Document:

Exhibit 10.1

 

PTC THERAPEUTICS, INC.

EIGHTH AMENDED AND RESTATED

1998 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN

 

1.              DEFINITIONS.   Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this Eighth Amended and Restated PTC Therapeutics, Inc. 1998 Employee, Director and Consultant Stock Option Plan, have the following meanings:

 

Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means the Committee.

 

Affiliate means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.

 

Board of Directors means the Board of Directors of the Company.

 

Certificate means an Option Certificate.

 

Code means the United States Internal Revenue Code of 1986, as amended.

 

Committee means the committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan.

 

Common Stock means shares of the Company’s common stock, $.001 par value per share.

 

Company means PTC Therapeutics, Inc., a Delaware corporation.

 

Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.

 

Fair Market Value of a Share of Common Stock means:

 

(a)  If the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported for the Common Stock, the closing or last price of the Common Stock on the Composite Tape or other comparable reporting system for the trading day immediately preceding the applicable date;

 

(b)  If the Common Stock is not traded on a national securities exchange but is traded on the over-the-counter market, if sales prices are not regularly reported for the Common Stock for the trading day referred to in clause (a), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market for the trading day on which Common Stock was traded immediately preceding the applicable date; and

 

(c)  If the Common Stock is neither listed on a national securities exchange nor traded in the over-the-counter market, such value as the Administrator, in good faith, shall determine.

 

ISO means an option meant to qualify as an incentive stock option under Section 422 of the Code.

 

Key Employee means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), or otherwise designated by the Administrator to be eligible to be granted one or more Options under the Plan.

 

Non-Qualified Option means an option which is not intended to qualify as an ISO.

 

Option means an ISO or Non-Qualified Option granted under the Plan.

 

Option Certificate means a certificate delivered to the Participant by the Company pursuant to the Plan, in such form as the Administrator shall approve, which sets forth the terms and conditions of a Stock Option Grant.

 

Participant means a Key Employee, director or consultant to whom one or more Options are granted under the Plan.  As used herein, “Participant” shall include “Participant’s Survivors” where the context requires.

 

Plan means this Eighth Amended and Restated PTC Therapeutics, Inc. 1998 Employee, Director and Consultant Stock Option Plan.

 

Shares means shares of the Common Stock as to which Options have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan.  The Shares issued upon exercise of Options granted under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.

 

Stock Option Grant means a grant of an option to purchase Shares under the Plan in either the form of an ISO or Non-Qualified Option.

 

Survivors means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to an Option by will or by the laws of descent and distribution.

 

2.              PURPOSES OF THE PLAN.  The Plan is intended to encourage ownership of Shares by Key Employees and directors of and certain consultants to the Company in order to attract such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate.  The Plan provides for the granting of Stock Option Grants.

 

3.              SHARES SUBJECT TO THE PLAN.

 

a.              The number of Shares which may be issued from time to time pursuant to this Plan shall be equal to Three Million Nine Hundred Seventy-six Thousand Eight (3,976,008), or the equivalent of such numbers of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 16 of the Plan;

 

b.              The maximum number of Shares that may be issued as ISOs pursuant to this Plan shall be equal to Three Million Nine Hundred Seventy-six Thousand Eight (3,976,008), or the equivalent of such numbers of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 16 of the Plan; and

 

c.               If an Option ceases to be “outstanding”, in whole or in part, the Shares which were subject to such Option shall be available for the granting of other Options under the Plan.  Any Option shall be treated as “outstanding” until such Option is exercised in full, or terminates or expires under the provisions of the Plan, or by agreement of the parties to the pertinent Option Certificate.

 

4.              ADMINISTRATION OF THE PLAN.  The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator.  Subject to the provisions of the Plan, the Administrator is authorized to:

 

a.              Interpret the provisions of the Plan or of any Stock Option Grant or Option Certificate and to make all rules and determinations which it deems necessary or advisable for the administration of the Plan;

 

b.              Determine which employees of the Company or of an Affiliate shall be designated as Key Employees and which of the Key Employees, directors and consultants shall be granted Options;

 

c.               Determine the number of Shares for which an Option or Options shall be granted, provided, however, that in no event shall Options to purchase more than 700,000 Shares be granted to any Participant in any fiscal year; and

 

d.              Specify the terms and conditions upon which an Option or Options may be granted

 

 

provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs.  Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Option granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee.

 

5.              ELIGIBILITY FOR PARTICIPATION.  The Administrator will, in its sole discretion, name the Participants in the Plan, provided, however, that each Participant must be a Key Employee, director or consultant of the Company or of an Affiliate at the time an Option is granted.  Notwithstanding the foregoing, the Administrator may authorize the grant of an Option to a person not then an employee, director or consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Option shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the delivery of the Option Certificate evidencing such Option.  ISOs may be granted only to Key Employees.  Non-Qualified Options may be granted to any Key Employee, director or consultant of the Company or an Affiliate.  The granting of any Option to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Options.

 

6.              TERMS AND CONDITIONS OF OPTIONS.  Each Stock Option Grant shall be set forth in writing in an Option Certificate, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant.  The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto.

 

A.  Non-Qualified Options:  Each Option intended to be a Non-Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non-Qualified Option:

 

a.        Option Price:  Each Option Certificate shall state the option price (per share) of the Shares covered by each Stock Option Grant, which option price shall be determined by the Administrator but shall not be less than 85% of the Fair Market Value per share of Common Stock;

 

b.        Each Option Certificate shall state the number of Shares to which it pertains;

 

c.         Each Option Certificate shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain conditions or the attainment of stated goals or events, or through other circumstances or programs approved by the Administrator (the “Vesting Provisions”);

 

d.        The provisions of Paragraph 6(A)(c) above notwithstanding, with the consent of the Administrator, the vesting provisions specified in a Participant’s employment agreement shall be the Vesting Provisions that apply to the relevant Non-Qualified Options; and

 

e.         Exercise of any Option may be conditioned upon the Participant’s execution of a Share purchase agreement in form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that:

 

i.                  The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and

 

ii.               The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions.

 

B.  ISOs:  Each Option intended to be an ISO, in accordance with Section 422 of the Code, shall be issued only to a Key Employee and be subject to the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal Revenue Service:

 

a.  Minimum standards:  The ISO shall meet the minimum standards required of Non-Qualified Options, as described in Paragraph 6(A) above, except clause (a) thereunder;

 

b.  Option Price:  Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code:

 

i.            Ten percent (10%) or less of the total combined voting power of all classes of stock   of the Company or an Affiliate, the Option price per share of the Shares covered by each ISO shall not be less than one hundred percent (100%) of the Fair Market Value per share of the Shares on the date of the Stock Option Grant; or

 

ii.         More than ten percent (10%) of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of the Shares covered by each ISO shall not be less than one hundred ten percent (110%) of the said Fair Market Value on the date of the Stock Option Grant;

 

c.  Term of Option:  For Participants who own:

 

i.            Ten percent (10%) or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than ten (10) years from the date of the Stock Option Grant or at such earlier time as the Option Certificate may provide; or

 

ii.         More than ten percent (10%) of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than five (5) years from the date of the Stock Option Grant or at such earlier time as the Option Certificate may provide;

 

d.        Limitation on Yearly Exercise:  The Option Certificates shall restrict the amount of ISOs which may be exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined at the time each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed one hundred thousand dollars ($100,000), provided that this subparagraph (d) shall have no force or effect if its inclusion in the Plan is not necessary for Options issued as ISOs to qualify as ISOs pursuant to Section 422(d) of the Code; and

 

e.         Intention to be Treated as an ISO:  It is the Company’s intent that an ISO qualify for the favorable tax treatment provided to holders of Options that meet the standards of Section 422 of the Code.  Any provision of this Plan, an Option Certificate or any other relevant document which conflicts with the Code so that an Option intended to be an ISO would not be deemed an ISO is null and void and any ambiguities shall be resolved so that the Option qualifies as an ISO.  Nonetheless, if the Option is determined not to be an ISO, the Participant shall be deemed to acknowledge and agree that neither the Company nor

 

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any Affiliate is responsible to compensate him or her or otherwise make up for the treatment of the Option as a Non-Qualified Option and not as an ISO.  The Participant is deemed to have been advised to consult with his or her own tax advisors regarding the tax effects of the Option and the requirements necessary to obtain favorable tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements.

 

7.              EXERCISE OF OPTIONS AND ISSUE OF SHARES.  An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal executive office address, together with provision for payment of the full purchase price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Certificate.  Such written notice shall be signed by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Certificate.  Payment of the purchase price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Option, or (c) at the discretion of the Administrator, by having the Company retain from the shares otherwise issuable upon exercise of the Option, a number of shares having a Fair Market Value equal as of the date of exercise to the exercise price of the Option, or (d) at the discretion of the Administrator, by delivery of the grantee’s personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (e) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and as approved by the Administrator, or (f) at the discretion of the Administrator, by any combination of (a), (b), (c), (d) and (e) above.  Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.

 

The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be).  In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.  The Shares shall, upon delivery, be evidenced by an appropriate certificate or certificates for fully paid, non-assessable Shares.

 

The Administrator shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Administrator shall not accelerate the exercise date of any installment of any Option granted to any Key Employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Paragraph 19) if such acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6.B.d.

 

The Administrator may, in its discretion, amend any term or condition of an outstanding Stock Option Grant provided (i) such term or condition as amended is permitted by the Plan, (ii) any such amendment shall be made only with the consent of the Participant to whom the Option was granted, or in the event of the death of the Participant, the Participant’s Survivors, if the  amendment is adverse to the Participant, and (iii) any such amendment of any ISO shall be made only after the Administrator, after consulting the counsel for the Company, determines whether such amendment would constitute a “modification” of any Option which is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holder of such ISO.

 

8.              RIGHTS AS A SHAREHOLDER.  No Participant to whom an Option has been granted shall have rights as a shareholder with respect to any Shares covered by such Option, except after due exercise of the Option and tender of the full purchase price, if any, for the Shares being purchased pursuant to such exercise and registration of the Shares in the Company’s share register in the name of the Participant.

 

9.              ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.  By its terms, an Option granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, (ii) as approved by the Administrator in its sole discretion and set forth in the applicable Option Certificate, (iii) if approved by the Administrator in its sole discretion, through establishment of blind trusts, family limited partnerships, or other estate planning vehicles wherein the Participant or his direct descendants are the primary beneficiary, (iv) if approved by the Administrator in its sole discretion, in accordance with the division of property rights set forth in an authorized settlement agreement arising from the Participant’s divorce, or (v) under any other circumstances that are approved by the Administrator in its sole discretion.  Notwithstanding the foregoing, an ISO transferred in accordance with subsections 9(ii)-(v) above shall no longer qualify as an incentive stock option under Section 422 of the Code.  The designation of a beneficiary of an Option by a Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph.  Except as provided above, during the Participant’s lifetime, an Option shall only be exercisable by such Participant (or by his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.  Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Option or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon an Option, shall be null and void.

 

The Participant is required to notify the Company in writing immediately after the Participant makes a Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of the Option.  A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale) of such Shares before the later of (a) two years after the date the Participant was granted the Option or (b) one year after the date the Participant acquired Shares by exercising the Option, except as otherwise provided in Section 424(c) of the Code.  If the Participant has died before the Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.

 

10.  EFFECT OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR DISABILITY. Except as otherwise provided in the pertinent Option Certificate, in the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply:

 

a.  A Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate (for any reason other than termination “for cause”, Disability, or death for which events there are special rules in Paragraphs 11, 12, and 13, respectively), may exercise any Option granted to him or her (i) within three (3) months of such termination to the extent that the Option is exercisable on the date of such termination of service, but only if the Administrator has so designated in the pertinent Option Certificate, or (ii)  over such other term as the Administrator shall determine in its sole discretion;

 

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b.  Except as provided in Subparagraph (c) below, or Paragraph 12 or 13, in no event may an Option Certificate provide, if an Option is intended to be an ISO, that the time for exercise be later than three (3) months after the Participant’s termination of employment;

 

c.  The provisions of this Paragraph, and not the provisions of Paragraph 12 or 13, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of employment, director status or consultancy in all cases with the Company or an Affiliate, provided, however, in the case of a Participant’s Disability or death within three (3) months after the termination of employment, director status or consultancy, the Participant or the Participant’s Survivors may exercise the Option within one (1) year after the date of the Participant’s termination of employment, but in no event after the date of expiration of the term of the Option;

 

d.  Notwithstanding anything herein to the contrary, if subsequent to a Participant’s termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Board of Directors determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute “cause”, then such Participant shall forthwith cease to have any right to exercise any Option;

 

e.  A Participant to whom an Option has been granted under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a permanent and total Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide; and

 

f.   Except as required by law or as set forth in the pertinent Option Certificate, Options granted under the Plan shall not be affected by any change of a Participant’s status within or among the Company and any Affiliates, so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate.

 

11.  EFFECT OF TERMINATION OF SERVICE “FOR CAUSE”.  Except as otherwise provided in the pertinent Option Certificate, the following rules apply if the Participant’s service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated “for cause” prior to the time that all his or her outstanding Options have been exercised:

 

a.  All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated “for cause” will immediately be forfeited;

 

b.  In addition to any definition of the term “for cause” set forth in any employment agreement between the Company and the Participant, for purposes of this Plan, the term “cause” shall include, without limitation (i) the failure of the Participant to perform any of his material duties to the Company or any of its Affiliates, (ii) the conviction of the Participant of any felony involving moral turpitude, (iii) any acts of fraud or embezzlement by the Participant involving the Company or any of its Affiliates, (iv) violation of any federal, state or local law, or administrative regulation related to the business of the Company or any of its Affiliates, (v) a conflict of interest, (vi)  conduct that could result in publicity reflecting unfavorably on the Company or any of its Affiliates in a material way, (vii) failure to comply with the policies of the Company or any of its Affiliates, (viii) the unauthorized disclosure of confidential information, or (ix) a breach of the terms of any employment agreement, confidentiality agreement, non-competition and non-solicitation agreement or any other agreement between the Participant and the Company or any of its Affiliates, after giving effect to the notification provisions, if any, and the mechanisms to remedy or cure a breach, if appropriate, as described in any such agreement.  The determination of the Administrator as to the existence of “cause” will be conclusive on the Participant and the Company; and

 

c.  “Cause” is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of “cause” occur prior to termination.  If the Administrator determines, subsequent to a Participant’s termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute “cause,” then the right to exercise any Option is forfeited.

 

12.  EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.  Except as otherwise provided in the pertinent Option Certificate, a Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant:

 

a.  To the extent that the Option has become exercisable according to the vesting period of such Option as of the date of Disability; and

 

b.  To the extent of a pro rata portion through the date of Disability of any additional Options that would have become exercisable on the next vesting date had the Participant not become Disabled.  The proration shall be based upon the number of days accrued in the current vesting period prior to the date of Disability.

 

A Disabled Participant may exercise such rights only within the period ending one (1) year after the date of the Participant’s termination of employment, directorship or consultancy, as the case may be, notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not become disabled and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

 

The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination).  If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

 

13.  EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.  Except as otherwise provided in the pertinent Option Certificate, in the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate, the Participant’s Survivors may exercise any outstanding Option granted to the Participant:

 

a.   To the extent that the Option has become exercisable according to the vesting period of such Option as of the date of death; and

 

b.   To the extent of a pro rata portion through the date of death of any additional Options that would have become exercisable on the next vesting date had the Participant not died.  The proration shall be based upon the number of days accrued in the current vesting period prior to the date of death.

 

If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one (1) year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

 

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14.  PURCHASE FOR INVESTMENT.  Unless the offering and sale of the Shares to be issued upon the particular exercise of an Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled:

 

a.  The person(s) who exercise(s) such Option shall warrant to the Company, prior to the receipt of such Shares, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their Shares issued pursuant to such exercise or such grant:

 

“The shares represented by this certificate have been taken for investment, and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”; and

 

b.  At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the 1933 Act without registration thereunder.

 

15.  DISSOLUTION OR LIQUIDATION OF THE COMPANY.  Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to exercise any Option to the extent that the Option is exercisable as of the date immediately prior to such dissolution or liquidation.

 

16.  ADJUSTMENTS.  Upon the occurrence of any of the following events, a Participant’s rights with respect to any Option granted to him or her hereunder which has not previously been exercised in full shall be adjusted as hereinafter provided, unless otherwise specifically provided in the pertinent Option Certificate or, subject to the consent of the Administrator, as otherwise specified in an employment or other agreement between the Company and the Participant:

 

A.  Stock Dividends and Stock Splits.  If (i) the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, the number of shares of Common Stock deliverable upon the exercise of such Option may be appropriately increased or decreased proportionately, and appropriate adjustments may be made in the purchase price per share to reflect such events.  The number of Shares subject to the limitation in Paragraph 4(c) shall also be proportionately adjusted upon the occurrence of such events.

 

B.  Consolidations or Mergers.  If the Company is to be consolidated with or acquired by another entity in a merger, sale of all or substantially all of the Company’s assets or otherwise (an “Acquisition”), the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options, including without limitation any provisions relating to the acceleration of vesting, either the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that all vested Options must be exercised (either to the extent then exercisable, including Options subject to accelerated vesting provisions, or, at the discretion of the Administrator, all Options being made fully exercisable for purposes of this Subparagraph), at the end of which period the Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to such Options (either to the extent then exercisable or, at the discretion of the Administrator, all Options being made fully exercisable, including Options subject to accelerated vesting provisions, for purposes of this Subparagraph) over the exercise price thereof.

 

C.  Recapitalization or Reorganization.  In the event of a recapitalization or reorganization of the Company (other than a transaction described in Subparagraph B above) pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising an Option shall be entitled to receive for the purchase price, if any, paid upon such exercise the securities which would have been received if such Option had been exercised prior to such recapitalization or reorganization.

 

D.  Modification of ISOs.  Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph A, B or C above with respect to ISOs shall be made only after the Administrator, after consulting with counsel for the Company, determines whether such adjustments would constitute a “modification” of such ISOs (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holders of such ISOs.  If the Administrator determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments, unless the holder of an ISO specifically requests in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification” on his or her income tax treatment with respect to the ISO.

 

17.  ISSUANCES OF SECURITIES.  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 subject to Options.  Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Option Grant.

 

18.  FRACTIONAL SHARES.  No fractional shares shall be issued under the Plan and the person exercising such right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.

 

19.  CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.  The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an Affiliate at the time of such conversion.  Such actions may include, but not be limited to,

 

5

 

extending the exercise period or reducing the exercise price of the appropriate installments of such Options.  At the time of such conversion, the Administrator (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan.  Nothing in the Plan shall be deemed to give any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Administrator takes appropriate action.  The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such conversion.

 

20.  WITHHOLDING.  In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable law or governmental regulation to be withheld from the Participant’s salary, wages or other remuneration in connection with the exercise of an Option or a Disqualifying Disposition (as defined in Paragraphs 9 and 21), the Company may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a different withholding arrangement, including the use of shares of the Company’s Common Stock or a promissory note, is authorized by the Administrator (and permitted by law).  For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise.  If the fair market value of the shares withheld is less than the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer.  The Administrator in its discretion may condition the exercise of an Option for less than the then Fair Market Value on the Participant’s payment of such additional withholding.

 

21.  NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.  Each Key Employee who receives an ISO must agree to notify the Company in writing immediately after the Key Employee makes a Disqualifying Disposition of any shares acquired pursuant to the exercise of an ISO.  A Disqualifying Disposition is any disposition (including any sale) of such shares before the later of (a) two years after the date the Key Employee was granted the ISO, or (b) one year after the date the Key Employee acquired Shares by exercising the ISO.  If the Key Employee has died before such stock is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.

 

22.  TERMINATION OF THE PLAN.  The Plan will terminate on August 12, 2008, the date which is ten (10) years from the earlier of the date of its adoption and the date of its approval by the shareholders of the Company.  The Plan may be terminated at an earlier date by vote of the shareholders of the Company; provided, however, that any such earlier termination shall not affect any Option Certificates executed prior to the effective date of such termination.

 

23.  AMENDMENT OF THE PLAN AND CERTIFICATES.  The Plan may be amended by the shareholders of the Company.  The Plan may also be amended by the Administrator, including, without limitation, to the extent necessary to qualify any or all outstanding Options granted under the Plan or Options to be granted under the Plan for favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code, and to the extent necessary to qualify the shares issuable upon exercise of any outstanding Options granted, or Options to be granted, under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers.  Any amendment approved by the Administrator which the Administrator determines is of a scope that requires shareholder approval shall be subject to obtaining such shareholder approval.  Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her rights under an Option previously granted to him or her.  With the consent of the Participant affected, the Administrator may amend outstanding Option Certificates in a manner which may be adverse to the Participant but which is not inconsistent with the Plan.  In the discretion of the Administrator, outstanding Option Certificates may be amended by the Administrator in a manner which is not adverse to the Participant.  Except as provided herein, the terms and provisions of any Option Certificate may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions.  No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of such Option Certificate, whether or not similar.  Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

 

24.  EMPLOYMENT OR OTHER RELATIONSHIP.  Nothing in this Plan or any Option Certificates shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.

 

25.  GOVERNING LAW.  This Plan shall be construed and enforced in accordance with the law of the State of  Delaware.

 

6Exhibit 10.2

 

PTC Therapeutics, Inc.

 

INCENTIVE STOCK OPTION CERTIFICATE

 

THIS INCENTIVE STOCK OPTION CERTIFICATE (this “Certificate”), dated as of the XX day of XXXX, XXXX, certifies that, pursuant to the PTC Therapeutics, Inc. 1998 Employee, Director and Consultant Stock Option Plan, as amended (the “Plan”), the Board of Directors of PTC Therapeutics, Inc. (the “Company”) has granted an Option to purchase shares of Common Stock, $.001 par value per share (the “Shares”), of the Company, as follows:

 

	
Name of Optionee:
    	
 
    	
XXXX
    
	
Address of Optionee:
    	
 
    	
XXXX
    
	
 
    	
 
    	
XXXX
    
	
Grant ID Number:
    	
 
    	
#XXXX
    
	
Number of Shares:
    	
 
    	
XXXXX
    
	
Option Price:
    	
 
    	
US $XXX per share
    
	
Date of Grant:
    	
 
    	
XXXX
    
	
Vesting Reference Date:
    	
 
    	
XXXX
    

 

The Option is subject to all the terms, conditions and limitations set forth in the Plan, which is incorporated herein by reference, and to the following additional terms specified by the Board of Directors of the Company. The Optionee acknowledges receipt of a copy of the Plan. All capitalized terms used in this Certificate and not otherwise defined herein shall have the respective meanings ascribed to them in the Plan.

 

The Option shall vest and be exercisable as follows:

 

(a)                                 As to one-third (1/3) of the Shares, on the first anniversary of the Vesting Reference Date; and

 

(b)                                 As to the remaining two-thirds (2/3) of the Shares (the “Remainder”), monthly thereafter, so that one-twenty-fourth (1/24) of the Remainder vests on each of the thirteenth through thirty-sixth monthly anniversaries of the Vesting Reference Date.

 

The Option shall terminate ten (10) years from the Date of Grant or such shorter period as set forth in the Plan in the event of the Optionee’s termination of service, Death or Disability. For the avoidance of doubt, the Plan provides that in the event of a termination other than for Death, Disability, or “cause” (as defined in the Plan), the vested portion of the Option may be exercised within three (3) months after the date the Optionee ceases to be an employee of the Company, or within the originally prescribed term of the Option, whichever is shorter, but may not be exercised thereafter. Further, for the avoidance of doubt, the Plan provides that in the event of a termination for “cause” (as defined in the Plan), the Option will immediately be forfeited and the Optionee will lose all rights to exercise the Option (whether or not vested) for Shares.

 

The Option is not assignable or transferable, other than as provided in the Plan. Until the effective date of the registration of the Shares pursuant to the Securities Exchange Act of 1934, the Optionee may exercise this Option by written notice to the Company, in substantially the form of Exhibit A attached hereto, and as provided in the Plan. Following such registration of the Shares pursuant to the Securities Exchange Act of 1934, the form of written notice for exercise of the Option shall be in a form to be approved by the Company’s board of directors. No partial exercise of the Option may be for less than 100 full shares. In no event shall the Company be required to issue fractional shares.

 

The Optionee acknowledges that any income taxes or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Optionee’s responsibility.

 

No Shares will be issued pursuant to the exercise of this Option unless and until the Optionee pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of such exercise of this Option. The Company may withhold from the Optionee’s remuneration, if any, any withholding taxes attributable to such amount that is considered compensation includable in such person’s gross income. At the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Optionee on exercise of the Option. The Optionee further agrees that, if the Company does not withhold an amount from the Optionee’s remuneration

 

Confidential

 

 

sufficient to satisfy the Company’s income tax withholding obligation, the Optionee will reimburse the Company on demand, in cash, for the amount under-withheld prior to the issuance of the Shares upon such exercise.

 

The Shares acquired by the Optionee pursuant to the exercise of the Option granted hereby shall not be transferred by the Optionee except as permitted herein. The provisions of this paragraph shall terminate upon the effective date of the registration of the Shares pursuant to the Securities Exchange Act of 1934.

 

In the event of the Optionee’s termination of service for “cause” as defined in Article 11 of the Plan, or in the event the Administrator determines, subsequent to the Optionee’s termination of service, that either prior or subsequent to Optionee’s termination the Optionee engaged in conduct which would constitute “cause,” then the Company shall have the option, but not the obligation, to repurchase all or any part of the Shares issued pursuant to this Certificate (including, without limitation,  Shares purchased after termination of employment, consultancy or directorship, Disability or death in accordance with the Plan). In the event the Company does not exercise its option pursuant to this paragraph, the restrictions set forth in the balance of this Certificate shall not thereby lapse, and the Optionee for himself or herself, his or her heirs, legatees, executors, administrators and other successors in interest, agrees that the Shares shall remain subject to such restrictions. The following provisions shall apply to a repurchase under this paragraph:

 

(a)                                 The per share repurchase price of the Shares to be sold to the Company upon exercise of its option under this paragraph shall be equal to the Fair Market Value of each such Share determined in accordance with the Plan as of the date of termination of service;

 

(b)                                 The Company’s option to repurchase the Optionee’s Shares in the event of termination of service shall be valid for a period of eighteen (18) months commencing with the date of such termination of service;

 

(c)                                  In the event the Company shall be entitled to and shall elect to exercise its option to repurchase the Optionee’s Shares under this paragraph, the Company shall notify the Optionee, or in case of death, his or her representative, in writing of its intent to repurchase the Shares. Such written notice may be mailed by the Company up to and including the last day of the time period provided for in subsection (b) of this paragraph for exercise of the Company’s option to repurchase;

 

(d)                                 The written notice to the Optionee shall specify the address at, and the time and date on, which payment of the repurchase price is to be made (the “Closing”). The date specified shall not be less than ten (10) days nor more than sixty (60) days from the date of the mailing of the notice, and the Optionee or his or her successor in interest with respect to the Shares shall have no further rights as the owner thereof from and after the date specified in the notice. At the Closing, the repurchase price shall be delivered to the Optionee or his or her successor in interest and the Shares being purchased, duly endorsed for transfer, shall, to the extent that they are not then in the possession of the Company, be delivered to the Company by the Optionee or his or her successor in interest; and

 

(e)                                  The provisions of this paragraph shall terminate upon the effective date of the registration of the Shares pursuant to the Securities Exchange Act of 1934.

 

It shall be a condition precedent to the validity of any sale or other transfer of any Shares by the Optionee that the following restrictions be complied with (except as hereinafter otherwise provided) (the following restrictions, the “ROFR Restrictions”):

 

(a)                                 No Shares owned by the Optionee may be sold, pledged or otherwise transferred (including by gift or devise) to any person or entity, voluntarily, or by operation of law, except in accordance with the terms and conditions hereinafter set forth;

 

(b)                                 Before selling or otherwise transferring all or part of the Shares, the Optionee shall give written notice of such intention to the Company, which notice shall include the name of the proposed transferee, the proposed purchase price per share, the terms of payment of such purchase price and all other matters relating to such sale or transfer, and shall be accompanied by a copy of the binding written agreement of the proposed transferee to purchase the Shares of the Optionee. Such notice shall constitute a binding offer by the Optionee to sell to the Company such number of the Shares then held by the Optionee as are proposed to be sold in the notice at the monetary price per share designated in such notice, payable on the terms offered to the Optionee by the proposed transferee (provided, however, that the Company shall not be required to meet any non-monetary terms of the proposed transfer, including, without limitation, delivery of other securities in exchange for the Shares proposed to be sold). The Company shall give written notice to the Optionee as to whether such offer has been

 

2

 

accepted in whole by the Company within sixty (60) days after its receipt of written notice from the Optionee. The Company may only accept such offer in whole and may not accept such offer in part. Such acceptance notice shall fix a time, location and date for the closing on such purchase (“Closing Date”) which shall not be less than ten (10) nor more than sixty (60) days after the giving of the acceptance notice. The place for such closing shall be at the Company’s principal office. At such closing, the Optionee shall accept payment as set forth herein and shall deliver to the Company in exchange therefor certificates for the number of Shares stated in the notice accompanied by duly executed instruments of transfer;

 

(c)                                  If the Company shall fail to accept any such offer, the Optionee shall be free to sell all, but not less than all, of the Shares set forth in his or her notice to the designated transferee at the price and terms designated in the Optionee’s notice, provided that (i) such sale is consummated within six (6) months after the giving of notice by the Optionee to the Company as aforesaid, and (ii) the transferee first agrees in writing to be bound by the provisions of these ROFR Restrictions so that such transferee (and all subsequent transferees) shall thereafter only be permitted to sell or transfer the Shares in accordance with the terms hereof. After the expiration of such six (6) months, the provisions of this paragraph shall again apply with respect to any proposed voluntary transfer of the Optionee’s Shares;

 

(d)                                 The restrictions on transfer contained in this paragraph shall not apply to (a) transfers by the Optionee to his or her spouse or children or to a trust for the benefit of his or her spouse or children, (b) transfers by the Optionee to his or her guardian or conservator, and (c) or transfers by the Optionee, in the event of his or her death, to his or her executor(s) or administrator(s) or to trustee(s) under his or her will (collectively, “Permitted Transferees”); provided however, that in any such event the Shares so transferred in the hands of each such Permitted Transferee shall remain subject to this Certificate, and each such Permitted Transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer;

 

(e)                                  The provisions of this paragraph may be waived by the Company. Any such waiver may be unconditional or based upon such conditions as the Company may impose; and

 

(f)                                   The provisions of this paragraph shall terminate upon the effective date of the registration of the Shares pursuant to the Securities Exchange Act of 1934.

 

In the event that the Optionee or his or her successor in interest fails to deliver the Shares to be repurchased by the Company under this Certificate, the Company may elect (a) to establish a segregated account in the amount of the repurchase price, such account to be turned over to the Optionee or his or her successor in interest upon delivery of such Shares, and (b) immediately to take such action as is appropriate to transfer record title of such Shares from the Optionee to the Company and to treat the Optionee and such Shares in all respects as if delivery of such Shares had been made as required by this Certificate. The Optionee hereby irrevocably grants the Company a power of attorney which shall be coupled with an interest for the purpose of effectuating the preceding sentence.

 

If the Company shall pay a stock dividend or declare a stock split on or with respect to any of its Common Stock, or otherwise distribute securities of the Company to the holders of its Common Stock, the number of shares of stock or other securities of Company issued to the Optionee with respect to the Shares then subject to the restrictions contained in this Certificate shall be added to the Shares subject to the Company’s rights to repurchase pursuant to this Certificate. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation, distributed to the Optionee with respect to the Shares then subject to the restrictions contained in this Certificate, shall be added to the Shares subject to the Company’s rights to repurchase pursuant to this Certificate.

 

If the outstanding shares of Common Stock of the Company shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the outstanding shares of Common Stock of the Company, or if the Company shall be a party to a merger, consolidation or capital reorganization, there shall be substituted for the Shares then subject to the restrictions contained in this Certificate such amount and kind of securities as are issued in such subdivision, combination, reclassification, merger, consolidation or capital reorganization in respect of the Shares subject immediately prior thereto to the Company’s rights to repurchase pursuant to this Certificate.

 

The Company shall not be required to transfer any Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Certificate, or to treat as owner of such Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Shares shall have been so sold, assigned or otherwise transferred, in violation of this Certificate.

 

3

 

The Optionee agrees, in connection with the initial underwritten public offering of the Company’s securities pursuant to a registration statement under the Securities Act of 1933, (a) not to sell, make short sale of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock of the Company held by the Optionee (other than those shares included in the offering) without the prior written consent of the Company or the underwriters managing such initial underwritten public offering of the Company’s securities for a period of 180 days from the effective date of such registration statement, and (b) to execute any agreement reflecting clause (a) above as may be requested by the Company or the managing underwriters at the time of such offering.

 

The Optionee acknowledges and agrees that neither the Company, its shareholders nor its directors and officers, has any duty or obligation to disclose to the Optionee any material information regarding the business of the Company or affecting the value of the Shares before, at the time of, or following a termination of the employment, consultancy or directorship of the Optionee by the Company, including, without limitation, any information  concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.

 

All certificates representing the Shares to be issued to the Optionee pursuant to this Certificate shall have endorsed thereon a legend substantially as follows: “The shares represented by this certificate are subject to transfer restrictions and a right of repurchase by the Company, each as set forth in an Incentive Stock Option Certificate with this Company, a copy of which Certificate is available for inspection at the offices of the Company or will be made available upon request.”

 

Any notices required or permitted by the terms of this Certificate or the Plan shall be given by recognized overnight courier service, facsimile, or registered or certified mail, return receipt requested, addressed to the Company at its principal place of business or to the Optionee at the address set forth above or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized overnight courier service or three business days following mailing by registered or certified mail.

 

This Certificate, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof, and no other statement, representation, warranty, covenant or agreement shall affect or be used to interpret, change or restrict, the express terms and provisions of this Stock Option Grant, provided, however, in any event, this Certificate shall be subject to and governed by the Plan.

 

IN WITNESS WHEREOF, the Company has caused this Certificate to be executed by its duly authorized officer, and the Optionee has hereunto set his or her hand, all as of the date first above written.

 

	
PTC THERAPEUTICS, INC.
    	
 
    	
OPTIONEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
Signature:
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    

 

4

 

Exhibit A

 

NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION

 

	
To:
    	
PTC Therapeutics, Inc.
    
	
 
    	
100 Corporate Court
    
	
 
    	
Middlesex Business Center
    
	
 
    	
South Plainfield, NJ 07080
    

 

Ladies and Gentlemen:

 

I hereby exercise my Incentive Stock Option to purchase                                       shares (the “Shares”) of the common stock, $.001 par value, of PTC Therapeutics, Inc. (the “Company”), at the exercise price of $             per share, pursuant to and subject to the terms of that certain Incentive Stock Option Certificate between the undersigned and the Company dated         , 20   .

 

I am aware that the issuance of the Shares has not been registered under the Securities Act of 1933, as amended (the “1933 Act”), or any state securities laws. I understand that the reliance by the Company on exemptions under the 1933 Act is predicated in part upon the truth and accuracy of the statements by me in this Notice of Exercise.

 

I hereby represent and warrant that (1) I have been furnished with all information which I deem necessary to evaluate the merits and risks of the purchase of the Shares; (2) I have had the opportunity to ask questions concerning the Shares and the Company and all questions posed have been answered to my satisfaction; (3) I have been given the opportunity to obtain any additional information I deem necessary to verify the accuracy of any information obtained concerning the Shares and the Company; and (4) I have such knowledge and experience in financial and business matters that I am able to evaluate the merits and risks of purchasing the Shares and to make an informed investment decision relating thereto.

 

I hereby represent and warrant that I am purchasing the Shares for my own personal account for investment and not with a view to the sale or distribution of all or any part of the Shares.

 

I understand that because the issuance of the Shares has not been registered under the 1933 Act, I must continue to bear the economic risk of the investment for an indefinite time and the Shares cannot be sold unless the Shares are subsequently registered under applicable federal and state securities laws or an exemption from such registration requirements is available.

 

In addition to any other restrictions that may apply, I agree that I will in no event sell or distribute or otherwise dispose of all or any part of the Shares unless (1) a registration statement covering the Shares under the Securities Exchange Act of 1934 has been effective for at least 90 days or (2) the Company receives an opinion of my legal counsel (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration.

 

I consent to the placing of a legend on my certificate for the Shares stating that the issuance of the Shares has not been registered and setting forth the restriction on transfer contemplated hereby and to the placing of a stop transfer order on the books of the Company and with any transfer agents against the Shares until the Shares may be legally resold or distributed without restriction.

 

I understand that at the present time Rule 144 of the Securities and Exchange Commission (the “SEC”) may not be relied on for the resale or distribution of the Shares by me. I understand that the Company has no obligation to me to register the sale of the Shares with the SEC and has not represented to me that it will register the sale of the Shares.

 

I understand the terms and restrictions on the right to dispose of the Shares set forth in the PTC Therapeutics, Inc. 1998 Employee, Director and Consultant Stock Option Plan, as it may be amended form time to time, and the Incentive Stock Option Certificate, both of which I have carefully reviewed. I consent to the placing of a legend on my

 

5

 

certificate for the Shares referring to such restriction and the placing of stop transfer orders until the Shares may be transferred in accordance with the terms of such restrictions.

 

I have considered the Federal, state and local income tax implications of the exercise of my Option and the purchase and subsequent sale of the Shares.

 

I am paying the option exercise price for the Shares as follows:

 

 

 

Please issue the stock certificate for the Shares (check one):

 

o to me; or

 

o to me and                                  , as joint tenants with right of survivorship and mail the certificate to me at the following address:

 

 

 

My mailing address for shareholder communications, if different from the address listed above is:

 

 

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Optionee (signature)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Print Name
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Social Security Number
    

 

6

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