
approved by the stockholders of the Company, or if the issuance of such Shares
upon such exercise or the method of payment of consideration for such shares
would constitute a violation of any applicable federal or state securities or
other law or regulation, including any rule under Part 221 of Title
12 of the Code of Federal Regulations as promulgated by the Federal Reserve
Board.  As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by the Applicable Laws.  Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to Optionee on the date on
which the Option is exercised with respect to such Shares.

 

4.             Method of Payment.  Payment of the Exercise Price shall be by any
of the following, or a combination of the following, at the election of
Optionee:

 

(a)           cash or check;

 

(b)           prior to the date, if any,
upon which the Common Stock becomes a Listed Security, by surrender of other
shares of Common Stock of the Company that have an aggregate Fair Market Value
on the date of surrender equal to the Exercise Price of the Shares as to which
the Option is being exercised; provided, however, that this Section 4(b) shall
only apply to Options granted following the consummation of the merger of the
Company’s wholly owned subsidiary, Ikaria Acquisition, Inc., with and into
Ikaria, Inc. if permitted by the Administrator at the time of
exercise.  In the case of shares acquired
directly or indirectly from the Company, such shares must have been owned by
Optionee for more than six (6) months on the date of surrender (or such
shorter or longer period of time as may be deemed necessary in the 

 

2

 

Administrator’s
sole discretion to avoid risk of the incurrence of adverse accounting charges
by the Company);

 

(c)           following the date, if any,
upon which the Common Stock is a Listed Security, and if the Company is at such
time permitting “same day sale” cashless brokered exercises, delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker participating in such cashless brokered exercise program to deliver
promptly to the Company the amount required to pay the exercise price (and
applicable withholding taxes); or

 

(d)           any other method of payment
permitted under the Plan and approved by the Administrator at the time of
exercise.

 

5.             Termination of Relationship.  Following the date of termination of Optionee’s
Continuous Service Status for any reason (the “Termination Date”),
Optionee may exercise the Option only as set forth in the Notice and this Section 5.  To the extent that Optionee is not entitled
to exercise this Option as of the Termination Date, or if Optionee does not
exercise this Option within the Termination Period set forth in the Notice or
the termination periods set forth below (as applicable), the Option shall
terminate in its entirety.  In no event
may any Option be exercised after the Expiration Date of the Option as set
forth in the Notice.

 

(a)           Termination.  In the event of termination of Optionee’s
Continuous Service Status other than as a result of Optionee’s disability or
death or for Cause (as defined in the Plan), Optionee may, to the extent
Optionee is vested in the Option Shares at the Termination Date, exercise this
Option during the Termination Period set forth in the Notice.

 

(b)           Other Terminations.  In connection with any termination other than
a termination covered by Section 5(a), Optionee may exercise the Option
only as described below:

 

(i)            Termination upon Disability of
Optionee.  In the event of termination of Optionee’s
Continuous Service Status as a result of Optionee’s disability, Optionee may,
but only within six (6) months from the Termination Date, exercise this
Option to the extent Optionee was vested in the Option Shares as of such Termination
Date.

 

(ii)           Death of Optionee.  In the event of the death of Optionee (a) during
the term of this Option and while an Employee or Consultant of the Company and
having been in Continuous Service Status since the date of grant of the Option,
or (b) within ninety (90) days after Optionee’s Termination Date, the
Option may be exercised at any time within six (6) months following the
date of death by Optionee’s estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent Optionee
was vested in the Option as of the Termination Date.

 

(iii)          Termination for Cause.  In the event Optionee’s Continuous Service
Status is terminated for Cause, the Option shall terminate immediately upon
such termination for Cause as set forth in Section 10(b)(iv) of the
Plan.  In the event Optionee’s employment
or consulting relationship with the Company is suspended pending investigation
of whether such relationship shall be terminated for Cause, all Optionee’s
rights under the Option, including the right to exercise the Option, shall be
suspended during the investigation period, also as set forth in Section 10(b)(iv) of
the Plan.

 

3

 

6.             Restrictions on Transfers of the
Option and the Shares.  This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by him or her.  The terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of
Optionee.  The Shares issued upon
exercise of this Option are subject to the restrictions on transfers set forth
in the Common Stockholders Agreement attached hereto as Exhibit B.

 

7.             Tax Consequences.  Below is a brief summary as of the date of
this Option of certain of the federal tax consequences of exercise of this
Option and disposition of the Shares under the laws in effect as of the Date of
Grant.  THIS SUMMARY IS INCOMPLETE, AND
THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 

(a)           Incentive Stock Option.

 

(i)            Tax Treatment upon Exercise and
Sale of Shares.  If this Option qualifies as an Incentive
Stock Option, there will be no regular federal income tax liability upon the
exercise of the Option, although the excess, if any, of the fair market value
of the Shares on the date of exercise over the Exercise Price will be treated
as an adjustment to the alternative minimum tax for federal tax purposes and
may subject Optionee to the alternative minimum tax in the year of
exercise.  If Shares issued upon exercise
of an Incentive Stock Option are held for at least one (1) year after
exercise and are disposed of at least two (2) years after the Option grant
date, any gain realized on disposition of the Shares will also be treated as
long-term capital gain for federal income tax purposes.  If Shares issued upon exercise of an
Incentive Stock Option are disposed of within such one-year period or within
two (2) years after the Option grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the difference between the Exercise Price and the
lesser of (i) the fair market value of the Shares on the date of exercise,
or (ii) the sale price of the Shares.

 

(ii)           Notice of Disqualifying
Dispositions.  With respect to any Shares issued upon
exercise of an Incentive Stock Option, if Optionee sells or otherwise disposes
of such Shares on or before the later of (i) the date two (2) years
after the Option grant date, or (ii) the date one (1) year after the
date of exercise, Optionee shall immediately notify the Company in writing of
such disposition.  Optionee acknowledges
and agrees that he or she may be subject to income tax withholding by the
Company on the compensation income recognized by Optionee from the early
disposition by payment in cash or out of the current earnings paid to Optionee.

 

(b)           Nonstatutory Stock Option.  If this Option does not qualify as an
Incentive Stock Option, there may be a regular federal (and state) income tax
liability upon the exercise of the Option. 
Optionee will be treated as having received compensation income (taxable
at ordinary income tax rates) equal to the excess, if any, of the fair market
value of the Shares on the date of exercise over the Exercise Price.  If Optionee is an Employee, the Company will
be required to withhold from Optionee’s compensation or collect from Optionee
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.  If Shares issued upon exercise of a
Nonstatutory Stock Option 

 

4

 

are
held for at least one (1) year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income tax
purposes.

 

8.             Lock-Up Agreement.  In connection with the initial public
offering of the Company’s securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company’s securities,
Optionee hereby agrees not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any securities of the
Company (other than those included in the registration) without the prior
written consent of such underwriters for such period (not to exceed 180 days,
but subject to such extension(s) as may be required by the underwriters in
order to publish research reports while complying with the Rule 2711 of
the National Association of Securities Dealers, Inc.) from the effective
date of such registration as may be requested by such managing underwriters and
to execute an agreement reflecting the foregoing as may be requested by the
underwriters at the time of the Company’s initial public offering.  The foregoing restrictions shall be subject
to any longer restrictive periods that may be agreed between an Optionee and
the Company, including without limitation as provided in that certain Common
Stockholders Agreement dated as of February 22, 2007, by and among the
Company and certain current holders of the Company’s Common Stock.

 

9.             Effect of Agreement.  Optionee acknowledges receipt of a copy of
the Plan and represents that he or she is familiar with the terms and
provisions thereof (and has had an opportunity to consult counsel regarding the
Option terms), and hereby accepts this Option and agrees to be bound by its
contractual terms as set forth herein and in the Plan.  Optionee hereby agrees to accept as binding,
conclusive and final all decisions and interpretations of the Plan
Administrator regarding any questions relating to the Option.  In the event of a conflict between the terms
and provisions of the Plan and the terms and provisions of the Notice and this
Agreement, the Plan terms and provisions shall prevail.  The Option, including the Plan, constitutes
the entire agreement between Optionee and the Company on the subject matter
hereof and supersedes all proposals, written or oral, and all other
communications between the parties relating to such subject matter.

 

[BY EXECUTING THE NOTICE OF STOCK OPTION GRANT TO WHICH THIS

AGREEMENT IS ATTACHED YOU AGREE TO THE TERMS SET FORTH HEREIN]

 

5

 

EXHIBIT A

 

IKARIA HOLDINGS, INC.

 

2007 STOCK OPTION PLAN

 

EXERCISE
NOTICE AND RESTRICTED STOCK PURCHASE AGREEMENT

 

This Agreement (“Agreement”) is made
as of             ,
by and between Ikaria Holdings, Inc., a Delaware corporation (the “Company”),
and                       
(“Purchaser”).  To the extent any
capitalized terms used in this Agreement are not defined, they shall have the
meaning ascribed to them in the 2007 Stock Option Plan.

 

1.                                       Exercise
of Option.  Subject to the terms and
conditions hereof, Purchaser hereby elects to exercise his or her option to
purchase                
shares of the Non-Voting Common Stock (the “Shares”) of the Company
under and pursuant to the Company’s 2007 Stock Option Plan (the “Plan”)
and the Stock Option Agreement granted                         
(the “Option Agreement”).  The
purchase price for the Shares shall be $            
per Share for a total purchase price of $            .  The term “Shares” refers to the
purchased Shares and all securities received in replacement of the Shares or as
stock dividends or splits, all securities received in replacement of the Shares
in a recapitalization, merger, reorganization, exchange or the  like,
and all new, substituted or additional securities or other properties to which
Purchaser is entitled by reason of Purchaser’s ownership of the Shares.  Enclosed herewith is a counterpart signature page indicating
Purchaser’s agreement to be bound as a “Stockholder” by the Company’s Common
Stockholders Agreement dated as of February 22, 2007, as may be amended
from time to time (the “Common Stockholders Agreement”).

 

2.                                       Time and Place of Exercise.  The purchase and sale of the
Shares under this Agreement shall occur at the principal office of the Company
simultaneously with the execution and delivery of this Agreement in accordance
with the provisions of Section 3(b) of the Option Agreement.  On such date, the Company will deliver to
Purchaser a certificate representing the Shares to be purchased by Purchaser
(which shall be issued in Purchaser’s name) against payment of the exercise
price therefor by Purchaser by any method listed in Section 4 of the
Option Agreement.

 

3.                                       Limitations on Transfer.  In addition to any other
limitation on transfer created by applicable securities laws, Purchaser shall
not assign, encumber or dispose of any interest in the Shares except in
compliance with the Common Stockholders Agreement and applicable securities
laws.

 

4.                                       Investment and Taxation Representations.  In connection with the
purchase of the Shares,
Purchaser represents to the Company the following:

 

(a)                                  Purchaser is aware of the
Company’s business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision
to acquire the Shares.  Purchaser is
purchasing these securities for investment for his or her own account only and
not with a view to, or for resale in connection

 

 

with, any “distribution” thereof within the meaning of the Securities
Act of 1933, as amended (the “Securities Act”), or under any applicable
provision of state law.  Purchaser does
not have any present intention to transfer the Shares to any person or entity.

 

(b)                                 Purchaser understands that
the Shares have not been registered under the Securities Act by reason of a
specific exemption therefrom, which exemption depends upon, among other things,
the bona fide nature of Purchaser’s investment intent as expressed herein.

 

(c)                                  Purchaser further
acknowledges and understands that the securities must be held indefinitely
unless they are subsequently registered under the Securities Act or an
exemption from such registration is available. 
Purchaser further acknowledges and understands that the Company is under
no obligation to register the securities. 
Purchaser understands that the certificate(s) evidencing the
securities will be imprinted with a legend which prohibits the transfer of the
securities unless they are registered or such registration is not required in
the opinion of counsel for the Company.

 

(d)                                 Purchaser is familiar with
the provisions of Rules 144 and 701, each promulgated under the Securities
Act, which, in substance, permit limited public resale of “restricted
securities” acquired, directly or indirectly, from the issuer of the securities
(or from an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions. 
Purchaser understands that the Company provides no assurances as to
whether he or she will be able to resell any or all of the Shares pursuant to Rule 144
or Rule 701, which rules require, among other things, that the
Company be subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended, that resales of securities take place only after the
holder of the Shares has held the Shares for certain specified time periods,
and under certain circumstances, that resales of securities be limited in
volume and take place only pursuant to brokered transactions.  Notwithstanding this paragraph (d), Purchaser
acknowledges and agrees to the restrictions set forth in paragraph (e) below.

 

(e)                                  Purchaser further
understands that in the event all of the applicable requirements of Rule 144
or 701 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rules 144 and 701 are not exclusive,
the Staff of the Securities and Exchange Commission has expressed its opinion
that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 or 701 will
have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their
own risk.

 

(f)                                    Purchaser understands that
Purchaser may suffer adverse tax consequences as a result of Purchaser’s
purchase or disposition of the Shares. 
Purchaser represents that Purchaser has consulted any tax consultants
Purchaser deems advisable in connection with the purchase or disposition of the
Shares and that Purchaser is not relying on the Company for any tax advice.

 

2

 

5.                                       Restrictive
Legends and Stop-Transfer Orders.

 

(a)                                  Legends.  The certificate or certificates representing
the Shares shall bear the following legends (as well as any legends required by
applicable state and federal corporate and securities laws):

 

(i)                                     THE SHARES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. 
NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

(ii)                                  THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH
THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

(b)                                 Stop-Transfer Notices.  Purchaser agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate “stop transfer” instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

 

(c)                                  Refusal to Transfer.  The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat
as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.

 

6.                                       No
Employment Rights.  Nothing in this Agreement shall affect in any
manner whatsoever the right or power of the Company, or a parent or subsidiary
of the Company, to terminate Purchaser’s employment or consulting relationship,
for any reason, with or without cause.

 

7.                                       Lock-Up
Agreement.  In connection with the initial public offering
of the Company’s securities and upon request of the Company or the underwriters
managing any underwritten offering of the Company’s securities, Purchaser
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the Company (other than
those included in the registration) without the prior written consent of such
underwriters for such period (not to exceed 180 days, but subject to such
extension(s) as may be

 

3

 

required by the underwriters in order to publish research reports while
complying with the Rule 2711 of the National Association of Securities
Dealers, Inc.) from the effective date of such registration as may be
requested by such managing underwriters and to execute an agreement reflecting
the foregoing as may be requested by the underwriters at the time of the
Company’s initial public offering.  The
foregoing restrictions shall be subject to any longer restrictive periods that
may be agreed between an Optionee and the Company, including without limitation
as provided in that certain Common Stockholders Agreement.

 

8.                                       Miscellaneous.

 

(a)                                  Governing
Law. 
This Agreement and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of Washington, without
giving effect to principles of conflicts of law.

 

(b)                                 Entire
Agreement; Enforcement of Rights.  This Agreement sets forth
the entire agreement and understanding of the parties relating to the subject
matter herein and merges all prior discussions between them.  No modification of or amendment to this
Agreement, nor any waiver of any rights under this Agreement, shall be
effective unless in writing signed by the parties to this Agreement.  The failure by either party to enforce any
rights under this Agreement shall not be construed as a waiver of any rights of
such party.

 

(c)                                  Severability.  If one or more provisions of
this Agreement are held to be unenforceable under applicable law, the parties
agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii) the
balance of the Agreement shall be enforceable in accordance with its terms.

 

(d)                                 Construction.  This Agreement is the result
of negotiations between and has been reviewed by each of the parties hereto and
their respective counsel, if any; accordingly, this Agreement shall be deemed
to be the product of all of the parties hereto, and no ambiguity shall be
construed in favor of or against any one of the parties hereto.

 

(e)                                  Notices.  Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient when delivered
personally or sent by telegram or fax or forty-eight (48) hours after being
deposited in the U.S.  mail, as certified
or registered mail, with postage prepaid, and addressed to the party to be
notified at such party’s address as set forth below or as subsequently modified
by written notice.

 

(f)                                    Counterparts.  This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one instrument.

 

(g)                                 Successors and Assigns.  The rights and benefits of this Agreement
shall inure to the benefit of, and be enforceable by the Company’s successors
and assigns.  The rights and obligations
of Purchaser under this Agreement may only be assigned with the prior written
consent of the Company.

 

4

 

(h)                                 California Corporate Securities
Law.  THE SALE OF
THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED
WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR
25105 OF THE CALIFORNIA CORPORATIONS CODE. 
THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

 

[Signature Page Follows]

 

5

 

The parties have executed this Exercise
Notice and Restricted Stock Purchase Agreement as of the date first set forth
above.

 

 

	
   

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  IKARIA
  HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:.

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PURCHASER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  
					

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

I,                      ,
spouse of                      ,
have read and hereby approve the foregoing Agreement.  In consideration of the Company’s granting my
spouse the right to purchase the Shares as set forth in the Agreement, I hereby
agree to be irrevocably bound by the Agreement and further agree that any
community property or other such interest shall hereby by similarly bound by the
Agreement.  I hereby appoint my spouse as
my attorney-in-fact with respect to any amendment or exercise of any rights
under the Agreement.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Spouse
  of 

  	
   

  	
   

  

 

6

 

NOTE:  THE
FOLLOWING SHEET IS A COUNTERPART SIGNATURE PAGE TO THE COMPANY’S COMMON
STOCKHOLDER AGREEMENT, WHICH MUST ALSO BE SIGNED AND RETURNED TO THE COMPANY IN
ORDER TO EXERCISE YOUR STOCK OPTION PURSUANT TO SECTION 6 OF YOUR STOCK
OPTION AGREEMENT.

 

IF YOU ARE MARRIED YOUR SPOUSE MUST ALSO SIGN THE
COUNTERPART SPOUSAL CONSENT TO THE COMMON STOCKHOLDERS AGREEMENT.

 

 

IN WITNESS WHEREOF, this
Common Stockholders Agreement has been signed by or on behalf of each of the
parties hereto, all as of the date first above written.

 

 

	
   

  	
   

  	
  INDIVIDUAL
  STOCKHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  

 

[SIGNATURE
PAGE TO IKARIA HOLDINGS, INC. COMMON STOCKHOLDERS AGREEMENT]

 

 

The undersigned acknowledges
that the undersigned has read the foregoing Common Stockholders Agreement
between the Company and the undersigned’s spouse, understands that the
undersigned’s spouse holds shares of Common Stock subject to the provisions of
such Agreement and agrees to be bound by the foregoing Agreement.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Spouse
  of 

  	
   

  

 

[SIGNATURE PAGE TO IKARIA HOLDINGS, INC. COMMON STOCKHOLDERS AGREEMENT]

 

 

EXHIBIT B

 

IKARIA HOLDINGS, INC.

 

COMMON STOCKHOLDERS
AGREEMENT

 

 

EXECUTION COPY

 

COMMON STOCKHOLDERS AGREEMENT, dated as of February 22,
2007, among Ikaria Holdings, Inc., a Delaware corporation, and each of the
Persons listed on the signature pages hereto under the heading “Stockholder”
(each, a “Stockholder”, and collectively, the “Stockholders”),
and such other Persons who are signatories hereto on the date hereof or who
will become signatories hereto from time to time as provided for herein.

 

WHEREAS, the Stockholder is a holder of
shares of Ikaria Common Stock;

 

WHEREAS, pursuant to an Agreement
and Plan of Merger, dated as of February 22, 2007 (the “Merger
Agreement”), among the Company, Ikaria Merger Sub Inc., a Delaware
corporation and a wholly owned subsidiary of the Company, and Ikaria, Inc.,
a Delaware corporation (“Ikaria”), Ikaria Merger Sub Inc. will be merged
with and into Ikaria, with Ikaria the surviving entity, and the Stockholders
will, in the merger, receive shares of Common Stock in exchange for their
shares of Ikaria Common Stock;

 

WHEREAS, pursuant to a Preferred
Stock Purchase Agreement, dated as of February 22, 2007 (the “Preferred
Stock Purchase Agreement”), by and among the Company, Ikaria, the NMP
Entities, and certain stockholders of Ikaria, the NMP Entities and such
stockholders are purchasing shares of Series B Preferred Stock and certain
of them are acquiring shares of the Series C Preferred Stock of the
Company.

 

WHEREAS, pursuant to a Sale and
Purchase Agreement, dated as of February 22, 2007 (the “Sale and
Purchase Agreement”), by and among Linde Gas, Inc., a Delaware
corporation, certain affiliates of Linde Gas, Inc., the Company, Ikaria
Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of the
Company, and Ikaria, Linde Gas, Inc., is selling all of the membership
interests in INO Therapeutics LLC, a Delaware limited liability company, to
Ikaria Acquisition Inc. in exchange for cash and shares of Series B
Preferred Stock and Series C Preferred Stock of the Company.

 

WHEREAS, the Company and the
Stockholders wish to provide for certain arrangements with respect to the
Stockholders’ rights to hold and dispose of their shares of Common Stock.

 

WHEREAS, to induce the Company to
execute and deliver the Merger Agreement, the Preferred Stock Purchase
Agreement and the Sale and Purchase Agreement, and to consummate the
transactions contemplated thereby, the Stockholders have agreed to be bound by
the provisions set forth in this Agreement.

 

NOW, THEREFORE, the parties
hereto agree as follows:

 

Section 1. Definitions.

 

1.1           “Affiliate” means, with respect to any
Person, any other Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person.

 

 

1.2           “Affiliate Securities” means any securities
issued by an Affiliate of the Company.

 

1.3           “Agreement” means this Stockholders’
Agreement, as may be amended, restated, supplemented or modified from time to
time.

 

1.4           “Board” means the board of directors of the
Company.

 

1.5           “Call” has the meaning ascribed to such term
in Section 3.2(a).

 

1.6           “Call Period” means (i) in the case of
the termination for Cause of the employment of a Stockholder who is an
Employee, six months following the date of such termination, or (ii) in the
case of the breach or violation by a Stockholder of any obligation under a
Non-Competition Agreement, six months following the date that the Company has
actual knowledge of such breach or violation; provided, that, in the
case of each of (i) and (ii), if the Stockholder holds stock options
during such six-month period, then, as to such the shares of Common Stock
acquired upon the exercise of such stock options, the Call Period shall be the
six-month period commencing on the date on which such stock options has been
exercised for Common Stock.

 

1.7           “Call Price” has the meaning ascribed to such
term in Section 3.2(a).

 

1.8           “Called Shares” has the meaning ascribed to
such term in Section 3.2(c).

 

1.9           “Capital Stock” means the Common Stock and
the Preferred Stock.

 

1.10         “Capital Transaction” means any Stock
Dividend, recapitalization (including any special dividend or distribution),
reclassification, spin-off, partial liquidation or similar capital adjustments
(including through merger or consolidation).

 

1.11         “Cause” (i) means, if an Employee is a
party to an employment, consulting or severance agreement with the Company or
one of its subsidiaries, the occurrence of any circumstances defined as “Cause”
in any such agreement, or (ii) if an Employee is not a party to an
employment, consulting or severance agreement with the Company or one of its
subsidiaries, has the meaning set forth in the 2007 Stock Option Plan; provided,
however, that, prior to the termination of an Employee for Cause, the
Company shall provide such Employee with written notice that the Board intends
to meet to consider the Employee’s termination for Cause and the grounds
constituting Cause.

 

1.12         “Closing” has the meaning ascribed to such
term in Section 3.2(c).

 

1.13         “Closing Price” of a share of Common Stock
means, on any day, the last reported sales price for such Common Stock on such
day or, in the event no such sale takes place on such day, the average of the
closing bid and asked prices for such Common Stock, in each case on the New York
Stock Exchange or, if such Common Stock is not then listed or admitted to
trading on such exchange, on the principal national securities exchange on
which such Common Stock is listed or admitted to trading, or, if such Common
Stock is not listed or admitted to trading on any such exchange, the average of
the highest reported bid and lowest reported asked prices for such Common Stock
as furnished by the National Association of Securities Dealers through the

 

 

National Association of Securities Dealers Automated Quotation System (“Nasdaq”)
(or a similar organization if Nasdaq is no longer reporting such information).

 

1.14         “Common Stock” means any shares of common
stock, par value $0.01 per share, of the Company, whether voting or nonvoting,
but excluding any shares of Common Stock issued upon conversion of any shares
of Preferred Stock.  There shall be
included within the term Common Stock any common stock now or hereafter
authorized to be issued, and any and all securities of any kind whatsoever of
the Company which may be issued after the date hereof in respect of, or in
exchange for, shares of Common Stock pursuant to a Capital Transaction or
otherwise.

 

1.15         “Company” means Ikaria Holdings, Inc., a
Delaware corporation, and shall include any successor thereto by merger,
consolidation, acquisition of substantially all the assets thereof, or
otherwise.

 

1.16         “Compensatory Equity” means, as to any
Employee, Convertible Securities granted to such Employee for services
performed in respect of the Company or any of its subsidiaries (including,
without limitation, options granted pursuant to the 2007 Stock Option Plan).

 

1.17         “Contemplated Transactions” means the
transactions contemplated by the Merger Agreement, the Preferred Stock Purchase
Agreement and the Sale and Purchase Agreement.

 

1.18         “Convertible Securities” means (i) any
options or warrants to purchase or other rights to acquire Common Stock, (ii) any
securities by their terms convertible into or exchangeable for Common Stock,
and (iii) any options or warrants to purchase or other rights to acquire
any such convertible or exchangeable securities.

 

1.19         “Employee” means any Stockholder who is as of
the date hereof, or becomes after the date hereof, an employee of, or a
consultant or independent contractor to, the Company or a subsidiary of the
Company.

 

1.20         “Expenses of Sale” means all expenses
incurred by the Preferred Stock Holders and their Affiliates in connection with
any Transaction to the extent that such expenses are not paid or reimbursed by
the Company.

 

1.21         “Fair Market Value” of a share of Common
Stock means the fair market value per share of such Common Stock as determined
in accordance with Section 3.2(e).

 

1.22         “Family Member” has the meaning ascribed to
such term in Section 3.1(b)(i).

 

1.23         “Ikaria” has the meaning ascribed to such
term in the recitals.

 

1.24         “Ikaria Common Stock” means the common stock,
$0.0001 par value, of Ikaria.

 

1.25         “Investor Stockholders Agreement” means the
Investor Stockholders Agreement, dated as of the date hereof, by and among the
Company and the Preferred Stock Holders who are signatories thereto on the date
thereof or who will become signatories thereto from time to time

 

 

as provided for therein, as such agreement may be amended, restated,
supplemented or modified from time to time; any reference herein to a section
thereof shall be to such section as the same may be amended, restated,
supplemented or modified from time to time.

 

1.26         “Legal Representative” means the guardian,
executor, administrator or other legal representative of the Stockholder.  All references herein to a Stockholder who is
an individual shall be deemed to include references to such Stockholder’s Legal
Representative, if any, unless the context otherwise requires.

 

1.27         “Majority Stockholders” means, at any time,
Stockholders holding a majority of the voting power represented by the shares
of Common Stock and Preferred Stock then held by all Stockholders.

 

1.28         “Merger Agreement” has the meaning ascribed
to such term in the recitals.

 

1.29         “NMP Entities” means New Mountain Partners
II, L.P., a Delaware limited partnership, New Mountain Affiliated Investors II,
L.P., a Delaware limited partnership, and Allegheny New Mountain Partners,
L.P., a Delaware limited partnership.

 

1.30         “Non-Competition Agreement” means any
employment or other agreement between the Stockholder and the Company or any of
its subsidiaries that contains non-competition, non-solicitation or
confidentiality restrictions on such Stockholder.

 

1.31         “Notice Date” means the date of delivery by
the Company of written notice of its election to exercise its right to purchase
shares of Common Stock from a Stockholder pursuant to Section 3.2(a).

 

1.32         “Permitted Transferee” has the meaning
ascribed to such term in Section 3.1(b).

 

1.33         “Person” means an individual, a corporation,
a partnership, a limited liability company, an association, a trust or any
other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.

 

1.34         “Preferred Stock” means the Series A
Preferred Stock and the Series B Preferred Stock or either of them.

 

1.35         “Preferred Stock Holder” means any holder of
Preferred Stock.

 

1.36         “Preferred Stock Purchase Agreement” has the
meaning ascribed to such term in the recitals.

 

1.37         “Public Offering” means a public offering of
Common Stock pursuant to a registration statement (other than a Form S-8
or successor forms) filed with, and declared effective by, the Securities and
Exchange Commission.

 

1.38         “Release Date” means the later to occur of (i) the
18-month anniversary of the closing of the Contemplated Transactions and (ii) the
initial Public Offering.

 

 

1.39         “Representative” has the meaning ascribed to
such term in Section 4.13(b).

 

1.40         “Restricted Period” has the meaning ascribed
to such term in Section 3.6.

 

1.41         “Sale and Purchase Agreement” has the meaning
ascribed to such term in the recitals.

 

1.42         “Sale Obligations” means any liabilities and
obligations (including, without limitation, liabilities and obligations for
indemnification, amounts paid into escrow and post-closing adjustments)
incurred by the Preferred Stock Holders and their Affiliates in connection with
any Transaction; provided, that the Sale Obligations of any Stockholder
shall not exceed the amount of consideration received by such Stockholder in
such Transaction.

 

1.43         “Scheduled Closing Date” has the meaning
ascribed to such term in Section 3.2(c).

 

1.44         “Section 3.3 Notice” has the meaning
ascribed to such term in Section 3.3(a).

 

1.45         “Selected Courts” has the meaning ascribed to
such term in Section 4.3(b).

 

1.46         “Series A Preferred Stock” means any
share of the Series A Convertible Preferred Stock, $0.01 par value per
share, of the Company.

 

1.47         “Series B Preferred Stock” means any
share of the Series B Convertible Preferred Stock, $0.01 par value per
share, of the Company.

 

1.48         “Stock Dividend” means any stock split, stock
dividend, reverse stock split or similar transaction which changes the number
of outstanding shares of Common Stock of the Company.

 

1.49         “Stockholder” has the meaning ascribed to
such term in the preamble.

 

1.50         “Transaction” means any sale pursuant to Section 3.3
or any transaction pursuant to Section 3.4.

 

1.51         “Transfer” has the meaning ascribed to such
term in Section 3.1(a).

 

1.52         “2007 Stock Option Plan” means the stock
option plan of the Company being adopted by the Company in connection with the
Contemplated Transactions.

 

Section 2. Stock Certificate Legend.

 

2.1           All certificates representing Common Stock held by
the Stockholders (unless registered under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder) shall bear
the following legend:

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE 

 

 

STATE SECURITIES LAWS.  THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH ACT OR LAWS AND EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF A STOCKHOLDERS’ AGREEMENT WITH THE COMPANY, A COPY OF
WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.”

 

Section 3. Rights and Restrictions on Common Stock.

 

3.1           No Sale or Transfer.

 

(a)           Prior to the Release Date, no Stockholder shall sell,
transfer, assign, exchange, pledge, encumber or otherwise dispose of any Common
Stock held by such Stockholder or grant any option or right to purchase such
Common Stock or any legal or beneficial interest therein or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of any Common Stock held by such
Stockholder (each, a “Transfer”), except (i) to the Company in
accordance with the terms of Section 3.2, (ii) to a third party or
third parties in accordance with Section 3.3 or 3.4 or (iii) as
provided for in subsection (b) below.

 

(b)           Each Stockholder may Transfer any of its Common
Stock, but only to:

 

(i)            any spouse, child (whether
natural or adopted) or grandchild of such Stockholder (any such person, a “Family
Member”);

 

(ii)           any corporation or
partnership which is controlled solely by such Stockholder; or

 

(iii)          a trust solely for the
benefit of such Stockholder or any Family Member, the trustees of which are
solely such Stockholder and/or a corporation or partnership which is controlled
solely by such Stockholder (each Person to whom shares of Common Stock
are Transferred in accordance with this Section 3.1(b) being
herein referred to as the “Permitted Transferee”); provided, that,
for any Transfer to the Permitted Transferee to be effective hereunder (and for
the transferee to be deemed a Permitted Transferee hereunder), the Permitted
Transferee shall execute and deliver a written agreement (which may be in the
form of a counterpart hereto) satisfactory to the Company by which it agrees to
be bound by all of the terms of this Agreement applicable to such Stockholder
as if the Permitted Transferee originally had been a party hereto; and provided,
further, that for any Transfer to a Permitted Transferee that is the
spouse of a Stockholder to be effective hereunder, the Permitted Transferee
shall execute and deliver a written agreement satisfactory to the Company
providing for rights of repurchase (at a price determined by the Board in good
faith) by the Stockholder or the Company in the event of a divorce between such
spouse and such Stockholder; and provided, further, that any
Permitted Transferee pursuant to paragraph (b)(ii) 

 

 

or b(iii) of this Section 3.1
shall agree in writing to Transfer any shares of Common Stock which it may own
back to the Stockholder from whom the Common Stock was Transferred if at any
time it ceases to meet the criteria for a Permitted Transferee set forth in the
applicable paragraph.  A Permitted Transferee
may Transfer any shares of Common Stock back to the Stockholder from whom the
Common Stock was Transferred or to any Person who would be a Permitted
Transferee of such Stockholder, subject to compliance by such Person with this Section 3.1(b),
and upon such compliance such Person shall likewise be a Permitted
Transferee.  Any reference herein to a
Stockholder shall be to both the Permitted Transferee and the Stockholder from
and after the date the transfer is effected in accordance with this Section 3.1
(b).  Without limiting the generality of
the foregoing, the provisions of Section 3.2 shall be likewise applicable
to any Permitted Transferee, commencing upon the date that such Person becomes
a Permitted Transferee, for the respective periods they apply to the
Stockholder.

 

3.2           Effect of Certain Events.

 

(a)           If (i) the employment of a Stockholder who is
an Employee is terminated by the Company or one of its subsidiaries for Cause,
or (ii) a Stockholder breaches or violates any obligation of such Stockholder
under any Non-Competition Agreement to which such Stockholder is a party,
including without limitation any obligation not to compete with the Company or
any of its subsidiaries, any obligation not to solicit employees of the Company
or any of its subsidiaries or any obligation not to disclose confidential or
proprietary information involving the Company or any of its subsidiaries,
irrespective of whether such Stockholder is an Employee at the time of such
breach or violation, the Company shall have the right, at its option,
exercisable by delivery of written notice to such Stockholder during the Call
Period, to purchase all or any portion of the shares of Common Stock held by
such Stockholder at the time such written notice is delivered or acquired after
the date such written notice is delivered upon exercise of any stock options
held by such Stockholder (a “Call”). 
The purchase price per share of any shares of Common Stock purchased
pursuant to this Section 3.2(a) shall be equal to the Fair Market Value
of such share of Common Stock as of the business day immediately preceding the
date on which the Closing occurs (the “Call Price”).

 

(b)           All shares of Common Stock held by any Stockholder
that the Company does not purchase pursuant to the provisions of Section 3.2(a) shall
continue to be subject to the provisions of this Agreement (including Sections
3.1, 3.3(b) and 3.4), other than Section 3.3(a).

 

(c)           Subject to Section 3.2(d), the closing (the “Closing”)
of any purchase of shares of Common Stock which the Company has elected to
purchase pursuant to Section 3.2(a) (the “Called Shares”)
shall take place at the principal office of the Company on the later of (i) fifteen
business days after the Notice Date and (ii) if such Stockholder has died,
is permanently disabled or has been adjudicated an incompetent on or prior to
the date of the Closing, ten days after the appointment of a Legal
Representative (or, in each case, if such day is not a business day, then the
first business day thereafter) (such later date, the “Scheduled Closing Date”).  At the Closing, such Stockholder shall sell,
convey, transfer, assign and deliver to the Company all right, title and
interest in and to the Called Shares, which shall constitute (and, at the
Closing, such Stockholder shall represent, warrant and certify the same to the
Company in

 

 

writing) good and unencumbered title to such shares, free and clear of
all liens, security interests, encumbrances and adverse claims of any kind and
nature (other than those in favor of the Company pursuant to this Agreement),
and shall deliver to the Company a certificate representing the shares duly
endorsed for transfer, or accompanied by appropriate stock transfer powers duly
executed, and with all necessary transfer tax stamps affixed thereto at the
expense of such Stockholder, and the Company shall deliver to such Stockholder,
in full payment of the purchase price for the Called Shares, either a wire
transfer to an account designated by such Stockholder or a cashier’s, certified
or official bank check payable to the order of such Stockholder (the method of
payment to be at the option of the Company), in an amount equal to the Call
Price multiplied by the aggregate number of Called Shares.  Notwithstanding anything herein to the
contrary, from and after the Notice Date, such Stockholder shall not have any
rights with respect to any of the Called Shares (including any rights pursuant
to Sections 3.3 and 3.4), except to receive the purchase price therefor.

 

(d)           Notwithstanding the provisions of Section 3.2(c),
if the Company exercises its option to purchase Called Shares, but the Company
is prohibited from effecting the Closing on the Scheduled Closing Date by any
contractual obligation of the Company or any of its Affiliates, the terms of any
Capital Stock or applicable law, then the Closing shall take place on the first
practicable date on which none of the foregoing prohibitions is
applicable.  If at any time the foregoing
prohibitions shall cease to be applicable to any portion of the Called Shares
not purchased, then the Company shall purchase such portion on the first
practicable date on which the Company is permitted to do so.

 

(e)           If, as of the business day immediately preceding the
date on which the Closing occurs, the Common Stock is listed or traded in a
manner referred to in the definition of “Closing Price”, then the Fair Market
Value per share of such Stockholder’s Common Stock shall equal the Closing
Price of such Common Stock as of the business day immediately preceding the date
on which the Closing occurs; otherwise, the Fair Market Value per share of such
Stockholder’s Common Stock shall be the per share fair market value of such
Common Stock as of such business day as determined in good faith by the Board,
and such determination shall be final and binding on the Company and the
Stockholder.

 

3.3           Participation in Public Offering of Common Stock.

 

(a)           If the Preferred Stock Holders propose to sell all
or any portion of their shares of Common Stock owned by the Preferred Stock Holders
in a Public Offering in connection with the exercise of their registration
rights under the Investor Stockholders Agreement, and the managing underwriter(s) advises
the Company in writing of its belief that, after taking into account the
securities which the Company and the Preferred Stock Holders have requested to
be included in such Public Offering, additional shares of Common Stock may be
included in such Public Offering without adversely affecting the Public
Offering or requiring the Preferred Stock Holders to reduce their participation
in the Public Offering, then each Stockholder shall be entitled to participate
proportionately in such Public Offering by selling in the Public Offering the
lesser of (x) such number of shares of Common Stock as, in the belief of
the managing underwriter(s), would not adversely affect such Public Offering or
require the Preferred Stock Holders to reduce their participation in the Public
Offering and (y) the same percentage of such Stockholder’s shares of
Common Stock as the Preferred Stock Holders are

 

 

selling of their shares of Common Stock in the Public Offering
(determined on the basis of the aggregate number of shares of Common Stock
owned and the aggregate number of shares of Common Stock being sold by the Preferred
Stock Holders (assuming conversion, exchange or exercise of all Convertible
Securities held by the Preferred Stock Holders and such Stockholder other than
Compensatory Equity)).  If the
Stockholders shall be entitled to participate in a Public Offering pursuant to
the previous sentence, then the Company shall notify each Stockholder in
writing of the Preferred Stock Holders’ intention to effect such Public
Offering at least ten business days, or such shorter time as the Company deems
practicable, before the effective date of the registration statement relating
to such Public Offering (the “Section 3.3 Notice”).  If the Stockholder wishes to participate in
such Public Offering, such Stockholder shall notify the Company in writing
within three business days after receipt of the Section 3.3 Notice of such
Stockholder’s intention to participate in such Public Offering, including the
number of shares with respect to which such Stockholder will so
participate.  Any failure by a
Stockholder to so notify the Company within such three business-day period
shall be deemed an election by such Stockholder not to participate in such
Public Offering with respect to any of such Stockholder’s shares of Common
Stock.  If any Stockholder sells any
shares pursuant to this Section 3.3, such Stockholder shall pay and be
responsible for such Stockholder’s proportionate share of the Expenses of Sale
and the Sale Obligations, including indemnifying the underwriters of such
Public Offering, on a proportionate basis, to the same extent as the Preferred
Stock Holders are required to indemnify such underwriters.  If any Stockholder sells any shares pursuant
to this Section 3.3, such Stockholder shall be entitled to all of the
rights and be bound by all of the obligations of a “Participating Holder” under
Section 2.1(g), the first sentence of Section 2.2(b), Section 2.3(a)(iii),
Section 2.3(a)(vi), Section 2.3(a)(viii) (to the extent such
section relates to the provision of an earnings statement), Section 2.3(a)(xix),
Section 2.3(a)(xx), the last two sentences of Section 2.4(a), the
last two sentences of Section 2.4(b), and Section 2.6 of the Investor
Stockholders Agreement, and shall be entitled to all of the rights and be bound
by all of the obligations of a “Holder” under Sections 2.2(b), 2.3(c) and
2.6 of the Investor Stockholders Agreement.

 

(b)           In connection with any proposed Public Offering of
the Company, whether by any of the Preferred Stock Holders or the Company or
otherwise, and whether or not such Stockholder is participating therein, each
Stockholder agrees (i) to supply any information reasonably requested by
the Company in connection with the preparation of a registration statement
and/or any other documents relating to such Public Offering, (ii) to
execute and deliver any agreements and instruments reasonably requested by the
Company to effectuate such Public Offering, including an underwriting
agreement, a custody agreement and a “hold back” agreement pursuant to which
the Stockholder will agree not to sell or purchase any securities of the
Company (whether or not such securities are otherwise governed by this
Agreement) for the same period of time following the Public Offering as is
agreed to by the Preferred Stock Holders with respect to themselves and (iii) to
otherwise comply with the provisions of Section 2 of the Investor
Stockholders Agreement applicable to the Participating Holders (as defined
therein).  If the Company requests that
the Stockholder take any of the actions referred to in clause (i), (ii) or
(iii) of the previous sentence, the Stockholder shall take such action
promptly but in any event within five days following the date of such request.

 

3.4           Required Participation in Sale of Securities by the
NMP Entities. 
Notwithstanding any other provision of this Agreement to the contrary,
if the NMP Entities shall 

 

 

propose to sell (including by exchange, in a business combination or
otherwise) at least 80% of their shares of Series B Preferred Stock to a
third party in the same transaction or transactions (which would represent,
together with any other shares of Capital Stock proposed to be transferred
(including pursuant to the exercise by the NMP Entities of their rights under Section 7.4 of the
Investor Stockholders Agreement), more than 50% of the outstanding Capital
Stock) or the Company proposes to sell or otherwise transfer for value all or
substantially all of the stock, assets or business (whether by merger, sale or
otherwise) of the Company to a third party, then (i) the NMP Entities at
their option may require, in the case of a sale of Capital Stock by the NMP
Entities, that each Stockholder sell a proportionate amount of such Stockholder’s
shares of Common Stock (which shall be the same proportion as the proportion of
the aggregate number of shares sold by the NMP Entities to the aggregate number
of shares owned by the NMP Entities) and waive any appraisal right that it may
have in connection with the Transaction and (ii) in any case, if
stockholder approval of the Transaction is required and the Company’s
stockholders are entitled to vote thereon, that each Stockholder vote all of
such Stockholder’s shares of Common Stock in favor of such Transaction.  Any sale of shares of Common Stock by a
Stockholder pursuant to this Section 3.4 shall, subject to Section 3.5,
be for the same consideration per share, on substantially the same terms and
subject to substantially the same conditions as the sale of shares of Capital
Stock owned by the NMP Entities.  Each
Stockholder that sells any shares of Common Stock pursuant to this Section 3.4
shall pay and be responsible for such Stockholder’s proportionate share of the
Expenses of Sale and the Sale Obligations.

 

3.5           Exceptions.  Notwithstanding anything contained to the
contrary in Section 3.4,

 

(a)           in connection with a sale by the NMP Entities
pursuant to Section 3.4 where the consideration in such sale consists of
or includes securities, if the sale of such securities to the Stockholder would
require either a registration statement under the Securities Act of 1933, as
amended, or preparation of a disclosure statement pursuant to Regulation D (or any successor
regulation) under the Securities Act of 1933, as amended, or a similar
provision of any state securities law, and such registration statement or
disclosure statement is not otherwise being prepared in connection with the
sale, then, at the option of the NMP Entities, the Stockholder may receive, in
lieu of such securities, the fair market value of such securities in cash, as
determined in good faith by the Board, whose determination shall be final and
binding;

 

(b)           the consideration per share received by a
Stockholder in any sale pursuant to Section 3.4 which is not a sale of all
of the outstanding Capital Stock shall be adjusted as between the Preferred
Stock Holders and the holders of Common Stock if the sale involves both
Preferred Stock and Common Stock, which adjustment shall be as determined in
good faith by the Board, whose determination shall be final and binding; and

 

(c)           in no event shall any Stockholder be obligated
pursuant to Section 3.4 to assume any joint liabilities or obligations
with respect to any other party, or to make representations, warranties or
covenants that are more expansive or otherwise less favorable to the
Stockholder than those made by any other similarly situated Company security
holder in such Transaction.

 

3.6           Limitation on Sale of Securities.  If the Company receives a request for
registration pursuant to an underwritten offering of registrable securities
pursuant to Section 2.1

 

 

or 2.2 of the Investor Stockholders Agreement (and if such a request is
being implemented or has not been withdrawn or abandoned), each Stockholder
agrees that, to the extent requested in writing by the managing underwriter(s),
it will not effect any public or private offer, sale, distribution or other
disposition of any Common Stock during the 180-day period in the case of an
initial public offering of Common Stock (or such shorter period as the managing
underwriter(s) may require), or the 90-day period in the case of any other
underwritten offering (or such shorter period as the managing underwriter(s) may
require), in each case beginning on the effective date of such registration
statement and excluding shares of Common Stock covered by the registration statement
filed in connection with such underwritten offering (such periods of time being
herein referred to as the “Restricted Period”), provided that each
Stockholder has received prior written notice of such offering and provided,
further, that, in connection with such underwritten offering, each
officer and director of the Company is subject to restrictions substantially
equivalent to those imposed on the Stockholders, and provided, further,
that, if (A) the Company issues an earnings release or material news or a
material event relating to the Company occurs during the last 17 days of the
relevant Restricted Period, or (B) prior to the expiration of the relevant
Restricted Period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the relevant Restrictive
Period, the restrictions imposed by this Section 3.6 shall continue to
apply until the expiration of the 18-day period beginning on the issuance of
the earnings release or the occurrence of the material news or material event.

 

Section 4. Miscellaneous.

 

4.1           Distributions.  In the event of any dividend, distribution or
exchange paid or made in respect of the Common Stock consisting of Affiliate
Securities, (a) the restrictions and rights with respect to the Common
Stock that are contained in this Agreement shall be applicable to the Affiliate
Securities without further action of the parties (with the references to Common
Stock being deemed references to the Affiliate Securities and the references to
the Company being deemed references to the Affiliate), and (b) as a
condition precedent to the receipt of the Affiliate Securities by a
Stockholder, such Stockholder shall enter into a stockholders’ agreement
containing terms substantially equivalent to those contained herein with
respect to the Affiliate Securities (but reflecting the economics of the
dividend, distribution or exchange and the capitalization of the
Affiliate).  The Board, in good faith,
shall determine such terms and its determination shall be final and binding on
such Stockholder.

 

4.2           Further Assurances.  Each party hereto shall cooperate with each
other party, shall do and perform or cause to be done and performed all further
acts and things, and shall execute and deliver all other agreements,
certificates, instruments, and documents as any other party hereto reasonably
may request in order to carry out the intent and accomplish the purposes of
this Agreement and the consummation of the transactions contemplated hereby.

 

4.3           Governing Law; Venue; Service of Process; Waiver of
Jury Trials.

 

(a)           Governing Law.  This Agreement shall be construed and
enforced in accordance with, and the rights and obligations of the parties
hereto shall be governed by, the laws of the State of New York, without giving
effect to the conflicts of law principles thereof.

 

 

(b)           Venue and Service of Process.  By execution and delivery of this Agreement,
each of the parties hereto hereby irrevocably and unconditionally (i) consents
to submit to the exclusive jurisdiction of the federal and state courts located
in the State of New York in New York County (collectively, the “Selected
Courts”) for any action or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby, and agrees not to commence
any action or proceeding relating thereto except in the Selected Courts, provided,
that, a party may commence any action or proceeding in a court other than a
Selected Court solely for the purpose of enforcing an order or judgment issued
by one of the Selected Courts; (ii) consents to service of any process,
summons, notice or document in any action or proceeding by registered
first-class mail, postage prepaid, return receipt requested or by nationally
recognized courier guaranteeing overnight delivery in accordance with Section 4.6
and agrees that such service of process shall be effective service of process
for any action or proceeding brought against it in any such court, provided,
that, nothing herein shall affect the right of any party hereto to serve
process in any other manner permitted by law; (iii) waives any objection
to the laying of venue of any action or proceeding arising out of this
Agreement or the transactions contemplated hereby in the Selected Courts; and (iv) waives
and agrees not to plead or claim in any court that any such action or
proceeding brought in any such Selected Court has been brought in an
inconvenient forum.

 

(c)           Waiver of Jury Trial.  With respect to any action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby, each of the parties hereby irrevocably, to the extent not prohibited by
applicable law that cannot be waived, waives, and covenants that it will not
assert (whether as plaintiff, defendant or otherwise),
any right to trial by jury in any action arising in whole or in part under or
in connection with this Agreement or the transactions contemplated hereby,
whether now existing or hereafter arising, and whether sounding in contract,
tort or otherwise, and agrees that any of them may file a copy of this
paragraph with any court as written evidence of the knowing, voluntary and
bargained-for agreement among the parties irrevocably to waive its right to
trial by jury in any action or proceeding whatsoever between them relating to
this Agreement or the transactions contemplated hereby.  Such action or proceeding shall instead be
tried in a Selected Court by a judge sitting without a jury.

 

4.4           Remedies.  Each party hereby agrees that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or was otherwise
breached and further agree that money damages or other remedy at law would not
be a sufficient or adequate remedy for any breach or violation of, or a default
under, this Agreement by it and that, in addition to all other remedies
available to the other parties, each of them shall be entitled to an injunction
restraining such breach, violation or default or threatened breach, violation
or default and to any other equitable relief, including, without limitation,
specific performance of the terms and provisions of this Agreement.  Any requirements for the securing or posting
of any bond with respect to such remedy are hereby waived by each of the
parties hereto.  Each party hereby
further agrees that, in the event of any action for an injunction or other
equitable remedy in respect of such breach or enforcement of specific
performance, it will not assert the defense that a remedy at law would be
adequate.  In any action or proceeding
brought to enforce any provision of this Agreement or where any provision
hereof is validly asserted as a defense, the successful party to such action or

 

 

proceeding shall be entitled to recover, to the extent permitted by
applicable law, attorneys’ fees in addition to its costs and expenses and any
other available remedy.

 

4.5           Severability.  Whenever possible, each provision or portion
of any provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law but the invalidity or unenforceability
of any provision or portion of any provision of this Agreement in any
jurisdiction shall not affect the validity or enforceability of the remainder
of this Agreement in that jurisdiction or the validity or enforceability of
this Agreement, including, without limitation, that provision or portion of any
provision, in any other jurisdiction.  In
addition, should a court or arbitrator determine that any provision or portion
of any provision of this Agreement is not reasonable or valid, either in period
of time, geographical area, or otherwise, the parties hereby agree that such
provision should be interpreted and enforced to the maximum extent which such
court or arbitrator deems reasonable or valid.

 

4.6           Notice.  Unless otherwise provided herein, all
notices, requests, demands, claims and other communications provided for under
the terms of this Agreement shall be in writing.  Any notice, request, demand, claim or other
communication hereunder shall be sent by (i) personal delivery (including,
without limitation, receipted courier service) or overnight delivery service to
the intended recipient at the address set forth below, (ii) facsimile
during normal business hours, with confirmation of receipt, to the number of
the intended recipient as set forth below, (iii) reputable commercial
overnight delivery service courier to the intended recipient at the address set
forth below or (iv) registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set forth
below:

 

(a)           If to the Company, to:

 

Ikaria Holdings, Inc.

c/o New Mountain Capital, L.L.C.

787 Seventh Avenue

New York, NY 10019

Attention: David Shaw

Facsimile: (212) 582-2277

 

(b)           If to a Stockholder, to the address for such
Stockholder set forth in the books and records of the Company, and if to the
Legal Representative, to such Person at the address of which the Company is
notified in accordance with this Section 4.6.

 

(c)           In all cases, with a copy to (which shall not
constitute notice):

 

c/o New Mountain Capital, L.L.C.

787 Seventh Avenue

New York, NY 10019

Attention: Alok Singh

Facsimile: (212) 582-2277

 

and

 

 

Fried, Frank, Harris, Shriver &  Jacobson LLP

One New York Plaza

New York, NY 10004

Attention: Aviva F. Diamant, Esq.

Facsimile: (212) 859-4000

 

and

 

Heller Ehrman LLP

701 Fifth Avenue, Suite 6100

Seattle, WA 98104

Attention: Sonya Erickson, Esq.

Facsimile: (206) 515-8888

 

All such notices, requests, consents and other
communications shall be deemed to have been given when received.  Any party may change its facsimile number or
its address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties hereto
notice in the manner then set forth in this Section 4.6.

 

4.7           Binding Effect; Assignment; Third-Party
Beneficiaries.  This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and any of their respective successors, personal
representatives and permitted assigns who agree in writing to be bound by the
terms hereof.  Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
Stockholder without the prior written consent of the Company.  In addition, each of the NMP Entities shall
be a third party beneficiary of Sections 3.3(b), 3.4 and 3.5 of this Agreement
and shall be entitled to enforce such Sections of this Agreement.

 

4.8           Amendments and Waivers.  This Agreement and any of the provisions
hereof may be amended, waived (either generally or in a particular instance and
either retroactively or prospectively), modified or supplemented, in whole or
in part, only by written agreement signed by the Company and the Majority
Stockholders; provided, that any amendment, waiver or modification of,
or supplement to, Section 3.3, 3.4 or 3.5 may be effected only with the
consent of the NMP Entities; and provided, further, that, the
observance of any provision of this Agreement may be waived in writing by the
party that will lose the benefit of such provision as a result of such
waiver.  The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be
construed as a further or continuing waiver of such breach or as a waiver of
any other or subsequent breach, except as otherwise explicitly provided for in
such waiver.  The waiver by any party
hereto of a breach of any provision of this Agreement by any Stockholder shall
not operate or be construed as a waiver of such breach by any other
Stockholder, except as otherwise explicitly provided for in such waiver.  Except as otherwise expressly provided
herein, no failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder, or otherwise available in
respect hereof at law or in equity, shall operate as a waiver thereof, nor
shall any single or partial exercise of such right, power or remedy by such
party preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.  The
Company may require any prospective holder of Common Stock after the date
hereof to execute a counterpart signature page to this Agreement

 

 

agreeing to be bound by the provisions of this Agreement as a “Stockholder,”
and the execution of such a counterpart signature page to this Agreement
by such prospective holder shall only require consent of the Company, which
shall be evidenced by the Company’s execution of the counterpart signature page (provided,
that nothing in this Section 4.8 shall relieve the Company of any
obligation to obtain any requisite approval of the Board or any other approval
required by it under the terms of any contract to which it is a party prior to
taking any action set forth in this Section 4.8).  Notwithstanding anything contained in this
Agreement to the contrary, each Stockholder hereby acknowledges and agrees that
no Stockholder shall have any right to enforce this Agreement against any other
Stockholder or compel or seek to compel the Company or the NMP Entities to
enforce any of their respective rights under this Agreement against any other
Stockholder, and such right of the Company and the NMP Entities to enforce
their respective rights under this Agreement against any Stockholder shall be
solely and exclusively vested in the Company and the NMP Entities (and their
respective successors and assigns), respectively.  Without limiting the generality of the
foregoing, each Stockholder hereby acknowledges and agrees that (i) the
Company (and its successors and assigns) shall have the sole and exclusive
right to waive any rights of the Company hereunder and compliance by any
Stockholder with any provision hereof and to provide any Stockholder with terms
relating to such rights that are different from (including, without limitation,
terms that are more favorable or less favorable than) the terms provided in
this Agreement to any other Stockholder, and (ii) the NMP Entities (and
its successors and assigns) shall have the sole and exclusive right to waive
any rights of the NMP Entities hereunder and compliance by any Stockholder with
any provision hereof and to provide any Stockholder with terms relating to such
rights that are different from (including, without limitation, terms that are
more favorable or less favorable than) the terms provided in this Agreement to
any other Stockholder.

 

4.9           Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

 

4.10         Entire Agreement.  This Agreement, and, to the extent referred
to herein, the Investor Stockholders Agreement, constitute the entire
agreement, and supersede all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.

 

4.11         Withholding.  The Company shall have the right to deduct
from any amount payable under this Agreement any taxes required by applicable
law to be withheld.  Each Stockholder
agrees to indemnify the Company against any federal, state and local
withholding taxes for which the Company may be liable in connection with such
Stockholder’s acquisition, ownership or disposition of any Common Stock.

 

4.12         No Right to Continued Employment.  This Agreement shall not confer upon any
Stockholder any right with respect employment by the Company or any Affiliate
thereof, nor shall it interfere in any way with the right of the Company or any
Affiliate thereof to terminate such Stockholder’s employment at any time.

 

 

4.13         Possession of Certificates; Power of Attorney.

 

(a)           In order to provide for the safekeeping of the
certificates representing the shares of Common Stock held by the Stockholders
pursuant hereto and to facilitate the enforcement of the terms and conditions
hereof, at any time requested by the Company, (i) each Stockholder shall
redeliver to the Company, and the Company shall retain physical possession of,
all certificates representing shares of Common Stock held by such Stockholder
pursuant hereto and (ii) each Stockholder shall deliver to the Company an
undated stock power, duly executed in blank, for each such certificate.  Each Stockholder shall be relieved of any
obligation otherwise imposed by this Agreement to deliver certificates
representing shares of Common Stock if the same are in the custody of the
Company.

 

(b)           Each Stockholder hereby irrevocably appoints the
Representative as the Stockholder’s true and lawful agent and attorney-in-fact,
with full powers of substitution, to act in the Stockholder’s name, place and
stead, to do or refrain from doing all such acts and things, and to execute and
deliver all such documents, as the Representative shall deem necessary or
appropriate in connection with a Public Offering of securities of the Company,
including pursuant to Section 3.3, or a sale pursuant to Section 3.2
or 3.4, including, without in any way limiting the generality of the foregoing,
in the case of a sale pursuant to Section 3.4, but subject to the
limitations set forth in Section 3.5, to execute and deliver on behalf of
such Stockholder a purchase and sale agreement and any other agreements and
documents that the Representative deems necessary in connection with any such
sale, and in the case of a Public Offering, to execute and deliver on behalf of
such Stockholder an underwriting agreement, a “hold back” agreement and, if the
Stockholder is participating in the Public Offering, a custody agreement, an
underwriting agreement, a power of attorney and in each case any other
agreements and documents that the Representative deems necessary in connection
with any such Public Offering, and in the case of any sale pursuant to Section 3.4
and any Public Offering pursuant to Section 3.3(a), to receive on behalf
of such Stockholder the proceeds of the sale or Public Offering of such
Stockholder’s shares, to hold back from any such proceeds any amount that the
Representative deems necessary to reserve against such Stockholder’s share of
any Expenses of Sale and Sale Obligations and to pay such Expenses of Sale and
Sale Obligations.  Such Stockholder
hereby ratifies and confirms all that the Representative shall do or cause to
be done by virtue of its appointment as such Stockholder’s agent and attorney-in-fact.  In acting for such Stockholder pursuant to
the appointment set forth in this Section 4.13(b), the Representative
shall not be responsible to such Stockholder for any loss or damage such
Stockholder may suffer by reason of the performance by the Representative of
its duties under this Agreement, except for loss or damage arising from willful
violation of law or gross negligence by the Representative in the performance
of its duties hereunder.  The appointment
of the Representative shall be deemed coupled with an interest and as such
shall be irrevocable and shall survive the death, incompetency, mental illness
or insanity of such Stockholder, and any person dealing with the Representative
may conclusively and absolutely rely, without inquiry, upon any act of the
Representative as the act of such Stockholder in all matters referred to in
this Section 4.13(b). 
Notwithstanding anything herein to the contrary, no authority is hereby
granted to the Representative (a) to elect whether the Stockholder shall
participate in a Public Offering pursuant to Section 3.3(a), or (b) to
cause any Stockholder to assume any joint liabilities or obligations with
respect to any other party, or to make representations, warranties or covenants
that are more expansive or otherwise less favorable to the Stockholder than
those made by any 

 

 

other similarly situated Company security holder in such
Transaction.  For purposes of this
Agreement, the “Representative” shall mean (i) as applied to Section 3.2,
the Secretary of the Company or such other person designated by the
Board, and (ii) as applied to Sections 3.3, 3.4 and 3.5, the NMP Entities.

 

4.14         General Interpretive Principles.  Whenever used in this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, any noun
or pronoun shall be deemed to include the plural as well as the singular and to
cover all genders.  The headings of the
sections, paragraphs, subparagraphs, clauses and subclauses of this Agreement
are for convenience of reference only and shall not in any way affect the
meaning or interpretation of any of the provisions hereof.  Unless otherwise specified, the terms “hereof’,
“herein” and similar terms refer to this Agreement as a whole, and references
herein to Sections refer to Sections of this Agreement.  Words of inclusion shall not be construed as
terms of limitation herein, so that references to “include”, “includes” and “including”
shall not be limiting and shall be regarded as references to non-exclusive
and non-characterizing illustrations. 
Any action required to be taken “within” a specified time period
following the occurrence of an event shall be required to be taken no later
than 5:00 PM, New York City time, on the last day of the time period, which
shall be calculated starting with the day immediately following the date of the
event.

 

4.15         Termination.  This Agreement, and all of the rights and
obligations of the parties hereto, shall terminate without further action of
the parties upon the termination of the Preferred Stock Purchase Agreement.

 

 

IN WITNESS WHEREOF, this Common Stockholders
Agreement has been signed by or on behalf of each of the parties hereto, all as
of the date first above written.

 

	
   

  	
  IKARIA HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[SIGNATURE
PAGE TO IKARIA HOLDINGS, INC. COMMON STOCKHOLDERS AGREEMENT]

 

 

IN WITNESS WHEREOF, this Common Stockholders
Agreement has been signed by or on behalf of each of the
parties hereto, all as of the date first above written.

 

	
   

  	
  INDIVIDUAL STOCKHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENTITY STOCKHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Print Legal Name of
  Stockholder Entity)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
				

 

[SIGNATURE
PAGE TO IKARIA HOLDINGS, INC. COMMON STOCKHOLDERS AGREEMENT]

 

 

The undersigned acknowledges that the
undersigned has read the foregoing Common Stockholders Agreement between the
Company and the undersigned’s spouse, understands that the undersigned’s spouse
holds shares of Common Stock subject to the provisions of such
Agreement and agrees to be bound by the foregoing Agreement.

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Individual’s Spouse

  

 

[SIGNATURE
PAGE TO IKARIA HOLDINGS, INC. COMMON STOCKHOLDERS AGREEMENT]

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