Document:

Exhibit
10.40

 

Form of Stock Option
Agreement

 

IKARIA, INC.

 

Stock Option Agreement

Amended and Restated 2010 Long Term Incentive Plan

 

This
Stock Option Agreement (this “Agreement”) is made between Ikaria, Inc.
(the “Company”), a Delaware corporation, and the Participant.

 

NOTICE OF GRANT

 

I.                                        Participant
Information

 

	
  Participant:

  	
   

  
	
  Participant
  Address:

  	
   

  

 

II.                                   Grant
Information

 

	
  Grant
  Date:

  	
   

  
	
  Number
  of Shares:

  	
   

  
	
  Exercise
  Price Per Share:

  	
   

  
	
  Vesting
  Commencement Date:

  	
   

  
	
  Type
  of Option:

  	
  Incentive
  Stock Option/ Nonqualified Stock Option

  

 

III.                              Vesting
Table

 

	
  Vesting Date

  	
   

  	
   

  	
  Shares that Vest

  
	
  First
  anniversary of the Vesting Commencement Date

  	
   

  	
   

  	
  [1/4]

  
	
  Second
  anniversary of the Vesting Commencement Date

  	
   

  	
   

  	
  [1/4]

  
	
  Third
  anniversary of the Vesting Commencement Date

  	
   

  	
   

  	
  [1/4]

  
	
  Fourth
  anniversary of the Vesting Commencement Date

  	
   

  	
   

  	
  [1/4]

  

 

IV.                               Expiration
Date

 

	
  5:00
  pm Eastern time on Date:

  	
   

  

 

This
Agreement includes this Notice of Grant and the following Exhibits, which are
expressly incorporated by reference in their entirety herein:

 

Exhibit A
— General Terms and Conditions

Exhibit B
— Notice of Exercise and Restricted Stock Agreement

Exhibit C
— Common Stockholders Agreement

Exhibit D
— Confidentiality and Noncompetition Agreement

Exhibit E
— Amended and Restated 2010 Long Term Incentive Plan

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

	
  IKARIA, INC.

  	
   

  	
  PARTICIPANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
   

  

 

1 of 24 

 

Form of Stock Option
Agreement

 

Stock Option Agreement

Amended and Restated 2010 Long Term Incentive Plan

 

EXHIBIT A

 

GENERAL TERMS AND CONDITIONS

 

For valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:

 

1.                                      Grant of Option.  This Agreement evidences the grant by the
Company, on the grant date (the “Grant Date”) set forth in the Notice of
Grant that forms part of this Agreement (the “Notice of Grant”), to the
Participant, an employee, advisor, consultant or director of the Company, of an
option to purchase, in whole or in part, on the terms provided herein and in
the Company’s Amended and Restated 2010 Long Term Incentive Plan (the “Plan”),
the number of shares set forth in the Notice of Grant (the “Shares”) of
non-voting common stock, $0.01 par value per share, of the Company (“Common
Stock”) at the exercise price per Share set forth in the Notice of Grant
(the “Exercise Price”).  Unless
earlier terminated, this option shall expire at the time set forth in the
Notice of Grant  (the “Final Exercise Date”).  Effective upon the consummation of an Initial
Public Offering (as defined in the Plan) or any other conversion of all of the
outstanding shares of the Company’s non-voting common stock into voting common
stock, the option shall automatically convert and represent the right to
purchase Company voting common stock without any further action on the part of
the Company or the Participant (with the terms “Shares”, “Common Stock” and the
like as used herein referring to such Company voting common stock after the date
of any such Initial Public Offering or other conversion).

 

It
is intended that the option evidenced by this Agreement shall be an incentive
stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the “Code”)
solely to the extent set forth in the Notice of Grant.  To the extent not designated as an incentive
stock option, or to the extent that the option does not qualify as an incentive
stock option, the option shall be a nonstatutory stock option.  Except as otherwise indicated by the context,
the term “Participant”, as used in this option, shall be deemed to include any
person who acquires the right to exercise this option validly under its terms.

 

2.                                      Vesting
Schedule.

 

This
option will become exercisable (“vest”) in accordance with the Vesting
Table set forth in the Notice of Grant.

 

The
right of exercise shall be cumulative so that to the extent the option is not
exercised in any period to the maximum extent permissible it shall continue to
be exercisable, in whole or in part, with respect to all Shares for which it is
vested until the earlier of the Final Exercise Date or the termination of this
option under Section 3 hereof or the Plan.

 

2

 

3.                                      Exercise of
Option.

 

(a)                                 Form of
Exercise.  Each
election to exercise this option (i) shall be accompanied by the Notice of
Exercise and Restricted Stock Agreement in the form attached as Exhibit B,
signed by the Participant, and received by the Company at its principal office,
accompanied by this Agreement, and payment in full in the manner provided in
the Plan and (ii) shall be accompanied by an executed counterpart
signature page to the Company’s Common Stockholders Agreement, as it may
be amended from time to time, a copy of the current version of which is
attached as Exhibit C.  The
Participant may purchase less than the number of shares covered hereby,
provided that no partial exercise of this option may be for any fractional
share.

 

(b)                                 Continuous
Relationship with the Company Required.  Except as otherwise provided in this
Section 3, this option may not be exercised unless the Participant, at the
time he or she exercises this option, is, and has been at all times since the
Grant Date, an employee or officer of, or consultant or advisor to, the Company
or any Parent or Subsidiary, each as defined in the Plan (an “Eligible
Participant”).

 

(c)                                  Termination of
Relationship with the Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d), (e) and
(f) below or expressly set forth in another agreement between the
Participant and the Company, the right to exercise this option shall terminate  ninety (90) days after such cessation (but in no event
after the Final Exercise Date), provided  that this option shall
be exercisable only to the extent that the Participant was entitled to exercise
this option on the date of such cessation. 
Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition or confidentiality provisions of
any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, including the provisions of Exhibit D
attached hereto, the right to exercise this option shall terminate immediately
upon such violation.

 

(d)                                 Exercise Period
Upon Disability.  If the
Participant ceases to be an Eligible Participant by reason of becoming disabled
(within the meaning of Section 22(e)(3) of the Code) prior to the
Final Exercise Date and the Company has not terminated such relationship for “cause”
as defined in paragraph (f) below, then, except as expressly set forth in
another agreement between the Participant and the Company, this option shall be
exercisable, within the period of six months following such cessation (but in
no event after the Final Exercise Date), by the Participant, provided  that
this option shall be exercisable only to the extent that this option was exercisable
by the Participant on the date of such cessation.

 

(e)                                  Exercise Period
Upon Death.  If the
Participant ceases to be an Eligible Participant by reason of his or her death
prior to the Final Exercise Date and the Company has not terminated such relationship
for “cause”, or the Participant dies within the ninety (90)-day period
following cessation of service with the Company other than for “cause”, then,
except as expressly set forth in another agreement between the Participant and
the Company, this option shall be exercisable, within the period of six months
following the date of death of the Participant (but in no event after the Final
Exercise Date), by the Participant’s authorized transferee, provided  that
this option shall be exercisable only to the extent that this option was
exercisable by the Participant on the date of his or her death.

 

3

 

(f)                                   Termination for
Cause.  If, prior to the Final
Exercise Date, the Participant’s employment is terminated by the Company for
Cause (as defined below), then, except as expressly set forth in another
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon the effective date of such termination
of employment.  If the Participant is
party to an employment or severance agreement with the Company that contains a
definition of “cause” for termination of employment, “Cause” shall have the
meaning ascribed to such term in such agreement.  Otherwise, “Cause” shall mean (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 (including, without limitation, breach by the Participant of
any provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Participant and the
Company, including the provisions of Exhibit D attached hereto), as
determined by the Company, which determination shall be conclusive.  The Participant’s employment shall be
considered to have been terminated for Cause if the Company determines, within
30 days after the Participant’s resignation, that termination for Cause was warranted.

 

4.                                      Tax Matters.

 

(a)                                 Withholding.  No Shares will be issued pursuant to the
exercise of this option unless and until the Participant 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
this option.

 

(b)                                 Disqualifying
Disposition.  If this
option satisfies the requirements to be treated as an incentive stock option
under the Code and the Participant disposes of Shares acquired upon exercise of
this option within two years from the Grant Date or one year after such Shares
were acquired pursuant to exercise of this option, the Participant shall notify
the Company in writing of such disposition.

 

5.                                      Transfer
Restrictions.

 

(a)                                 This option may
not be sold, assigned, transferred, pledged or otherwise encumbered by the
Participant, either voluntarily or by operation of law, except by will or the
laws of descent and distribution, and, during the lifetime of the Participant,
this option shall be exercisable only by the Participant.  The terms of this Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Participant.

 

(b)                                 The Shares
issued upon exercise of this option are subject to the restrictions on
transfers set forth in the Notice of Exercise and Restricted Stock Agreement
attached hereto as Exhibit B and the Common Stockholders Agreement
attached hereto as Exhibit C.

 

4

 

6.                                      Confidential
Information; Noncompetition; Work Product.  By accepting this option, Participant is
hereby acknowledging and agreeing to the provisions set forth in the
Confidentiality and Noncompetition Agreement attached hereto as Exhibit D
related to confidential information, noncompetition and work product.  Without limitation to any other remedies
available under law or those set forth in Exhibit D, the
Participant agrees that if Participant breaches any of the provisions of Exhibit D,
then (a) the Participant’s right to exercise this option shall terminate
immediately, (b) any Shares acquired by the Participant upon exercise of
this option that continue to be held by the Participant shall be subject to
repurchase by the Company, in its sole discretion, at a price equal to the
Exercise Price set forth in the Notice of Grant and (c) if the Participant
acquired any Shares upon the exercise of this option and the Participant has
sold, transferred or otherwise disposed of such Shares, then the Participant
shall be required to pay to the Company, in cash, within 30 days of a written
request by the Company for such payment, the difference between the Exercise
Price set forth in the Notice of Grant and the price at which the Participant
sold the Shares.

 

7.                                      Miscellaneous.

 

(a)                                 No Rights to
Employment.  The
Participant acknowledges and agrees that the grant of the this option and its
vesting pursuant to Section 2 do not constitute an express or implied
promise of continued employment for the vesting period of the option, or for
any period.

 

(b)                                 Section 409A.  This Agreement is intended to comply with or
be exempt from the requirements of Section 409A and shall be construed
consistently therewith.  In any event,
the Company makes no representations or warranties and will have no liability
to the Participant or to any other person, if any of the provisions of or
payments under this Agreement are determined to constitute nonqualified
deferred compensation subject to Section 409A but that do not satisfy the
requirements of that Section.

 

(c)                                  Entire
Agreement.  This
Agreement and the Plan constitute the entire agreement between the parties, and
supersede all prior agreements and understandings, relating to the subject
matter of this Agreement; provided that any separate employment or severance
agreement between the Company and the Participant that includes terms relating
to the acceleration of vesting of equity awards shall not be superseded by this
Agreement.  In the event of a conflict
between the terms and provisions of the Plan and the terms and provisions of
this Agreement, the Plan terms and provisions shall prevail.

 

(d)                                 Governing Law.  This Agreement shall be construed,
interpreted and enforced in accordance with the internal laws of the State of
Delaware, without regard to any applicable conflict of law principles.

 

(e)                                  Interpretation.  The interpretation and construction of any
terms or conditions of the Plan or this Agreement by the Compensation Committee
shall be final and conclusive.

 

5

 

EXHIBIT B

 

NOTICE OF EXERCISE AND RESTRICTED
STOCK AGREEMENT

 

	
   

  	
  Date:
                          (1)

  

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

Attention:  Treasurer

 

Dear
Sir or Madam:

 

I
am the holder of
                  (2) Stock
Option granted to me under the Ikaria, Inc. (the “Company”) Amended
and Restated 2010 Long Term Incentive Plan on
                    (3) for
the purchase of
                    (4) shares
of Common Stock of the Company (the “Shares”) at a purchase price of
$                    (5) per
share.

 

I
hereby exercise my option to purchase
                  (6) shares
of Common Stock (the “Shares”), for which I have enclosed
                    (7) in
the amount of
                (8),
plus any applicable withholding tax.  
Enclosed herewith is a counterpart signature page indicating my
agreement to be bound as a “Stockholder” by the Company’s Common Stockholders
Agreement, as may be amended from time to time (the “Common Stockholders
Agreement”).

 

Please
register my stock certificate as follows:

 

	
  Name(s):

  	
   

  	
  (9)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  

 

(1)                                 Enter the date
of exercise.

(2)                                 Enter either
“an Incentive” or “a Nonstatutory” or both.

(3)                                 Enter the date
of grant.

(4)                                 Enter the total
number of shares of Common Stock for which the option was granted.

(5)                                 Enter the option
exercise price per share of Common Stock.

(6)                                 Enter the
number of shares of Common Stock to be purchased upon exercise of all or part
of the option.

(7)                                 Enter “cash”,
“personal check” or if permitted by the option or Plan, “stock certificates
No. XXXX and XXXX”.

(8)                                 Enter the
dollar amount (price per share of Common Stock times the number of shares of
Common Stock to be purchased), or the number of shares tendered.  Fair market value of shares tendered,
together with cash or check, must cover the purchase price of the shares issued
upon exercise.

(9)                                 Enter name(s) to
appear on stock certificate: (a) Your name only; (b) Your name and
other name (i.e., John Doe and Jane Doe, Joint Tenants With Right of
Survivorship); or (c) In the case of a Nonstatutory option only, a Child’s
name, with you as custodian (i.e., Jane Doe, Custodian for Tommy Doe).  Note: 
There may be income and/or gift tax consequences of registering shares
in a Child’s name.

 

6

 

	
  Tax
  I.D. #:

  	
   

  	
  (10)

  
	
   

  	
   

  	
   

  
	
  (11)

  	
   

  	
   

  

 

I
represent, warrant and covenant as follows:

 

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

 

2.              I am purchasing the Shares
for my own account for investment only, and not with a view to, or for sale in
connection with, any distribution of the Shares in violation of the Securities
Act of 1933 (the “Securities Act”), or any rule or regulation under the
Securities Act.

 

3.              I have had such opportunity
as I have deemed adequate to obtain from representatives of the Company such
information as is necessary to permit me to evaluate the merits and risks of my
investment in the Company.

 

4.              I have sufficient experience
in business, financial and investment matters to be able to evaluate the risks
involved in the purchase of the Shares and to make an informed investment
decision with respect to such purchase.

 

5.              I can afford a complete loss
of the value of the Shares and am able to bear the economic risk of holding
such Shares for an indefinite period.

 

6.              I understand that (i) the
Shares have not been registered under the Securities Act and are “restricted
securities” within the meaning of Rule 144 under the Securities Act, (ii) the
Shares cannot be sold, transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an exemption from
registration is then available; (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least one year
and even then will not be available unless a public market then exists for the
Common Stock, adequate information concerning the Company is then available to
the public, and other terms and conditions of Rule 144 are complied with;
and (iv) there is now no registration statement on file with the
Securities and Exchange Commission with respect to any stock of the Company and
the Company has no obligation or current intention to register the Shares under
the Securities Act.

 

7.              I understand that the
certificate or certificates representing the Shares shall bear the following
legends (as well as any other legends required by applicable state and federal
corporate and securities laws):

 

(10)                          Social Security
Number of Holder(s).

(11)                          The investment
representation is not necessary if the issuance of the shares is covered by an
effective registration statement on Form S-8.

 

7

 

(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.

 

8.              I agree and
acknowledge 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.

 

9.              I understand
and acknowledge that 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 have been so transferred.

 

	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  

 

8

 

NOTE:  THE FOLLOWING SHEET IS A COUNTERPART SIGNATURE
PAGE TO THE COMPANY’S COMMON STOCKHOLDERS AGREEMENT, WHICH MUST ALSO BE SIGNED
AND RETURNED TO THE COMPANY IN ORDER TO EXERCISE YOUR STOCK OPTION PURSUANT TO SECTION 3
OF THE OPTION AGREEMENT.

 

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

 

9

 

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, INC. COMMON
STOCKHOLDERS AGREEMENT]

 

10

 

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, INC. COMMON STOCKHOLDERS AGREEMENT]

 

11

 

EXHIBIT C

 

IKARIA, INC.

COMMON STOCKHOLDERS AGREEMENT

 

See
Common Stockholders Agreement among Ikaria, Inc. and the stockholders
listed on the signature pages thereto, dated as of February 22, 2007,
filed as exhibit 4.2 to Ikaria Inc.’s Registration Statement on Form S-1
filed on May 13, 2010.

 

12

 

EXHIBIT D

 

CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

 

I.                                         The Participant
acknowledges that the Participant’s employment by or other service to the
Company will, throughout such employment or service period, bring the
Participant into close contact with the confidential affairs of the Company and
its subsidiaries, including access to information about their client and
customer lists and information concerning proprietary manufacturing
formulations and processes, costs, profits, real estate, markets, sales,
products, key personnel, pricing policies, operational methods, patents,
research and development, technical processes, and other business affairs and
methods, plans for future product development and other information not readily
available to the public.  The Participant
further acknowledges that the services to be performed by the Participant are
of a special, unique, unusual, extraordinary and intellectual character.  The Participant further acknowledges that the
business of the Company and its subsidiaries is international in scope, that
their products are marketed throughout the world, that the Company and its
subsidiaries competes in nearly all of their business activities with other
entities that are or could be located in nearly any part of the world and that
the nature of the Participant’s services, position and expertise are such that
the Participant is capable of competing with the Company and its subsidiaries
from nearly any location in the world. 
In recognition of the foregoing, the Participant covenants and agrees:

 

1.  For Participants Resident in States Other
Than California, Wisconsin, Texas, and Louisiana:

 

(a)                                  The
Participant, at all times while the Participant is an employee of or service
provider to the Company and thereafter, shall hold in a fiduciary capacity for
the benefit of the Company all secret, trade, proprietary or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies and shareholders, and their respective businesses, that the Participant
obtains during the Participant’s employment by the Company or any of its
affiliated companies and that is not public knowledge (other than as a result
of the Participant’s violation of this Section (a)) (“Confidential
Information”).  The Participant shall
not communicate, divulge or disseminate Confidential Information at any time
during or after the Participant’s employment with or service to the Company,
except with the prior written consent of the Company or as otherwise required
by law or legal process.  Nothing in this
paragraph diminishes or limits any protection granted by law to trade secrets
or relieves Employee of any duty not to disclose, use, or misappropriate any
information that is a trade secret, for as long as such information remains a
trade secret.

 

(b)                                 During the “Noncompetition
Period,” the Participant shall not, without the prior written consent of the
Board, engage in or become associated with a “Competitive Activity.”  For purposes of these provisions:  (i) the
“Noncompetition Period” means the period commencing on the Grant Date
(set forth in the Notice of Grant) and ending on the twelve-month anniversary
of the date upon which Participant’s employment with or service to the Company
is terminated for any reason (the “Date of Termination”); (ii) a “Competitive
Activity” means any business or other endeavor that engages in clinical or
pre- clinical research or development, manufacturing, marketing, sales, or
commercialization of products or services that directly or indirectly compete
with, or are a therapeutic alternative to, either (x) the products of, or
services 

 

13

 

engaged
in by, the Company or any of its subsidiaries at the Date of Termination in any
geographic location in the United States or, if different, the country in which
the Participant primarily performs services for the Company or (y) the
products proposed to be developed or commercialized, or services proposed to be
engaged in, by the Company or any of its subsidiaries at the Date of
Termination in any geographic location in the United States or, if different,
the country in which the Participant primarily performs services for the
Company (provided that clause (y) shall apply only to any proposed
business activity as to which the Company or any of its subsidiaries has
devoted significant and documented efforts at the Date of Termination, whether
internally or through acquisition, licensing or other business development
activities); provided, however, that the Participant shall not be engaged in a
Competitive Activity if the Participant is providing services to a division or
subsidiary of a multi-division entity or holding company, so long as no
division or subsidiary to which the Participant provides services is in
competition with the Company or its subsidiaries, and the Participant does not
otherwise engage in a Competitive Activity on behalf of the multi-division
entity or any competing division or subsidiary; and (iii) the Participant
shall be considered to have become “associated with a Competitive
Activity” if the Participant becomes directly or indirectly involved as an
owner, investor (other than a passive stockholder of less than five percent
(5%) of a corporation the securities of which are traded on a national
securities exchange), employee, officer, director, consultant, independent
contractor, agent, partner, advisor, or in any other capacity in a role where
Participant may draw upon the goodwill of the Company or where Participant’s
knowledge of the Confidential Information of the Company is likely to affect
Participant’s decisions or actions with regard to the Competitive Activity, to
the detriment of Company.

 

(c)                                  During the
Noncompetition Period, the Participant shall not, on the Participant’s own behalf
or on behalf of any other person, firm or entity (x) directly or
indirectly hire, solicit, induce or attempt to solicit or induce any employee
of the Company or any of its subsidiaries to terminate his employment with the
Company or any of its subsidiaries, or to provide any assistance whatsoever to
any person, firm or entity engaged in a Competitive Activity, or (y) directly
or indirectly induce any business, entity or person with which the Company or
any of their subsidiaries has a business relationship to terminate or alter
such business relationship.

 

(d)                                 In addition to
such other rights and remedies as the Company may have at equity or in law with
respect to any breach of these provisions, if the Participant commits a
material breach of any of these provisions, the Company shall have the right to
seek to have such provisions specifically enforced by any court having equity
jurisdiction (without any obligation to post a bond or other security); it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages alone will not
provide an adequate remedy to the Company.

 

(e)                                  The Participant
acknowledges that while the Participant is an employee of or service provider
to the Company, the Participant may conceive of, discover, invent or create
inventions, improvements, new contributions, literary property, computer
programs and software material, ideas and discoveries, whether patentable or
copyrightable or not (all of the foregoing being collectively referred to
herein as “Work Product”), and that various business opportunities shall
be presented to the Participant by reason of the Participant’s employment by
the Company.  The Participant
acknowledges that all of the foregoing shall be owned by and belong exclusively

 

14

 

to
the Company and that the Participant shall have no personal interest therein
and the Participant does hereby assign all rights, title and interest therein
to the Company; provided that they are either related in any manner to
the business (commercial or experimental) of the Company or any of its
subsidiaries, or are, in the case of Work Product, conceived or made on the
Company’s time or with the use of the Company’s facilities or materials, or, in
the case of business opportunities, are presented to the Participant for the
possible interest or participation of the Company or any of its
subsidiaries.  The Participant agrees that
the Participant will not assert any rights to any Work Product or business
opportunity as having been made or acquired by the Participant prior to the
date hereof.

 

(f)                                    The Participant
acknowledges and agrees that these provisions are necessary to protect the
business operations and affairs of the Company and its subsidiaries.  The Participant understands that the
restrictions set forth in these provisions may limit the Participant’s ability
to earn a livelihood in a business similar that of the Company, but the
Participant nevertheless believes that the Participant has received and will
receive sufficient consideration and other benefits as an employee of or
service provider to the Company, including without limitation, the option
granted by the Company and memorialized in the Agreement to which these
provisions are attached, to justify clearly such restrictions which, in any
event (given the Participant’s education, skills and ability), the Participant
does not believe would prevent the Participant from earning a livelihood.

 

2.  For Participants Resident in California:

 

(a)                              The
Participant, at all times while the Participant is an employee of or service
provider to the Company and thereafter, shall hold in a fiduciary capacity for
the benefit of the Company all secret, trade, proprietary or confidential
information, knowledge or data relating to the Company or any of its
subsidiaries companies and shareholders, and their respective businesses, that
the Participant obtains during the Participant’s employment by the Company or
any of its subsidiaries and that is not public knowledge (other than as a
result of the Participant’s violation of this Section (a)) (“Confidential
Information”).  The Participant shall
not communicate, divulge or disseminate Confidential Information at any time
during or after the Participant’s employment with or service to the Company,
except with the prior written consent of the Company or as otherwise required
by law or legal process.

 

(b)                                 During the “Noncompetition
Period,” the Participant shall not, without the prior written consent of the
Board, engage in or become associated with a “Competitive Activity.”  For purposes of these provisions:  (i) the
“Noncompetition Period” means the period commencing on the Grant Date
(set forth in the Notice of Grant) and ending on the date upon which
Participant’s employment with or service to the Company is terminated for any
reason (the “Date of Termination”); (ii) a “Competitive Activity”
means any business or other endeavor that engages in clinical or pre- clinical
research or development, manufacturing, marketing, sales, or commercialization
of products or services that directly or indirectly compete with, or are a
therapeutic alternative to, either (x) the products of, or services
engaged in by, the Company or any of its subsidiaries during the Noncompetition
Period in any geographic location in the United States or, if different, the
country in which the Participant primarily performs services for the Company or
(y) the products proposed to be developed or commercialized, or services
proposed to be engaged in, by the Company or any of its subsidiaries during the
Noncompetition Period in

 

15

 

any
geographic location in the United States or, if different, the country in which
the Participant primarily performs services for the Company (provided that
clause (y) shall apply only to any proposed business activity as to which
the Company or any of its subsidiaries has devoted significant and documented
efforts during the Noncompetition Period, whether internally or through
acquisition, licensing or other business development activities); provided,
however, that the Participant shall not be engaged in a Competitive Activity if
the Participant is providing services to a division or subsidiary of a
multi-division entity or holding company, so long as no division or subsidiary
to which the Participant provides services is in competition with the Company
or its subsidiaries, and the Participant does not otherwise engage in a
Competitive Activity on behalf of the multi-division entity or any competing
division or subsidiary; and (iii) the Participant shall be considered to
have become “associated with a Competitive Activity” if the Participant becomes
directly or indirectly involved as an owner, investor (other than a passive
stockholder of less than five percent (5%) of a corporation the securities of
which are traded on a national securities exchange), employee, officer,
director, consultant, independent contractor, agent, partner, advisor, or in any
other capacity calling for the rendition of the Participant’s personal
services, with any individual, partnership, corporation or other organization
that is engaged directly or indirectly in a Competitive Activity.

 

(c)                                  During both the
Noncompetition Period and the twelve-month period following the Date of
Termination, the Participant shall not, on the Participant’s own behalf or on
behalf of any other person, firm or entity, directly or indirectly, solicit,
induce or attempt to solicit or induce any employee of the Company or any of
its subsidiaries to terminate his employment with the Company or any of its
subsidiaries, or to provide any assistance whatsoever to any person, firm or
entity engaged in a Competitive Activity. 
During the Noncompetition Period, the Participant shall not directly or
indirectly induce any business, entity or person with which the Company or any
of its subsidiaries has a business relationship to terminate or alter such
business relationship.

 

(d)                                 In addition to
such other rights and remedies as the Company may have at equity or in law with
respect to any breach of these provisions, if the Participant commits a
material breach of any of these provisions, the Company shall have the right to
seek to have such provisions specifically enforced by any court having equity
jurisdiction (without any obligation to post a bond or other security); it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages alone will not
provide an adequate remedy to the Company.

 

(e)                                  The Participant
Employee agrees to assign and does hereby assign to the Company (or any person
or entity designated by the Company) all his/her right, title and interest in
and to all inventions, improvements, new contributions, literary property,
computer programs and software material, ideas and discoveries, whether
patentable or copyrightable or not (all of the foregoing being collectively
referred to herein as “Work Product”) and all related patents, patent
applications, copyrights and copyright applications to the maximum extent
permitted by Section 2870 of the California Labor Code or any like statute
of any other state.  The Participant hereby also waives all claims to
moral rights in any Work Product.  The Participant understands that the
provisions of this Agreement requiring assignment of Work Product to the
Company do not apply to any invention which qualifies fully under the
provisions of California Labor Code Section 2870 (attached hereto as Appendix
A).  The Participant agrees to advise the Company 

 

16

 

promptly
in writing of any invention that he/she believes meets the criteria in Section 2870
and is not otherwise disclosed on Appendix B.

 

(f)                                    The Participant
acknowledges and agrees that these provisions are necessary to protect the
business operations and affairs of the Company and its subsidiaries.  The Participant understands that the
restrictions set forth in these provisions may limit the Participant’s ability
to earn a livelihood in a business similar that of the Company, but the
Participant nevertheless believes that the Participant has received and will
receive sufficient consideration and other benefits as an employee of or
service provider to the Company, including without limitation, the option
granted by the Company and memorialized in the Agreement to which these
provisions are attached, to justify clearly such restrictions which, in any
event (given the Participant’s education, skills and ability), the Participant
does not believe would prevent the Participant from earning a livelihood.

 

3.                                       For
Participants Resident in Wisconsin and Texas

 

(a)                                  Company will
provide Participant with access to secret, trade, proprietary or confidential
information relating to Company and its subsidiaries and shareholders that is
not readily available outside Company or its subsidiaries and that Company and
its subsidiaries take steps to protect (“Confidential Information”).  (“Confidential Information” shall not include
information that Participant can prove (i) was in the public domain, being
publicly and openly known through lawful and proper means, (ii) was
independently developed or acquired by Participant without reliance in any way
on other Confidential Information of Company or any subsidiary or (iii) was
approved by Company for use and disclosure by Participant without
restriction.)  The Participant shall not
communicate, divulge, or disseminate Confidential Information where such
disclosure would be detrimental to the interests of Company (except as required
by law), but only for so long as such Confidential Information continues to be
not generally known to, and not readily ascertainable through proper means by,
Company’s competitors.  The promises
contained in this paragraph are not intended to preclude Participant from being
gainfully employed by another or on his or her own, but are intended to
prohibit him or her from using the confidential or proprietary information
described herein in a manner that is not for the financial benefit of
Company.  Nothing in this paragraph
diminishes or limits any protection granted by law to trade secrets or relieves
Employee of any duty not to disclose, use, or misappropriate any information
that is a trade secret, for as long as such information remains a trade secret.

 

(b)                                 Independent of
any other restriction, the Participant during the “Noncompetition Period” shall
not, for him(her)self, or on behalf of any other person or entity, directly or
indirectly provide services to a “Direct Competitor” in a role where
Participant will be expected to draw upon the customer goodwill he gained while
with Company or where Participant’s knowledge of “Confidential Information” is
likely to affect Participant’s decisions or actions for the Direct Competitor
to the detriment of Company.  For
purposes of this provision:  (i) the “Noncompetition
Period” means the period commencing on the Grant Date (set forth in the
Notice of Grant) and ending on the twelve-month anniversary of the date upon
which Participant’s employment with or service to the Company is terminated for
any reason (the “Date of Termination”); (ii) a “Direct
Competitor” means any business or other endeavor that engages in clinical
or pre- clinical research or development, manufacturing, marketing, sales, 

 

17

 

or
commercialization of “Competitive Products or Services” in any geographic
location in the United States (except that “Direct Competitor” does not include any business which the parties have agreed in
writing to exclude from the definition, and Company will not unreasonably or
arbitrarily withhold such agreement); and (iii) “Competitive Products
or Services” means products or services that serve the same function as or
are a therapeutic alternative to products or services that Company or its
subsidiaries offered at the Date of Termination, or to products or services
under development or commercialization by Company or its subsidiaries at the
Date of Termination (with development or commercialization demonstrated by
significant and documented efforts, whether internally or through acquisition,
licensing or other business development activities).

 

(c)                                  Independent of
any other restriction, for a period of one year after Participant’s employment
with or service to the Company is terminated for any reason, the Participant
shall not, on the Participant’s own behalf or on behalf of any other person,
firm or entity, directly or indirectly induce any business, entity or person
with which the Company or its subsidiaries has a business relationship
(collectively, “Business Associates”) to terminate or alter such
business relationship (provided that clause (y) shall apply only to those
Business Associates who did business with the Company within the last six
months of Participant’s employment or service and (1) about whom
Participant, as a result of his or her employment or service, had access to
confidential information or goodwill that would assist in solicitation of such
Person, or (2) with whom Participant personally dealt on behalf of Company
in the 12 months immediately preceding the last day of Participant’s employment
or service and that Participant was introduced to or otherwise had business
contact with such Business Associate as a result of his or her employment or
service with the Company).

 

(d)                                 Independent of
any other restriction, Participant shall not, either personally or in
conjunction with others, either (a) solicit, interfere with, or endeavor
to cause any employee of Company or its subsidiaries to leave such employment
or (b) otherwise induce or attempt to induce any such employee to
terminate employment with Company or its subsidiaries.  Nothing in this paragraph is meant to
prohibit an employee of Company or its subsidiaries who is not a party to this
Agreement from becoming employed by another organization or person.

 

(e)                                  In addition to
such other rights and remedies as the Company may have at equity or in law with
respect to any breach of these provisions, if the Participant commits a
material breach of any of these provisions, the Company shall have the right to
seek to have such provisions specifically enforced by any court having equity
jurisdiction (without any obligation to post a bond or other security); it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages alone will not
provide an adequate remedy to the Company.

 

(f)                                    The Participant
acknowledges that while the Participant is an employee of or service provider
to the Company, the Participant may conceive of, discover, invent or create
inventions, improvements, new contributions, literary property, computer
programs and software material, ideas and discoveries, whether patentable or
copyrightable or not (all of the foregoing being collectively referred to
herein as “Work Product”), and that various business opportunities shall
be presented to the Participant by reason of the Participant’s employment by
the Company.  

 

18

 

The
Participant acknowledges that all of the foregoing shall be owned by and belong
exclusively to the Company and that the Participant shall have no personal
interest therein and the Participant does hereby assign all rights, title and
interest therein to the Company; provided that they are either related
in any manner to the business (commercial or experimental) of the Company or
any of its subsidiaries, or are, in the case of Work Product, conceived or made
on the Company’s time or with the use of the Company’s facilities or materials,
or, in the case of business opportunities, are presented to the Participant for
the possible interest or participation of the Company or any of its
subsidiaries.  The Participant agrees
that the Participant will not assert any rights to any Work Product or business
opportunity as having been made or acquired by the Participant prior to the
date hereof.

 

(g)                                 The Participant
acknowledges and agrees that these provisions are necessary to protect the
business operations and affairs of the Company and its subsidiaries.  The Participant understands that the
restrictions set forth in these provisions may limit the Participant’s ability
to earn a livelihood in a business similar that of the Company, but the
Participant nevertheless believes that the Participant has received and will
receive sufficient consideration and other benefits as an employee of or
service provider to the Company, including without limitation, the option granted
by the Company and memorialized in the Agreement to which these provisions are
attached, to justify clearly such restrictions which, in any event (given the
Participant’s education, skills and ability), the Participant does not believe
would prevent the Participant from earning a livelihood.

 

4.                                       For
Participants Resident in Louisiana

 

(a)                                  Company will
provide Participant with access to secret, trade, proprietary or confidential
information relating to Company and its subsidiaries and shareholders that is
not readily available outside Company or its subsidiaries and that Company and
its subsidiaries take steps to protect (“Confidential Information”).  (“Confidential Information” shall not include
information that Participant can prove (i) was in the public domain, being
publicly and openly known through lawful and proper means, (ii) was
independently developed or acquired by Participant without reliance in any way
on other Confidential Information of Company or any subsidiary or (iii) was
approved by Company for use and disclosure by Participant without
restriction.)  The Participant shall not
communicate, divulge or disseminate Confidential Information at any time during
or after the Participant’s employment with or service to the Company, except
with the prior written consent of the Company or as otherwise required by law
or legal process.  Nothing in this
paragraph diminishes or limits any protection granted by law to trade secrets
or relieves Employee of any duty not to disclose, use, or misappropriate any
information that is a trade secret, for as long as such information remains a
trade secret.

 

(b)                                 During the “Noncompetition
Period,” the Participant shall not, without the prior written consent of the
Board, engage in or become associated with a “Competitive Activity” in West
Baton Rouge Parish or any parish or county in the United States where Company
does business.  For purposes of these
provisions:  (i) the “Noncompetition Period” means the period
commencing on the Grant Date (set forth in the Notice of Grant) and ending on
the twelve-month anniversary of the date upon which Participant’s employment
with or service to the Company is terminated for any reason (the “Date of
Termination”); (ii) a “Competitive Activity” means any business
or other endeavor that engages in clinical or pre- clinical research 

 

19

 

or
development, manufacturing, marketing, sales, or commercialization of products
or services that directly or indirectly compete with, or are a therapeutic
alternative to, either (x) the products of, or services engaged in by, the
Company or any of its subsidiaries at the Date of Termination or (y) the
products proposed to be developed or commercialized, or services proposed to be
engaged in, by the Company or any of its subsidiaries at the Date of
Termination (provided that clause (y) shall apply only to any proposed
business activity as to which the Company or any of its subsidiaries has
devoted significant and documented efforts at the Date of Termination, whether
internally or through acquisition, licensing or other business development
activities); provided, however, that the Participant shall not be engaged in a
Competitive Activity if the Participant is providing services to a division or
subsidiary of a multi-division entity or holding company, so long as no
division or subsidiary to which the Participant provides services is in
competition with the Company or its subsidiaries, and the Participant does not
otherwise engage in a Competitive Activity on behalf of the multi-division
entity or any competing division or subsidiary; and (iii) the Participant
shall be considered to have become “associated with a Competitive
Activity” if the Participant becomes directly or indirectly involved as an
owner, investor (other than a passive stockholder of less than five percent
(5%) of a corporation the securities of which are traded on a national
securities exchange), employee, officer, director, consultant, independent
contractor, agent, partner, advisor, or in any other capacity in a role where
Participant’s ability to draw upon the goodwill or Confidential Information of
the Company is likely to affect Participant’s decisions or actions with regard
to the Competitive Activity, to the detriment of Company.

 

(c)                                  During the
Noncompetition Period, the Participant shall not, on the Participant’s own
behalf or on behalf of any other person, firm or entity (x) directly or
indirectly hire, solicit, induce or attempt to solicit or induce any employee
of the Company or any of its subsidiaries to terminate his employment with the
Company or any of its subsidiaries, or to provide any assistance whatsoever to
any person, firm or entity engaged in a Competitive Activity, or (y) directly
or indirectly induce any business, entity or person with which the Company or
any of their subsidiaries has a business relationship to terminate or alter
such business relationship.

 

(d)                                 In addition to
such other rights and remedies as the Company may have at equity or in law with
respect to any breach of these provisions, if the Participant commits a
material breach of any of these provisions, the Company shall have the right to
seek to have such provisions specifically enforced by any court having equity
jurisdiction (without any obligation to post a bond or other security); it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages alone will not
provide an adequate remedy to the Company.

 

(e)                                  The Participant
acknowledges that while the Participant is an employee of or service provider
to the Company, the Participant may conceive of, discover, invent or create
inventions, improvements, new contributions, literary property, computer
programs and software material, ideas and discoveries, whether patentable or
copyrightable or not (all of the foregoing being collectively referred to
herein as “Work Product”), and that various business opportunities shall
be presented to the Participant by reason of the Participant’s employment by
the Company.  The Participant
acknowledges that all of the foregoing shall be owned by and belong exclusively
to the Company and that the Participant shall have no personal interest therein
and the 

 

20

 

Participant
does hereby assign all rights, title and interest therein to the Company; provided
that they are either related in any manner to the business (commercial or
experimental) of the Company or any of its subsidiaries, or are, in the case of
Work Product, conceived or made on the Company’s time or with the use of the
Company’s facilities or materials, or, in the case of business opportunities,
are presented to the Participant for the possible interest or participation of
the Company or any of its subsidiaries. 
The Participant agrees that the Participant will not assert any rights
to any Work Product or business opportunity as having been made or acquired by
the Participant prior to the date hereof.

 

(f)                                    The Participant
acknowledges and agrees that these provisions are necessary to protect the
business operations and affairs of the Company and its subsidiaries.  The Participant understands that the
restrictions set forth in these provisions may limit the Participant’s ability
to earn a livelihood in a business similar that of the Company, but the
Participant nevertheless believes that the Participant has received and will
receive sufficient consideration and other benefits as an employee of or
service provider to the Company, including without limitation, the option
granted by the Company and memorialized in the Agreement to which these
provisions are attached, to justify clearly such restrictions which, in any
event (given the Participant’s education, skills and ability), the Participant
does not believe would prevent the Participant from earning a livelihood.

 

II.                                     To the extent
permitted by law, any restriction set forth in this Agreement that is found by
any court of competent jurisdiction to be unreasonable because it extends for
too long a period of time or over too great a range of activities or in too
broad a geographic area, may be interpreted to extend only over the maximum
period of time, range of activities or geographic area deemed to be reasonable.

 

III.                                 To the extent
permitted by law, the invalidity of any provision of this Agreement will not
and shall not be deemed to affect the validity of any other provision.  In the event that any provision of this
Agreement is held to be invalid, it shall be considered expunged, and the
parties agree that the remaining provisions shall be deemed to be in full force
and effect as if they had been executed by both parties subsequent to the
expungement of the invalid provision.

 

21

 

APPENDIX A

TO CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

 

CALIFORNIA LABOR CODE SECTION 2870

 

(a)         
Any provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either:

 

(1)         
Relate at the time of conception or reduction to practice of the invention to
the employer’s business, or actual or demonstrably anticipated research or
development of the employer; or

 

(2)         
Result from any work performed by the employee for the employer.

 

(b)         
To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.

 

22

 

APPENDIX B

TO CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

 

LIST OF PRIOR INVENTIONS

AND ORIGINAL WORKS OF AUTHORSHIP:

 

	
  Title

  	
   

  	
  Date

  	
   

  	
  Identifying Number or Brief Description

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

23

 

EXHIBIT E

 

AMENDED AND RESTATED 2010 LONG TERM INCENTIVE PLAN

 

See
Amended and Restated Ikaria, Inc. 2010 Long Term Incentive Plan, as
amended, filed as exhibit 10.3 to Ikaria Inc.’s Amendment No. 1 to its
Registration Statement on Form S-1 filed on August 17, 2010.

 

24Exhibit 10.41

 

Form of RSU (Time
Vested)

 

IKARIA, INC.

 

Restricted Stock Unit Agreement (Time Vested)

Amended and Restated 2010 Long Term Incentive Plan

 

NOTICE OF GRANT

 

This
Restricted Stock Unit Agreement (this “Agreement”) is made as of the
Agreement Date between Ikaria, Inc. (the “Company”), a Delaware
corporation, and the Participant.

 

I.                                         Agreement
Date

 

	
  Date:

  	
   

  

 

II.                                     Participant
Information

 

	
  Participant:

  	
   

  
	
  Participant
  Address:

  	
   

  

 

III.                                 Grant
Information

 

	
  Grant
  Date:

  	
   

  
	
  Restricted
  Stock Units:

  	
   

  

 

IV.                                Vesting
Table

 

	
  Vesting
  Date

  	
   

  	
  RSUs that Vest

  
	
  First
  anniversary of the Grant Date

  	
   

  	
  [1/4]

  
	
  Second
  anniversary of the Grant Date

  	
   

  	
  [1/4]

  
	
  Third
  anniversary of the Grant Date

  	
   

  	
  [1/4]

  
	
  Fourth
  anniversary of the Grant Date

  	
   

  	
  [1/4]

  

 

This
Agreement includes this Notice of Grant and the following Exhibits, which are
expressly incorporated by reference in their entirety herein:

 

Exhibit A
— General Terms and Conditions

Exhibit B
— Investment Representations

Exhibit C
— Common Stockholders Agreement

Exhibit D
— Confidentiality and Noncompetition Agreement

Exhibit E
— Amended and Restated 2010 Long Term Incentive Plan

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Agreement Date.

 

	
  IKARIA, INC.

  	
   

  	
  PARTICIPANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
   

  

 

1 of 24

 

Restricted Stock Unit Agreement (Time Vested)

Amended and Restated 2010 Long Term Incentive Plan

 

EXHIBIT A

 

GENERAL TERMS AND CONDITIONS

 

For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:

 

1.                                       Grant of RSUs;
Condition of Grant.

 

(a)                                  Grant of RSUs.  In consideration of services rendered to the
Company by the Participant, the Company has granted to the Participant, subject
to the terms and conditions set forth in this Agreement and in the Company’s
Amended and Restated 2010 Long Term Incentive Plan (the “Plan”), an award of Restricted Stock Units (the “RSUs”),
representing an award of the number of RSUs (the “Share Number”) set
forth in the Notice of Grant that forms part of this Agreement (the “Notice
of Grant”).  The RSUs entitle the
Participant to receive, upon and subject to the vesting of the RSUs (as
described in Section 2 below), one share of non-voting common stock, $0.01
par value per share, of the Company (the “Common Stock”) for each RSU
that vests.  The shares of Common Stock
that are issuable upon vesting of the RSUs are referred to in this Agreement as
the “Shares.”  Effective upon the
consummation of an Initial Public Offering (as defined in the Plan) or any
other conversion of all of the outstanding shares of the Company’s non-voting
common stock into voting common stock, the RSUs shall automatically convert and
represent the right to receive upon vesting Company voting common stock without
any further action on the part of the Company or the Participant (with the
terms “Share Number”, “Shares”, “Common Stock” and the like as used herein
referring to such Company voting common stock after the date of any such
Initial Public Offering or other conversion).

 

(b)                                 Condition of
Grant.  It shall be a condition to the
acceptance of this RSU by the Participant that the Participant execute and
deliver to the Company with the executed Notice of Grant (i) the
Investment Representations attached as Exhibit B, and (ii) the
counterpart signature page to the Company’s Common Stockholders Agreement,
as it may be amended from time to time and attached as Exhibit C,
with both such executed documents (the “Execution Documents”) being held
in escrow by the Company until such time, if ever, that the RSUs vest pursuant
to this Agreement, at which time such Execution Documents shall become
effective immediately and automatically without any further action on the part
of the Company or the Participant.  It is
a further condition to the acceptance of this RSU by the Participant that the
Participant acknowledge and agree to be bound by the provisions set forth in
the Confidentiality and Noncompetition Agreement attached hereto as Exhibit D.

 

2.                                       Vesting of the
RSUs; Issuance of Shares.

 

(a)                                  Vesting of the
RSUs.  Subject to the other
provisions of this Section 2, the RSUs shall vest in accordance with the
Vesting Table set forth in the Notice of Grant (the “Vesting Table”).  Any fractional RSU resulting from the
application of the percentages in the Vesting Table shall be rounded down to
the nearest whole number of RSUs.  Within
thirty days of each vesting date shown in the Vesting Table (the “Vesting
Dates”), the Company will issue to the Participant, in certificated or
uncertificated form, such number of Shares as is equal to the

 

2 of 24

 

number
of RSUs that vested on such Vesting Date and shall deliver such Shares to the
Participant, or to the broker designated by the Participant.  It shall be a condition to the vesting of the
RSUs on the Vesting Date that the Execution Documents remain valid, binding and
enforceable in all respects.

 

(b)                                 Employment Termination.

 

(1)                                  Termination of
the Participant.  Except to the extent specifically otherwise provided
in another agreement between the Particpant and the Company, upon the
termination of the Participant’s employment with the Company for any reason or
no reason, all RSUs that have not vested pursuant to Section 2(a) shall
be automatically forfeited as of such termination.

 

(2)                                  Employment with
Affiliated or Successor Companies.  For purposes of this Agreement, employment
with the Company shall include employment with a parent or subsidiary of the
Company, or any successor to the Company.

 

3.                                       Dividends.  The RSUs shall have no rights with respect to
dividends declared by the Company with respect to its capital stock, provided
that the foregoing shall not prohibit or otherwise limit the adjustment of the
terms of this Agreement in accordance with Section 13 of the Plan.

 

4.                                       Withholding
Taxes.

 

(a)                                  Participant
acknowledges that he or she has reviewed with his or her own tax advisors the
federal, state, local and foreign tax consequences of this investment and the
actions contemplated by this Agreement. 
Participant affirms that he or she is relying solely on such advisors
and not on any statements or representations of the Company or any of its
agents.

 

(b)                                 The Company’s
obligation to deliver Shares to Participant upon or after the vesting of the
RSUs shall be subject to Participant’s satisfaction of all income tax
(including federal, state and local taxes), social insurance, payroll tax, or
other tax related withholding requirements associated with or related to the
grant, vesting or delivery of the Shares (“Withholding Taxes”).

 

(c)                                  Participant
acknowledges and agrees that the Company has the right to deduct from payments
of any kind otherwise due to the Participant the amount of any Withholding
Taxes required to be withheld with respect to the actions contemplated by this
Agreement in any manner permitted by the Plan. 
As soon as practicable following the closing of the Company’s Initial
Public Offering, the Participant shall provide a designated broker with
irrevocable instructions directing the designated broker to, on the date of the
designated broker’s receipt of any Shares in accordance with Section 2(a),
sell in accordance with ordinary principles of best execution that number of
such Shares as is necessary to yield net proceeds to the Participant equal to
the amount Withholding Taxes with respect to the income recognized by the
Participant as a result of the vesting of such Shares (based on the minimum
statutory withholding rates for all tax purposes, including payroll and social
security taxes, that are applicable to such income) and remit such proceeds to
the Company in satisfaction of such tax withholding obligations of the Company.

 

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5.                                       Restrictions on
Transfer.  The RSUs,
and any interest therein, are subject to the restrictions on transfer set forth
in the Plan.  The Shares issued upon
vesting of this RSU are subject to the restrictions on transfer set forth in
the Common Stockholders Agreement attached hereto as Exhibit C.

 

6.                                       Effect of
Transaction.

 

(a)                                  In connection
with a Transaction (as defined in the Plan), the Compensation Committee of the
Board of Directors (the “Committee”) may take any one or more of the following
actions with respect to the RSUs on such terms as the Committee determines
(except to the extent specifically otherwise provided in another agreement
between the Company and the Participant): 
(i) provide that outstanding RSUs shall become vested and
deliverable in whole or in part prior to or upon such Transaction, (ii) provide
that the RSUs shall be assumed, or substantially equivalent RSUs shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (iii) in the event of a Transaction under the terms of which
holders of Common Stock will receive upon consummation thereof a cash payment
for each share surrendered in the Transaction (the “Acquisition Price”),
make or provide for a cash payment to Participant with respect to each RSU held
by a Participant equal to (A) the number of shares of Common Stock that
vest upon or immediately prior to such Transaction multiplied by (B) the
excess of (I) the Acquisition Price over (II) any applicable tax
withholdings, in exchange for the termination of such Award, (iv) provide
that, in connection with a liquidation or dissolution of the Company, the RSUs
shall convert into the right to receive liquidation proceeds (if applicable,
net of any applicable tax withholdings), (v) any other action permitted
under the Plan and (vi) any combination of the foregoing.  In taking any of the actions permitted under
this Section 6(a), the Board shall not be obligated by the Plan or this
Agreement to treat all Awards under the Plan, all Awards held by Participant,
or all Awards of the same type, identically.

 

(b)                                 Notwithstanding
the terms of Section 6(a), in the case of outstanding RSUs that are
subject to Section 409A of the Internal Revenue Code and the guidance
thereunder (“Section 409A”): (i) if another agreement between the
Participant and the Company provides that the RSUs shall be settled upon a “change
in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i),
and the Transaction constitutes such a “change in control event”, then no
assumption or substitution shall be permitted pursuant to Section 6(a)(ii) and
the RSUs shall instead be settled in accordance with the terms of the
applicable agreement; and (ii) the Committee may only undertake the
actions set forth in clauses (i), (iii), (iv) or (v) of Section 6(a) if
the Transaction constitutes a “change in control event” as defined under
Treasury Regulation Section 1.409A-3(i)(5)(i) and such action is
permitted or required by Section 409A of the Code; if the Transaction is
not a “change in control event” as so defined or such action is not permitted
or required by Section 409A of the Code, and the acquiring or succeeding
corporation does not assume or substitute the RSUs pursuant to clause (ii) of
Section 6(a), then the unvested RSUs shall terminate immediately prior to
the consummation of the Transaction without any payment in exchange therefor.

 

(c)                                  For purposes of
Section 6(a)(ii), the RSU shall be considered assumed if, following
consummation of the Transaction, such award confers the right to receive
pursuant to the terms of such award, for each share of Common Stock subject to
the RSU immediately prior to the consummation of the Transaction, the
consideration (whether cash, securities or other property) received as a result
of the Transaction by holders of Common Stock for each share of 

 

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Common
Stock held immediately prior to the consummation of the Transaction (and if
holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares of Common Stock);
provided, however,
that if the consideration received as a result of the Transaction is not solely
common stock of the acquiring or succeeding corporation (or an affiliate
thereof), the Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received upon the exercise or
settlement of the award to consist solely of such number of shares of common
stock of the acquiring or succeeding corporation (or an affiliate thereof) that
the Committee determined to be equivalent in value (as of the date of such
determination or another date specified by the Committee) to the per share
consideration received by holders of outstanding shares of Common Stock as a
result of the Transaction.

 

7.                                       Confidential
Information; Noncompetition; Work Product.  By accepting this RSU, Participant is hereby
acknowledging and agreeing to the provisions set forth in the Confidentiality
and Noncompetition Agreement attached hereto as Exhibit D related
to confidential information, noncompetition and work product.  Without limitation to any other remedies
available under law or those set forth in Exhibit D, the
Participant agrees that if Participant breaches any of the provisions of Exhibit D,
then (i) the Participant shall not be entitled to any further vesting of
this RSU, (ii) any Shares acquired by the Participant upon vesting of this
RSU that continue to be held by the Participant shall be required to be
surrendered immediately and automatically to the Company in exchange for no
consideration and (iii) if the Participant acquired any Shares upon the
vesting of this RSU and the Participant has sold, transferred or otherwise
disposed of such Shares, then the Participant shall be required to pay to the
Company, in cash, within 30 days of a written request by the Company for such
payment, the amount for which the Participant sold the Shares.

 

8.                                       Miscellaneous.

 

(a)                                  No Rights to
Employment.  The
Participant acknowledges and agrees that the grant of the RSUs and their
vesting pursuant to Section 2 do not constitute an express or implied
promise of continued employment for the vesting period of the RSUs, or for any
period.

 

(b)                                 Section 409A.  This Agreement is intended to comply with or
be exempt from the requirements of Section 409A and shall be construed
consistently therewith.  In any event,
the Company makes no representations or warranties and will have no liability
to the Participant or to any other person, if any of the provisions of or payments
under this Agreement are determined to constitute nonqualified deferred
compensation subject to Section 409A but that do not satisfy the
requirements of that Section.

 

(c)                                  Entire
Agreement.  This
Agreement and the Plan constitute the entire agreement between the parties, and
supersede all prior agreements and understandings, relating to the subject
matter of this Agreement; provided that any separate employment or severance
agreement between the Company and the Participant that includes terms relating
to the acceleration of vesting of equity awards shall not be superseded by this
Agreement.  In the event of a conflict
between the terms and provisions of the Plan and the terms and provisions of
this Agreement, the Plan terms and provisions shall prevail.

 

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(d)                                 Governing Law.  This Agreement shall be construed,
interpreted and enforced in accordance with the internal laws of the State of
Delaware, without regard to any applicable conflict of law principles.

 

(e)                                  Interpretation.  The interpretation and construction of any
terms or conditions of the Plan or this Agreement by the Compensation Committee
shall be final and conclusive.

 

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EXHIBIT B

 

INVESTMENT REPRESENTATIONS

 

Dear
Sir or Madam:

 

I
am the holder of Restricted Stock Unit granted to me under the Ikaria, Inc.
(the “Company”) Amended and Restated 2010 Long Term Incentive Plan on
                    (1),
representing the right to receive                     (2) shares
of Common Stock of the Company (the “Shares”) subject to the
satisfaction of the terms and conditions set forth in the Agreement.

 

I
represent, warrant and covenant as follows as of the date hereof and as of each
Vesting Date:

 

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

 

2.               I am acquiring the Shares
for my own account for investment only, and not with a view to, or for sale in
connection with, any distribution of the Shares in violation of the Securities
Act of 1933 (the “Securities Act”), or any rule or regulation under the Securities
Act.

 

3.               I have had such opportunity
as I have deemed adequate to obtain from representatives of the Company such
information as is necessary to permit me to evaluate the merits and risks of my
investment in the Company.

 

4.               I have sufficient experience
in business, financial and investment matters to be able to evaluate the risks
involved in the purchase of the Shares and to make an informed investment
decision with respect to such purchase.

 

5.               I can afford a complete loss
of the value of the Shares and am able to bear the economic risk of holding
such Shares for an indefinite period.

 

6.               I understand that (i) the
Shares have not been registered under the Securities Act and are “restricted
securities” within the meaning of Rule 144 under the Securities Act, (ii) the
Shares cannot be sold, transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an exemption from
registration is then available; (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least one year
and even then will not be available unless a public market then exists for the
Common Stock, adequate information concerning the Company is then available to
the public, and other terms and conditions of Rule 144 are complied with;
and (iv) there is now no registration statement on file with the
Securities and Exchange Commission with respect to any stock of the Company and
the Company has no obligation or current intention to register the Shares under
the Securities Act.

 

(1)          Enter the date of grant.

 

(2)          Enter the total number of
shares of Common Stock for which the option was granted.

 

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7.               I understand that the
certificate or certificates representing the Shares shall bear the following
legends (as well as any other 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.

 

8.               I agree and
acknowledge 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.

 

9.               I understand
and acknowledge that 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 have been so transferred.

 

	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  

 

8 of 24

 

NOTE:  THE FOLLOWING SHEET IS A COUNTERPART SIGNATURE
PAGE TO THE COMPANY’S COMMON STOCKHOLDERS AGREEMENT, WHICH MUST ALSO BE SIGNED
AND RETURNED TO THE COMPANY IN ORDER TO ACCEPT YOUR RESTRICTED STOCK UNIT
PURSUANT TO SECTION 1 OF THE RESTRICTED STOCK UNIT AGREEMENT.

 

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

 

9 of 24

 

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, INC. COMMON
STOCKHOLDERS AGREEMENT]

 

10 of 24

 

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, INC. COMMON STOCKHOLDERS AGREEMENT]

 

11 of 24

 

EXHIBIT C

 

IKARIA, INC.

COMMON STOCKHOLDERS AGREEMENT

 

See
Common Stockholders Agreement among Ikaria, Inc. and the stockholders
listed on the signature pages thereto, dated as of February 22, 2007,
filed as exhibit 4.2 to Ikaria Inc.’s Registration Statement on Form S-1
filed on May 13, 2010.

 

12 of 24

 

EXHIBIT D

 

CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

 

I.                                        The Participant
acknowledges that the Participant’s employment by or other service to the
Company will, throughout such employment or service period, bring the
Participant into close contact with the confidential affairs of the Company and
its subsidiaries, including access to information about their client and
customer lists and information concerning proprietary manufacturing
formulations and processes, costs, profits, real estate, markets, sales,
products, key personnel, pricing policies, operational methods, patents,
research and development, technical processes, and other business affairs and
methods, plans for future product development and other information not readily
available to the public.  The Participant
further acknowledges that the services to be performed by the Participant are
of a special, unique, unusual, extraordinary and intellectual character.  The Participant further acknowledges that the
business of the Company and its subsidiaries is international in scope, that
their products are marketed throughout the world, that the Company and its
subsidiaries competes in nearly all of their business activities with other
entities that are or could be located in nearly any part of the world and that
the nature of the Participant’s services, position and expertise are such that
the Participant is capable of competing with the Company and its subsidiaries
from nearly any location in the world. 
In recognition of the foregoing, the Participant covenants and agrees:

 

1.  For Participants Resident in States Other
Than California, Wisconsin, Texas, and Louisiana:

 

(a)                                 The
Participant, at all times while the Participant is an employee of or service
provider to the Company and thereafter, shall hold in a fiduciary capacity for
the benefit of the Company all secret, trade, proprietary or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies and shareholders, and their respective businesses, that the Participant
obtains during the Participant’s employment by the Company or any of its
affiliated companies and that is not public knowledge (other than as a result
of the Participant’s violation of this Section (a)) (“Confidential
Information”).  The Participant shall
not communicate, divulge or disseminate Confidential Information at any time
during or after the Participant’s employment with or service to the Company,
except with the prior written consent of the Company or as otherwise required
by law or legal process.  Nothing in this
paragraph diminishes or limits any protection granted by law to trade secrets
or relieves Employee of any duty not to disclose, use, or misappropriate any
information that is a trade secret, for as long as such information remains a
trade secret.

 

(b)                                 During the “Noncompetition
Period,” the Participant shall not, without the prior written consent of the
Board, engage in or become associated with a “Competitive Activity.”  For purposes of these provisions:  (i) the
“Noncompetition Period” means the period commencing on the Grant Date
(set forth in the Notice of Grant) and ending on the twelve-month anniversary
of the date upon which Participant’s employment with or service to the Company
is terminated for any reason (the “Date of Termination”); (ii) a “Competitive
Activity” means any business or other endeavor that engages in clinical or
pre- clinical research or development, manufacturing, marketing, sales, or
commercialization of products or services that directly or indirectly compete
with, or are a therapeutic alternative to, either (x) the products of, or
services engaged in by, the Company or any of its subsidiaries at the Date of
Termination in any 

 

13 of 24

 

geographic
location in the United States or, if different, the country in which the
Participant primarily performs services for the Company or (y) the
products proposed to be developed or commercialized, or services proposed to be
engaged in, by the Company or any of its subsidiaries at the Date of
Termination in any geographic location in the United States or, if different,
the country in which the Participant primarily performs services for the
Company (provided that clause (y) shall apply only to any proposed
business activity as to which the Company or any of its subsidiaries has
devoted significant and documented efforts at the Date of Termination, whether
internally or through acquisition, licensing or other business development
activities); provided, however, that the Participant shall not be engaged in a
Competitive Activity if the Participant is providing services to a division or
subsidiary of a multi-division entity or holding company, so long as no
division or subsidiary to which the Participant provides services is in
competition with the Company or its subsidiaries, and the Participant does not
otherwise engage in a Competitive Activity on behalf of the multi-division
entity or any competing division or subsidiary; and (iii) the Participant
shall be considered to have become “associated with a Competitive
Activity” if the Participant becomes directly or indirectly involved as an
owner, investor (other than a passive stockholder of less than five percent
(5%) of a corporation the securities of which are traded on a national
securities exchange), employee, officer, director, consultant, independent
contractor, agent, partner, advisor, or in any other capacity in a role where
Participant may draw upon the goodwill of the Company or where Participant’s
knowledge of the Confidential Information of the Company is likely to affect
Participant’s decisions or actions with regard to the Competitive Activity, to
the detriment of Company.

 

(c)                                  During the
Noncompetition Period, the Participant shall not, on the Participant’s own
behalf or on behalf of any other person, firm or entity (x) directly or
indirectly hire, solicit, induce or attempt to solicit or induce any employee
of the Company or any of its subsidiaries to terminate his employment with the
Company or any of its subsidiaries, or to provide any assistance whatsoever to
any person, firm or entity engaged in a Competitive Activity, or (y) directly
or indirectly induce any business, entity or person with which the Company or
any of their subsidiaries has a business relationship to terminate or alter
such business relationship.

 

(d)                                 In addition to
such other rights and remedies as the Company may have at equity or in law with
respect to any breach of these provisions, if the Participant commits a
material breach of any of these provisions, the Company shall have the right to
seek to have such provisions specifically enforced by any court having equity
jurisdiction (without any obligation to post a bond or other security); it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages alone will not
provide an adequate remedy to the Company.

 

(e)                                  The Participant
acknowledges that while the Participant is an employee of or service provider
to the Company, the Participant may conceive of, discover, invent or create
inventions, improvements, new contributions, literary property, computer
programs and software material, ideas and discoveries, whether patentable or
copyrightable or not (all of the foregoing being collectively referred to
herein as “Work Product”), and that various business opportunities shall
be presented to the Participant by reason of the Participant’s employment by
the Company.  The Participant
acknowledges that all of the foregoing shall be owned by and belong exclusively
to the Company and that the Participant shall have no personal interest therein
and the Participant does hereby assign all rights, title and interest therein
to the Company; provided that 

 

14 of 24

 

they
are either related in any manner to the business (commercial or experimental)
of the Company or any of its subsidiaries, or are, in the case of Work Product,
conceived or made on the Company’s time or with the use of the Company’s
facilities or materials, or, in the case of business opportunities, are
presented to the Participant for the possible interest or participation of the
Company or any of its subsidiaries.  The
Participant agrees that the Participant will not assert any rights to any Work
Product or business opportunity as having been made or acquired by the
Participant prior to the date hereof.

 

(f)                                   The Participant
acknowledges and agrees that these provisions are necessary to protect the
business operations and affairs of the Company and its subsidiaries.  The Participant understands that the
restrictions set forth in these provisions may limit the Participant’s ability
to earn a livelihood in a business similar that of the Company, but the
Participant nevertheless believes that the Participant has received and will
receive sufficient consideration and other benefits as an employee of or
service provider to the Company, including without limitation, the option
granted by the Company and memorialized in the Agreement to which these
provisions are attached, to justify clearly such restrictions which, in any
event (given the Participant’s education, skills and ability), the Participant
does not believe would prevent the Participant from earning a livelihood.

 

2.  For Participants Resident in California:

 

(a)                             The
Participant, at all times while the Participant is an employee of or service
provider to the Company and thereafter, shall hold in a fiduciary capacity for
the benefit of the Company all secret, trade, proprietary or confidential
information, knowledge or data relating to the Company or any of its
subsidiaries companies and shareholders, and their respective businesses, that
the Participant obtains during the Participant’s employment by the Company or
any of its subsidiaries and that is not public knowledge (other than as a
result of the Participant’s violation of this Section (a)) (“Confidential
Information”).  The Participant shall
not communicate, divulge or disseminate Confidential Information at any time during
or after the Participant’s employment with or service to the Company, except
with the prior written consent of the Company or as otherwise required by law
or legal process.

 

(b)                                 During the “Noncompetition
Period,” the Participant shall not, without the prior written consent of the
Board, engage in or become associated with a “Competitive Activity.”  For purposes of these provisions:  (i) the
“Noncompetition Period” means the period commencing on the Grant Date
(set forth in the Notice of Grant) and ending on the date upon which
Participant’s employment with or service to the Company is terminated for any
reason (the “Date of Termination”); (ii) a “Competitive Activity”
means any business or other endeavor that engages in clinical or pre- clinical
research or development, manufacturing, marketing, sales, or commercialization
of products or services that directly or indirectly compete with, or are a
therapeutic alternative to, either (x) the products of, or services
engaged in by, the Company or any of its subsidiaries during the Noncompetition
Period in any geographic location in the United States or, if different, the
country in which the Participant primarily performs services for the Company or
(y) the products proposed to be developed or commercialized, or services
proposed to be engaged in, by the Company or any of its subsidiaries during the
Noncompetition Period in any geographic location in the United States or, if
different, the country in which the Participant primarily performs services for
the Company (provided that clause (y) shall apply only to any proposed
business activity as to which the Company or any of its subsidiaries has
devoted 

 

15 of 24

 

significant
and documented efforts during the Noncompetition Period, whether internally or
through acquisition, licensing or other business development activities);
provided, however, that the Participant shall not be engaged in a Competitive
Activity if the Participant is providing services to a division or subsidiary
of a multi-division entity or holding company, so long as no division or
subsidiary to which the Participant provides services is in competition with
the Company or its subsidiaries, and the Participant does not otherwise engage
in a Competitive Activity on behalf of the multi-division entity or any
competing division or subsidiary; and (iii) the Participant shall be
considered to have become “associated with a Competitive Activity” if the
Participant becomes directly or indirectly involved as an owner, investor
(other than a passive stockholder of less than five percent (5%) of a
corporation the securities of which are traded on a national securities
exchange), employee, officer, director, consultant, independent contractor,
agent, partner, advisor, or in any other capacity calling for the rendition of
the Participant’s personal services, with any individual, partnership,
corporation or other organization that is engaged directly or indirectly in a
Competitive Activity.

 

(c)                                  During both the
Noncompetition Period and the twelve-month period following the Date of
Termination, the Participant shall not, on the Participant’s own behalf or on
behalf of any other person, firm or entity, directly or indirectly, solicit,
induce or attempt to solicit or induce any employee of the Company or any of
its subsidiaries to terminate his employment with the Company or any of its
subsidiaries, or to provide any assistance whatsoever to any person, firm or
entity engaged in a Competitive Activity. 
During the Noncompetition Period, the Participant shall not directly or
indirectly induce any business, entity or person with which the Company or any
of its subsidiaries has a business relationship to terminate or alter such
business relationship.

 

(d)                                 In addition to
such other rights and remedies as the Company may have at equity or in law with
respect to any breach of these provisions, if the Participant commits a
material breach of any of these provisions, the Company shall have the right to
seek to have such provisions specifically enforced by any court having equity
jurisdiction (without any obligation to post a bond or other security); it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages alone will not
provide an adequate remedy to the Company.

 

(e)                                  The Participant
Employee agrees to assign and does hereby assign to the Company (or any person
or entity designated by the Company) all his/her right, title and interest in
and to all inventions, improvements, new contributions, literary property,
computer programs and software material, ideas and discoveries, whether
patentable or copyrightable or not (all of the foregoing being collectively
referred to herein as “Work Product”) and all related patents, patent
applications, copyrights and copyright applications to the maximum extent
permitted by Section 2870 of the California Labor Code or any like statute
of any other state.  The Participant hereby also waives all claims to
moral rights in any Work Product.  The Participant understands that the
provisions of this Agreement requiring assignment of Work Product to the
Company do not apply to any invention which qualifies fully under the
provisions of California Labor Code Section 2870 (attached hereto as Appendix
A).  The Participant agrees to advise the Company promptly in writing
of any invention that he/she believes meets the criteria in Section 2870
and is not otherwise disclosed on Appendix B.

 

16 of 24

 

(f)                                   The Participant
acknowledges and agrees that these provisions are necessary to protect the
business operations and affairs of the Company and its subsidiaries.  The Participant understands that the
restrictions set forth in these provisions may limit the Participant’s ability
to earn a livelihood in a business similar that of the Company, but the
Participant nevertheless believes that the Participant has received and will
receive sufficient consideration and other benefits as an employee of or
service provider to the Company, including without limitation, the option
granted by the Company and memorialized in the Agreement to which these
provisions are attached, to justify clearly such restrictions which, in any
event (given the Participant’s education, skills and ability), the Participant
does not believe would prevent the Participant from earning a livelihood.

 

3.                                      For
Participants Resident in Wisconsin and Texas

 

(a)                                 Company will
provide Participant with access to secret, trade, proprietary or confidential
information relating to Company and its subsidiaries and shareholders that is
not readily available outside Company or its subsidiaries and that Company and
its subsidiaries take steps to protect (“Confidential Information”).  (“Confidential Information” shall not include
information that Participant can prove (i) was in the public domain, being
publicly and openly known through lawful and proper means, (ii) was
independently developed or acquired by Participant without reliance in any way
on other Confidential Information of Company or any subsidiary or (iii) was
approved by Company for use and disclosure by Participant without
restriction.)  The Participant shall not
communicate, divulge, or disseminate Confidential Information where such
disclosure would be detrimental to the interests of Company (except as required
by law), but only for so long as such Confidential Information continues to be
not generally known to, and not readily ascertainable through proper means by,
Company’s competitors.  The promises
contained in this paragraph are not intended to preclude Participant from being
gainfully employed by another or on his or her own, but are intended to
prohibit him or her from using the confidential or proprietary information described
herein in a manner that is not for the financial benefit of Company.  Nothing in this paragraph diminishes or
limits any protection granted by law to trade secrets or relieves Employee of
any duty not to disclose, use, or misappropriate any information that is a
trade secret, for as long as such information remains a trade secret.

 

(b)                                 Independent of
any other restriction, the Participant during the “Noncompetition Period” shall
not, for him(her)self, or on behalf of any other person or entity, directly or
indirectly provide services to a “Direct Competitor” in a role where
Participant will be expected to draw upon the customer goodwill he gained while
with Company or where Participant’s knowledge of “Confidential Information” is
likely to affect Participant’s decisions or actions for the Direct Competitor
to the detriment of Company.  For
purposes of this provision:  (i) the “Noncompetition
Period” means the period commencing on the Grant Date (set forth in the
Notice of Grant) and ending on the twelve-month anniversary of the date upon
which Participant’s employment with or service to the Company is terminated for
any reason (the “Date of Termination”); (ii) a “Direct
Competitor” means any business or other endeavor that engages in clinical
or pre- clinical research or development, manufacturing, marketing, sales, or
commercialization of “Competitive Products or Services” in any geographic
location in the United States (except that “Direct Competitor” does not include any business which the parties have agreed in
writing to exclude from the definition, and Company will not unreasonably or
arbitrarily withhold such agreement); and (iii) “Competitive Products
or Services” means 

 

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products
or services that serve the same function as or are a therapeutic alternative to
products or services that Company or its subsidiaries offered at the Date of
Termination, or to products or services under development or commercialization
by Company or its subsidiaries at the Date of Termination (with development or
commercialization demonstrated by significant and documented efforts, whether
internally or through acquisition, licensing or other business development
activities).

 

(c)                                  Independent of
any other restriction, for a period of one year after Participant’s employment
with or service to the Company is terminated for any reason, the Participant
shall not, on the Participant’s own behalf or on behalf of any other person,
firm or entity, directly or indirectly induce any business, entity or person
with which the Company or its subsidiaries has a business relationship
(collectively, “Business Associates”) to terminate or alter such
business relationship (provided that clause (y) shall apply only to those
Business Associates who did business with the Company within the last six
months of Participant’s employment or service and (1) about whom
Participant, as a result of his or her employment or service, had access to
confidential information or goodwill that would assist in solicitation of such
Person, or (2) with whom Participant personally dealt on behalf of Company
in the 12 months immediately preceding the last day of Participant’s employment
or service and that Participant was introduced to or otherwise had business
contact with such Business Associate as a result of his or her employment or
service with the Company).

 

(d)                                 Independent of
any other restriction, Participant shall not, either personally or in
conjunction with others, either (a) solicit, interfere with, or endeavor
to cause any employee of Company or its subsidiaries to leave such employment
or (b) otherwise induce or attempt to induce any such employee to
terminate employment with Company or its subsidiaries.  Nothing in this paragraph is meant to prohibit
an employee of Company or its subsidiaries who is not a party to this Agreement
from becoming employed by another organization or person.

 

(e)                                  In addition to
such other rights and remedies as the Company may have at equity or in law with
respect to any breach of these provisions, if the Participant commits a
material breach of any of these provisions, the Company shall have the right to
seek to have such provisions specifically enforced by any court having equity
jurisdiction (without any obligation to post a bond or other security); it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages alone will not
provide an adequate remedy to the Company.

 

(f)                                   The Participant
acknowledges that while the Participant is an employee of or service provider
to the Company, the Participant may conceive of, discover, invent or create
inventions, improvements, new contributions, literary property, computer
programs and software material, ideas and discoveries, whether patentable or
copyrightable or not (all of the foregoing being collectively referred to
herein as “Work Product”), and that various business opportunities shall
be presented to the Participant by reason of the Participant’s employment by
the Company.  The Participant
acknowledges that all of the foregoing shall be owned by and belong exclusively
to the Company and that the Participant shall have no personal interest therein
and the Participant does hereby assign all rights, title and interest therein
to the Company; provided that they are either related in any manner to
the business (commercial or experimental) of the Company or any of its
subsidiaries, or are, in the case of Work Product, conceived or made on 

 

18 of 24

 

the
Company’s time or with the use of the Company’s facilities or materials, or, in
the case of business opportunities, are presented to the Participant for the
possible interest or participation of the Company or any of its
subsidiaries.  The Participant agrees
that the Participant will not assert any rights to any Work Product or business
opportunity as having been made or acquired by the Participant prior to the
date hereof.

 

(g)                                  The Participant
acknowledges and agrees that these provisions are necessary to protect the
business operations and affairs of the Company and its subsidiaries.  The Participant understands that the
restrictions set forth in these provisions may limit the Participant’s ability
to earn a livelihood in a business similar that of the Company, but the
Participant nevertheless believes that the Participant has received and will
receive sufficient consideration and other benefits as an employee of or
service provider to the Company, including without limitation, the option
granted by the Company and memorialized in the Agreement to which these
provisions are attached, to justify clearly such restrictions which, in any
event (given the Participant’s education, skills and ability), the Participant
does not believe would prevent the Participant from earning a livelihood.

 

4.                                      For
Participants Resident in Louisiana

 

(a)                                 Company will
provide Participant with access to secret, trade, proprietary or confidential
information relating to Company and its subsidiaries and shareholders that is
not readily available outside Company or its subsidiaries and that Company and
its subsidiaries take steps to protect (“Confidential Information”).  (“Confidential Information” shall not include
information that Participant can prove (i) was in the public domain, being
publicly and openly known through lawful and proper means, (ii) was
independently developed or acquired by Participant without reliance in any way
on other Confidential Information of Company or any subsidiary or (iii) was
approved by Company for use and disclosure by Participant without
restriction.)  The Participant shall not
communicate, divulge or disseminate Confidential Information at any time during
or after the Participant’s employment with or service to the Company, except
with the prior written consent of the Company or as otherwise required by law
or legal process.  Nothing in this
paragraph diminishes or limits any protection granted by law to trade secrets
or relieves Employee of any duty not to disclose, use, or misappropriate any
information that is a trade secret, for as long as such information remains a
trade secret.

 

(b)                                 During the “Noncompetition
Period,” the Participant shall not, without the prior written consent of the
Board, engage in or become associated with a “Competitive Activity” in West
Baton Rouge Parish or any parish or county in the United States where Company
does business.  For purposes of these
provisions:  (i) the “Noncompetition Period” means the period
commencing on the Grant Date (set forth in the Notice of Grant) and ending on
the twelve-month anniversary of the date upon which Participant’s employment
with or service to the Company is terminated for any reason (the “Date of
Termination”); (ii) a “Competitive Activity” means any business
or other endeavor that engages in clinical or pre- clinical research or
development, manufacturing, marketing, sales, or commercialization of products
or services that directly or indirectly compete with, or are a therapeutic
alternative to, either (x) the products of, or services engaged in by, the
Company or any of its subsidiaries at the Date of Termination or (y) the
products proposed to be developed or commercialized, or services proposed to be
engaged in, by the Company or any of its subsidiaries at the Date of
Termination (provided that clause (y) shall apply only to any proposed
business activity as to which the Company or any 

 

19 of 24

 

of
its subsidiaries has devoted significant and documented efforts at the Date of
Termination, whether internally or through acquisition, licensing or other
business development activities); provided, however, that the Participant shall
not be engaged in a Competitive Activity if the Participant is providing
services to a division or subsidiary of a multi-division entity or holding
company, so long as no division or subsidiary to which the Participant provides
services is in competition with the Company or its subsidiaries, and the
Participant does not otherwise engage in a Competitive Activity on behalf of
the multi-division entity or any competing division or subsidiary; and (iii) the
Participant shall be considered to have become “associated with a
Competitive Activity” if the Participant becomes directly or indirectly
involved as an owner, investor (other than a passive stockholder of less than
five percent (5%) of a corporation the securities of which are traded on a
national securities exchange), employee, officer, director, consultant,
independent contractor, agent, partner, advisor, or in any other capacity in a
role where Participant’s ability to draw upon the goodwill or Confidential
Information of the Company is likely to affect Participant’s decisions or
actions with regard to the Competitive Activity, to the detriment of Company.

 

(c)                                  During the
Noncompetition Period, the Participant shall not, on the Participant’s own
behalf or on behalf of any other person, firm or entity (x) directly or
indirectly hire, solicit, induce or attempt to solicit or induce any employee
of the Company or any of its subsidiaries to terminate his employment with the
Company or any of its subsidiaries, or to provide any assistance whatsoever to
any person, firm or entity engaged in a Competitive Activity, or (y) directly
or indirectly induce any business, entity or person with which the Company or
any of their subsidiaries has a business relationship to terminate or alter
such business relationship.

 

(d)                                 In addition to
such other rights and remedies as the Company may have at equity or in law with
respect to any breach of these provisions, if the Participant commits a
material breach of any of these provisions, the Company shall have the right to
seek to have such provisions specifically enforced by any court having equity
jurisdiction (without any obligation to post a bond or other security); it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages alone will not
provide an adequate remedy to the Company.

 

(e)                                  The Participant
acknowledges that while the Participant is an employee of or service provider
to the Company, the Participant may conceive of, discover, invent or create
inventions, improvements, new contributions, literary property, computer
programs and software material, ideas and discoveries, whether patentable or
copyrightable or not (all of the foregoing being collectively referred to
herein as “Work Product”), and that various business opportunities shall
be presented to the Participant by reason of the Participant’s employment by
the Company.  The Participant
acknowledges that all of the foregoing shall be owned by and belong exclusively
to the Company and that the Participant shall have no personal interest therein
and the Participant does hereby assign all rights, title and interest therein
to the Company; provided that they are either related in any manner to
the business (commercial or experimental) of the Company or any of its
subsidiaries, or are, in the case of Work Product, conceived or made on the
Company’s time or with the use of the Company’s facilities or materials, or, in
the case of business opportunities, are presented to the Participant for the
possible interest or participation of the Company or any of its subsidiaries.  The Participant agrees that the Participant
will not assert 

 

20 of 24

 

any
rights to any Work Product or business opportunity as having been made or
acquired by the Participant prior to the date hereof.

 

(f)                                   The Participant
acknowledges and agrees that these provisions are necessary to protect the
business operations and affairs of the Company and its subsidiaries.  The Participant understands that the
restrictions set forth in these provisions may limit the Participant’s ability
to earn a livelihood in a business similar that of the Company, but the
Participant nevertheless believes that the Participant has received and will
receive sufficient consideration and other benefits as an employee of or service
provider to the Company, including without limitation, the option granted by
the Company and memorialized in the Agreement to which these provisions are
attached, to justify clearly such restrictions which, in any event (given the
Participant’s education, skills and ability), the Participant does not believe
would prevent the Participant from earning a livelihood.

 

II.                                   To the extent
permitted by law, any restriction set forth in this Agreement that is found by
any court of competent jurisdiction to be unreasonable because it extends for
too long a period of time or over too great a range of activities or in too
broad a geographic area, may be interpreted to extend only over the maximum
period of time, range of activities or geographic area deemed to be reasonable.

 

III.                              To the extent
permitted by law, the invalidity of any provision of this Agreement will not
and shall not be deemed to affect the validity of any other provision.  In the event that any provision of this
Agreement is held to be invalid, it shall be considered expunged, and the
parties agree that the remaining provisions shall be deemed to be in full force
and effect as if they had been executed by both parties subsequent to the
expungement of the invalid provision.

 

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APPENDIX A

TO CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

 

CALIFORNIA LABOR CODE SECTION 2870

 

(a)                                 Any provision
in an employment agreement which provides that an employee shall assign, or
offer to assign, any of his or her rights in an invention to his or her
employer shall not apply to an invention that the employee developed entirely
on his or her own time without using the employer’s equipment, supplies,
facilities, or trade secret information except for those inventions that
either:

 

(1)                                 Relate at the
time of conception or reduction to practice of the invention to the employer’s
business, or actual or demonstrably anticipated research or development of the
employer; or

 

(2)                                 Result from any
work performed by the employee for the employer.

 

(b)                                 To the extent a
provision in an employment agreement purports to require an employee to assign
an invention otherwise excluded from being required to be assigned under
subdivision (a), the provision is against the public policy of this state and
is unenforceable.

 

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APPENDIX B

TO CONFIDENTIALITY AND NONCOMPETITION AGREEMENT

 

LIST OF PRIOR INVENTIONS

AND ORIGINAL WORKS OF AUTHORSHIP:

 

	
  Title

  	
   

  	
  Date

  	
   

  	
  Identifying
  Number or Brief Description

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

23 of 24

 

EXHIBIT E

 

AMENDED AND RESTATED 2010 LONG TERM INCENTIVE PLAN

 

See
Amended and Restated Ikaria, Inc. 2010 Long Term Incentive Plan, as
amended, filed as exhibit 10.3 to Ikaria Inc.’s Amendment No. 1 to its
Registration Statement on Form S-1 filed on August 17, 2010.

 

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