Document:

Exhibit 10.3

 

N30 PHARMACEUTICALS, INC.

 

2012 STOCK INCENTIVE PLAN

 

STOCK OPTION AGREEMENT

 

N30 Pharmaceuticals, Inc. (the “Company”) hereby grants to the Grantee listed below (the “Grantee”) an option (the “Option”) to purchase the number shares of Common Stock (“Stock”) of the Company set forth below, subject to the terms and conditions of the Plan and this Stock Option Agreement (the “Option Agreement”) including the Exhibits attached hereto, as follows:

 

	
Grantee:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Grant   Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Total Shares of Stock Subject to Option:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exercise   Price Per Share of Stock:
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Type   of Option (check one):
    	
 
    	
o Incentive   Option  o Nonqualified   Option
    
	
 
    	
 
    	
 
    
	
Vesting   Commencement Date:
    	
 
    	
 
    

 

Option Vesting Schedule:                                                                                                                                                   A portion of the Option equal to twenty-five percent (25%) of the shares of Stock subject to the Option (rounded down to the next whole number of shares) shall vest on the first anniversary of the Vesting Commencement Date and 1/48th of the shares of Stock subject to the Option shall vest monthly thereafter so that one hundred percent (100%) of the shares of Stock subject to the Option are vested on the fourth anniversary of the Vesting Commencement Date, so long as the Grantee’s Continuous Service Status has not terminated at each such vesting date (unless otherwise determined by the Committee).

 

 

By their signatures below, the Company and the Grantee agree that the Option is subject to this Option Agreement, including all the Exhibits attached hereto and incorporated herein, and the provisions of the Plan.  In the event there is a conflict or inconsistency between any provision in this Option Agreement and one or more provisions of the Plan, the provisions of the Plan shall govern. Capitalized terms used in this Option Agreement that are not otherwise defined herein shall have the same meanings as defined in the Plan.  The Grantee acknowledges receipt of copies of both this Option Agreement (including all applicable Exhibits) and the Plan, and hereby accepts the Option subject to all of their terms and conditions.

 

	
GRANTEE
    	
 
    	
COMPANY
    
	
 
    	
 
    	
 
    
	
[Insert   Name]
    	
 
    	
N30   PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
Signature
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
Date
    	
 
    	
 
    
	
 
    	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Address
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
					

 

 

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EXHIBIT A

 

N30 PHARMACEUTICALS, INC.

 

2012 STOCK INCENTIVE PLAN

 

TERMS AND CONDITIONS OF OPTION

 

The terms and conditions set forth in this Exhibit A constitute part of the Option Agreement.

 

1.                                      Grant of Option.  The Company has granted to the Grantee an Option to purchase all or any portion of the number of shares of Stock at the Exercise Price per share stated on the first page of this Option Agreement.  If the box marked “Incentive Option” on the first page hereof is checked, then this Option is intended to qualify as an “incentive stock option” as defined in Section 422 of the Internal Revenue Code of l986, as amended (the “Code”).  If this Option fails in whole or in part to qualify as an incentive stock option, or if the box marked “Nonqualified Option” on the first page hereof is checked, then this Option shall to that extent constitute a nonqualified stock option.

 

2.                                      Terms and Conditions.  It is understood and agreed that the Option evidenced hereby is subject to the following terms and conditions:

 

(a)                                 Expiration Date.  The Option shall expire ten (10) years after the Grant Date indicated on the first page of this Option Agreement, provided that if the Option is designated as an Incentive Option and the Grantee is a 10% Shareholder, the Option will expire five (5) years after such Grant Date.

 

(b)                                 Vesting of Options.  This Option shall vest and become exercisable as set forth on the first page of this Option Agreement.  No portion of the Option shall vest after the date that Grantee’s Continuous Service Status (as defined below) terminates for any reason (the “Termination Date”), but this Option shall continue to be exercisable in accordance with Section 2(f) below with respect to that number of shares of Stock that have vested as of Grantee’s Termination Date.  For purposes of this Option Agreement, “Continuous Service Status” means the absence of any interruption or termination of service as an employee, a member of the Board, or a consultant of the Company.  Continuous Service Status shall not be considered interrupted or terminated in the case of (1) Company approved sick leave; (2) military leave; or (3) any other bona fide leave of absence approved by the Company, provided that such leave is not for a period in excess of ninety (90) days, unless reemployment is guaranteed by contract, statute or Company policy.  Continuous Service Status shall not be considered interrupted or terminated in the case of a transfer between the Company and its Affiliates, or a change in status from or to employee, director or consultant.

 

(c)                                  Accelerated Vesting Upon a Change of Control.  Notwithstanding Section 2(b) above, the Option will be deemed fully vested if, within twelve (12) months following a Change of Control of the Company, Grantee’s employment is terminated (i) by the Company

 

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without Cause or (ii) Grantee resigns for Good Reason.  For purposes of this Option Agreement, the following definitions shall apply:

 

(i)                                     “Change of Control” means (A) a Sale of the Company; or (B) the closing of an underwritten public offering pursuant to an effective registration statement filed by the Company (or any successor entity) under the Securities Act of 1933, as amended.

 

(ii)                                  “Cause” means that the Company determined in good faith that (A) Grantee engaged in gross negligence or misconduct (including, without limitation, any act of unlawful discrimination or harassment) which is or could be injurious to the Company or a parent, affiliate or subsidiary of the Company, monetarily or otherwise; (B) Grantee has committed fraud, embezzlement or any other act of dishonesty against the Company, or breached a fiduciary duty to the Company; (C) Grantee has been convicted of, or plead “guilty,” “no contest,” or “nolo contendere” to any felony or crime involving dishonesty; (D) Grantee materially breached his/her employment agreement or engaged in prohibited activity which is set forth in any other written policy of the Company or agreement between Grantee and the Company, which breach or prohibited activity was not corrected by Grantee (if correctable) within ten (10) days after receiving written notice of such breach or activity from the Company; or (E) Grantee has engaged in acts or omissions of moral turpitude that would or could embarrass the Company, or adversely affect the business or reputation of the Company.

 

(iii)                               “Good Reason” means (A) a ten percent (10%) or more reduction in Grantee’s salary to which Grantee has not consented; (B) a material diminution in Grantee’s authority, duties or responsibilities without Grantee’s consent (which shall not include a change in reporting obligations resulting from a Change of Control); (C) a requirement by the Company, without Grantee’s consent, that Grantee’s primary work site be relocated to a site that is more than twenty five (25) miles away from Grantee’s work site prior to the Change of Control; or (D) any other action or inaction that constitutes a material breach by the Company of Grantee’s employment agreement, if any.

 

(d)                                 Exercise of Option.  Subject to the other terms of this Agreement and the Plan, Grantee may exercise all or any part of the Option, to the extent then vested, by delivery to the Company of an executed Exercise Agreement in the form attached hereto as Exhibit B, specifying the number of shares of Stock as to which the Option is being exercised.  Upon the valid exercise of all or any part of the Option, the number of shares of Stock with respect to which the Option is exercised shall be issued in the name of the Grantee, subject to the other terms and conditions of this Agreement and the Plan.

 

(e)                                  Consideration.  At the time of any exercise of the Option, the Exercise Price for the portion of the Option being exercised shall be paid to the Company in United States dollars by personal check, bank draft or money order, or with the consent of the Committee in its sole discretion, (i) surrender of other shares of Stock which have a Fair Market Value on the date

 

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of surrender equal to the Exercise Price of the shares of Stock as to which the Option is being exercised, (ii) surrender of shares of Stock issuable upon the exercise of the Option having a Fair Market Value on the date of exercise equal to the aggregate Exercise Price of the exercised portion of the Option; or (iii) any combination of the foregoing methods of payment.

 

(f)                                   Exercise Upon Termination of Relationship.  No shares of Stock may be purchased under the Option following the Grantee’s Termination Date, except as follows:

 

(i)                                     In the event the Grantee’s Termination Date occurs due to the Grantee’s death or disability (as determined in the good faith discretion of the Company’s Board of Directors), the Option may be exercised, to the extent then exercisable under Section 2(b) or 2(c) hereof, until the expiration of the stated period of the Option or the end of the six (6) month period commencing on the Termination Date, whichever period is shorter.

 

(ii)                                  In the event the Grantee’s Termination Date occurs due to termination by the Company or an Affiliate for any reason other than as a result of the Grantee’s death or disability or for Cause, the Option may be exercised, to the extent then exercisable under Section 2(b) or 2(c) hereof, until the expiration of the stated period of the Option or the end of the three (3) month period commencing on the Termination Date, whichever period is shorter.

 

(iii)                               In the event the Grantee’s Termination Date occurs due to the Grantee’s termination by the Company or an Affiliate for Cause, the Option shall automatically, and without any further action required by the Company, terminate on the Termination Date and no shares of Stock may thereafter be purchased under the Option.

 

(g)                                  Nontransferability.  The Option shall not be transferable otherwise than by will or the laws of descent and distribution, and is exercisable, during the lifetime of the Grantee, only by him; provided that the Option may be exercised after the Grantee’s death by the beneficiary most recently named by the Grantee in a written designation thereof filed by the Grantee with the Company, or if none, as designated by the Participant by will or by the laws of descent and distribution.

 

(h)                                 Withholding Taxes.  In no event shall Stock be delivered to the Grantee until the Grantee has paid to the Company in cash, or made arrangements satisfactory to the Company regarding the payment of, the amount of any taxes of any kind required by law to be withheld with respect to the Stock subject to the Option, and the Company shall have the right to deduct any such taxes from any payment of any kind otherwise due to the Grantee.

 

(i)                                     No Rights as Stockholder.  Neither the Grantee nor any other person shall become the beneficial owner of the shares of Stock subject to the Option, nor have any rights to dividends or other rights as a stockholder with respect to any such shares, until the Grantee has exercised the Option in accordance with the provisions hereof and of the Plan.

 

(j)                                    No Right to Continued Employment.  Neither the Option nor any terms contained in this Agreement shall confer upon the Grantee any express or implied right to be retained in the employment of or in a consulting relationship with the Company or an Affiliate for any period or at all, nor restrict in any way the right of the Company or any Affiliate, which

 

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right is hereby expressly reserved, to terminate his employment or consulting relationship at any time with or without cause.  The Grantee acknowledges and agrees that any right to exercise the Option is earned only by continuing to provide services to the Company and its Affiliates, or satisfaction of any other applicable terms and conditions contained in this Agreement and the Plan, and not through the act of being hired, being granted the Option, or acquiring shares of Stock hereunder.

 

(k)                                 Inconsistency with Plan.  Notwithstanding any provision herein to the contrary, the Option provides the Grantee with no greater rights or claims than are specifically provided for under the Plan.  If and to the extent that any provision contained in this Agreement is inconsistent with the Plan, the Plan shall govern.

 

(l)                                     Compliance with Laws and Regulations.  The Option and the obligation of the Company to sell and deliver shares of Stock hereunder shall be subject in all respects to (i) all applicable Federal, state and other laws, rules and regulations; and (ii) any registration, qualification, approvals or other requirements imposed by any government or regulatory agency or body which the Committee shall, in its sole discretion, determine to be necessary or applicable.  Moreover, the Option may not be exercised if its exercise, or the receipt of shares of Stock pursuant thereto, would be contrary to applicable law.  If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of shares of Stock upon any national securities exchange or under any state, Federal or other law, or the consent or approval of any governmental regulatory body, is necessary or desirable, the Company shall not be required to deliver any certificates for shares of Stock to the Grantee or any other person unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained, or otherwise provided for, free of any conditions not acceptable to the Company.

 

3.                                      Investment Representation.  If, at the time of exercise of all or part of the Option, the Stock is not registered under the Securities Act of 1933 (the “Securities Act”) and/or there is no current prospectus in effect under the Securities Act with respect to the Stock, the Grantee shall execute, prior to the issuance of any shares of Stock to the Grantee by the Company, an agreement (in such form as the Committee may specify) in which the Grantee, among other things, represents, warrants and agrees that the Grantee is purchasing or acquiring the shares acquired under this Agreement for the Grantee’s own account, for investment only and not with a view to the resale or distribution thereof, that the Grantee has knowledge and experience in financial and business matters, that the Grantee is capable of evaluating the merits and risks of owning any shares of Stock purchased or acquired under this Agreement, that the Grantee is a person who is able to bear the economic risk of such ownership and that any subsequent offer for sale or distribution of any of such shares shall be made only pursuant to (i) a registration statement on an appropriate form under the Securities Act, which registration statement has become effective and is current with regard to the shares being offered or sold, or (ii) a specific exemption from the registration requirements of the Securities Act, it being understood that to the extent any such exemption is claimed, the Grantee shall, prior to any offer for sale or sale of such shares, obtain a prior favorable written opinion, in form and substance satisfactory to the Committee, from counsel for or approved by the Committee, as to the applicability of such exemption thereto.

 

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4.                                      Lock-Up Period.  In the event and to the extent requested by the managing underwriter or, if the securities of the Company are not being disposed of in an underwritten public offering pursuant to an effective registration statement filed with the Securities and Exchange Commission, if requested by the Company, the Grantee agrees not to offer, pledge, lend, sell, contract to sell, make any short sale of, grant any option, right or warrant for the purchase of, enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of, or otherwise transfer or dispose, directly or indirectly, of any securities of the Company, for the thirty (30) days prior to and the ninety days (90) days (one hundred and eighty (180) days in the case of the initial public offering of the common stock of the Company pursuant to an effective registration statement filed with the Securities Exchange Commission) after the effectiveness of the registration statement pursuant to which such public offering shall be made (or such shorter period of time as is sufficient and appropriate, in the opinion of the managing underwriter or, as the case may be, the Company in order to complete the sale and distribution of the securities included in such public offering; provided that in no event shall such shorter period of time with respect to the Grantee be shorter than any such period for any other stockholder of the Company); provided that the limitations contained in this Section 4 shall not apply to the extent the Grantee is prohibited by applicable law from so withholding such securities from sale during such period.

 

5.                                      Purchase Option.

 

(a)                                 Upon the Grantee’s Termination Date, the Company, or its assignee, shall have the right, but not the obligation, to purchase from Grantee, or Grantee’s personal representative, as the case may be, any or all of the shares of Stock which have been purchased by Grantee pursuant to exercise of the Option, on the terms set forth herein (the “Purchase Option”).

 

(b)                                 The Company may exercise its Purchase Option by delivering, personally or by registered mail, to Grantee (or his or her transferee or personal representative, as the case may be), within ninety (90) days following Grantee’s Termination Date, or if later, ninety (90) days after the date Grantee exercises such Option, a notice in writing indicating the Company’s intention to exercise the Purchase Option and setting forth a date for closing not later than thirty (30) days from the mailing of such notice, at a purchase price determined in accordance with subparagraph 5(b)(i) or (ii) below, as applicable:

 

(i)                                     If Grantee’s Termination Date is due to any circumstances not described in Section 5(b)(ii), the purchase price to be paid by the Company for shares of Stock to be purchased by the Company pursuant to this Section 5(b) shall be the Fair Market Value of such shares as of Grantee’s Termination Date.

 

(ii)                                  If Grantee’s Termination Date is due to the termination of Grantee’s employment by the Company or an Affiliate for Cause, the purchase price to be paid by the Company for shares of Stock pursuant to this Section 5(b) shall be the lesser of: (A) the Fair Market Value of such shares on Grantee’s Termination Date and (B) the original Exercise Price stated on the first page of this Option Agreement.

 

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6.                                      Company’s Right of First Refusal.  (a) The Stock acquired pursuant to the exercise of this Option may be sold by the Grantee only in compliance with the provisions of this Section 6.  Prior to any intended sale, the Grantee shall first give written notice (the “Offer Notice”) to the Company specifying (i) his or her bona fide intention to sell or otherwise transfer such Stock, (ii) the name and address of the proposed purchaser(s), (iii) the number of shares of Stock the Grantee proposes to sell (the “Offered Shares”), (iv) the price for which he or she proposes to sell the Offered Shares, and (v) all other material terms and conditions of the proposed sale.  Within thirty (30) days after receipt of the Offer Notice, the Company or its nominee(s) may elect to purchase all or any portion of the Offered Shares at the price and on the terms and conditions set forth in the Offer Notice by delivery of written notice (the “Acceptance Notice”) to the Grantee specifying the number of Offered Shares that the Company or its nominees elect to purchase.  Within fifteen (15) days after delivery of the Acceptance Notice to the Grantee, the Company and/or its nominee(s) shall deliver to the Grantee payment of the amount of the purchase price of the Offered Shares to be purchased pursuant to this Section 6, against delivery by the Grantee of a certificate or certificates representing the Offered Shares to be purchased, duly endorsed for transfer to the Company or such nominee(s), as the case may be.  Payment shall be made on the same terms as set forth in the Offer Notice or, at the election of the Company or its nominees(s), by check or wire transfer of funds.  If the Company and/or its nominee(s) do not elect to purchase all of the Offered Shares, the Grantee shall be entitled to sell the balance of the Offered Shares to the purchaser(s) named in the Offer Notice at the price specified in the Offer Notice or at a higher price and on the terms and conditions set forth in the Offer Notice; provided, however, that such sale or other transfer must be consummated within sixty (60) days from the date of the Offer Notice and any proposed sale after such sixty (60) day period may be made only by again complying with the procedures set forth in this Section 6.  Any transferee of the Offered Shares pursuant to this Section 6 shall hold the Offered Shares subject to the terms and conditions of this Option Agreement and no further transfer of the Offered Shares may be made without complying with the provisions of this Section 6.  The Company may assign its rights under this Section 6 without the consent of the Grantee.

 

(b)                                 Notwithstanding the forgoing, the Grantee may transfer all or any portion of the Stock to a trust established for the sole benefit of the Grantee and/or his or her spouse or children without such transfer being subject to the right of first refusal set forth in this Section 6, provided that the Stock so transferred shall remain subject to the terms and conditions of this Option Agreement and no further transfer of such Stock may be made without complying with the provisions of this Section 6.

 

(c)                                  Notwithstanding the foregoing and anything contained herein to the contrary, the Company’s right of first refusal pursuant to this Section 6 shall expire upon the occurrence of an initial public offering for the Stock.

 

7.                                      Restrictions on Transfer of Stock.  The Grantee shall not transfer shares of Stock received by the Grantee (or any interest or right in such shares) except: (a) to the Company; (b) pursuant to a registration statement filed pursuant to the Securities Act or, at any time after an initial public offering of the Company, pursuant to Rule 144 under the Securities Act in an unsolicited brokerage transaction to the public; (c) following his death, by will or intestacy to the Grantee’s beneficiary, legal representative, heir or legatee; (d) as a gift or gifts during the Grantee’s lifetime to the Grantee’s spouse, children or grandchildren, or to a trust, partnership or

 

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other legal entity for the benefit of, or in which the only partners or members are, the Grantee and/or any of the foregoing, provided that the donee of such shares agrees to be bound by the provisions of this Agreement; or (e) pursuant to Section 8 of this Agreement.  Additionally, any shares of Stock received by the Grantee or any other person entitled to exercise the Option under Section 2(g) hereof upon exercise of the Option (or any interest or right in such shares) cannot be transferred in any manner except as permitted by the bylaws of the Company and any other agreements (e.g., stockholders agreement) to which the Grantee is a party.

 

8.                                      Drag-Along Rights.  (a)  In connection with a Sale of the Company approved by the Board of Directors of the Company, the Grantee shall (if applicable) vote for, consent to, raise no objections against and take all actions necessary or desirable to the Company in consummating such sale, including, if such sale is structured as a merger or consolidation, waiving any dissenters rights, appraisal rights or similar rights in connection with such merger or consolidation, or if such sale is structured as a sale of equity, agreeing to sell all of the Grantee’s equity securities on the same terms and conditions approved by and applicable to the other shareholders of the Stock, as the case may be.  In order to effect the foregoing covenant, the Grantee hereby grants to the Company with respect to all of Grantee’s Stock an irrevocable proxy (which is deemed to be coupled with an interest) with respect to any stockholder vote or action by written consent solely to effect such Sale of the Company in compliance with this Section 8.

 

(b)                                 The Company and the Grantee each hereby agree to cooperate fully (including by waiving any other appraisal rights to which the Grantee may be entitled under applicable law and the Grantee does hereby waive all such appraisal rights) with the purchaser in any such Sale of the Company and, to execute and deliver all documents (including purchase agreements) and instruments as such purchaser reasonably requests to effect such Sale of the Company including, without limitation, the making of representations and warranties as to due incorporation, existence and good standing, power and authority of the Grantee, and ownership of Stock and the granting of all indemnifications and the execution of all agreements (including, without limitation, participating in any escrow arrangements to the extent of their respective pro rata portion) and similar arrangements which the other shareholders of the Stock are making or executing.

 

9.                                      Representations of the Grantee; Restrictive Legends.  (a) The Grantee hereby acknowledges receipt of a copy of the Plan, and represents that he is familiar with the terms and provisions thereof.  The Grantee hereby represents and acknowledges that he has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement, and fully understands all provisions of the Plan and this Agreement.  The Grantee hereby agrees to be bound by all of the terms and provisions of the Plan and this Agreement, including the terms and provisions adopted after the granting of the Option but prior to the complete exercise hereof, subject to the last paragraph of Section 14(c) of the Plan as in effect on the date hereof.  The Grantee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee or the Board made upon any questions arising under the Plan or this Agreement, or otherwise relating to the Option.  None of the shares of Option Stock shall be transferred on the Company’s books nor shall the Company recognize any purported transfer of any such shares or any interest therein unless and

 

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until all applicable provisions of Sections 4, 5, 6, 7, 8 and 9 of this Agreement have been complied with in all respects.

 

(b)                                 The Grantee hereby acknowledges that federal securities laws and the securities laws of the state in which he or she resides may require the placement of certain restrictive legends upon the Stock issued upon exercise of the Option.  The Grantee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Stock together with any other legends that may be required by the Company or by state or federal securities laws:

 

“THE STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH STOCK MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.”

 

In addition, all stock certificates evidencing the Stock shall be imprinted with a legend substantially as follows:

 

“THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, REPURCHASE RIGHTS AND A RIGHT OF FIRST REFUSAL IN FAVOR OF THE CORPORATION AND/OR ITS NOMINEE(S), AS SET FORTH IN A STOCK OPTION AGREEMENT DATED AS OF                                     .  TRANSFER OF THE STOCK MAY BE MADE ONLY IN COMPLIANCE WITH THE PROVISIONS OF SAID AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.  SUCH TRANSFER RESTRICTIONS, REPURCHASE RIGHTS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.”

 

10.                               Notices.  Any notice or other communication required or permitted hereunder shall be in writing and in accordance with the Plan, and, if to the Company, may be sent to the Company, c/o N30 Pharmaceuticals, Inc., attention: Chief Financial Officer, by facsimile at 303-440-8399, or delivered in person, or sent by certified or registered mail or overnight courier, prepaid, addressed as follows: 3122 Sterling Circle, Suite 200, Boulder, CO 80301 and, if to the Grantee, shall be addressed to him at the address set forth below his signature hereon, subject to the right of either party to designate at any time hereafter in writing some other address.

 

11.                               Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware applicable to contracts executed and to be performed entirely within such state, without regard to the conflict of law provisions thereof.

 

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12.                               Severability.  If any of the provisions of this Agreement should be deemed unenforceable, the remaining provisions shall remain in full force and effect.

 

13.                               Modification.  Except as otherwise permitted by the Plan, this Agreement may not be materially modified or materially amended, nor may any provision hereof be waived, in any way except in writing signed by the parties hereto.

 

14.                               Counterparts.  This Agreement has been executed in two counterparts, each of which shall constitute one and the same instrument.

 

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EXHIBIT B

 

N30 PHARMACEUTICALS, INC.

 

2012 STOCK INCENTIVE PLAN

 

EXERCISE AGREEMENT

 

This Exercise Agreement is made by and between N30 Pharmaceuticals, Inc. (the “Company”) and                            (“Grantee”).  Capitalized terms used herein without definition shall have the meanings given in the N30 Pharmaceuticals, Inc. 2012 Stock Incentive Plan (the “Plan”) and Grantee’s Option Agreement dated                  (the “Option Agreement”).

 

1.                                      Exercise of Option.  Subject to the terms of the Plan and the Option Agreement, Grantee elects to exercise his or her Option to purchase          shares of Stock at a per share exercise price of $            , and a total purchase price of $                  .  Grantee acknowledges that the Stock will not be transferred to Grantee until all tax withholding obligations have been satisfied in accordance with the provisions of Section 2(h) of Exhibit A of the Option Agreement.

 

2.                                      Representations of Grantee.  Grantee acknowledges that he or she has received, read and understood the Plan and the Option Agreement.  Grantee agrees to abide by and be bound by the terms of the Plan and the Option Agreement, which terms are incorporated herein by reference.  Grantee acknowledges that the Stock he or she will receive pursuant to exercise of the Option is subject to certain restrictions and limitations, as set forth in the Option Agreement and incorporated herein by reference, including (i) a “lock-up period” restricting the transfer of Grantee’s Stock for a period of time before or after a public offering of the Company’s Stock (Section 4); (ii) the Company’s right to purchase Grantee’s Stock following the termination of Grantee’s relationship with the Company (Section 5); (iii) the Company’s right of first refusal to purchase Stock that Grantee intends to sell (Section 6); (iv) restrictions on Grantee’s ability to transfer Stock (Section 7); and (v) “drag-along rights” which obligates Grantee to sell his or her Stock on the same terms and conditions applicable to other shareholders in the event of a Sale of the Company (Section 8).

 

3.                                      Investment Representations.  (a) Grantee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Stock.  Grantee is acquiring the Stock for investment for Grantee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

 

(b)                                 Grantee acknowledges and understands that the Stock constitutes “restricted securities” under the Securities Act and has not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Grantee’s investment intent as expressed herein.  Grantee

 

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understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Grantee’s representation was predicated solely upon a present intention to hold the Stock for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Stock, or for a period of one year or any other fixed period in the future.  Grantee further understands that the Stock must be held indefinitely unless such Stock is subsequently registered under the Securities Act or an exemption from such registration is available.  Grantee further acknowledges and understands that the Company is under no obligation to register the Stock.  Grantee understands that the certificate evidencing the Stock will be imprinted with a legend which prohibits the transfer of the Stock unless such Stock is registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable securities laws or agreements.

 

(c)                                  Grantee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.  Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to Grantee, the exercise will be exempt from registration under the Securities Act.  In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Stock exempt under Rule 701 may under present law be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as this term is defined under the Exchange Act); (2) the availability of certain public information about the Company, (3) the amount of Stock being sold during any three (3) month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

 

(d)                                 Grantee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.  Grantee understands that no assurances can be given that any such other registration exemption will be available in such event.

 

4.                                      Entire Agreement.  The Plan and Option Agreement are incorporated herein by reference.  This Exercise Agreement, the Plan, and the Option Agreement (together with all applicable Exhibits hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Grantee with respect to the subject matter hereof.

 

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The Company and Grantee have executed this Exercise Agreement on the date(s) set forth below.

 

	
GRANTEE
    	
 
    	
COMPANY
    
	
 
    	
 
    	
 
    
	
[Insert   Name]
    	
 
    	
N30   PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
Signature
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
Date
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Address
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
					

 

Spousal Consent (if applicable, see below)

 

I,                               , spouse of Grantee, have read and hereby approve the foregoing Exercise Agreement, including the underlying terms of the Option disclosed in the Option Agreement.  In consideration of the Company’s granting Grantee the right to purchase the shares of Stock as set forth in the Option Agreement, I hereby agree to be irrevocably bound by the terms of the Option Agreement and further agree that any community property or similar interest that I may have in the Stock shall similarly be bound by the terms of the Option Agreement.  I hereby appoint Grantee as my attorney-in-fact with respect to any amendment or exercise of any rights under the Option Agreement.

 

 

	
 
    	
Spouse   of Grantee:
    	
 
    
	
 
    	
 
    
	
 
    	
Date:
    	
 
    
				

 

 

Note: If Grantee is married on the exercise date of this Agreement (and such Grantee is a resident of a community property law state such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, or the Commonwealth of Puerto Rico), such Spousal Consent form shall be executed and delivered to the Company, effective on the date hereof.

 

14Exhibit 10.4

 

NIVALIS THERAPEUTICS, INC.

 

EMPLOYEE STOCK PURCHASE PLAN

 

ARTICLE I: PURPOSE AND SCOPE OF THE PLAN

 

1.1.         Purpose and Scope.  The purpose of the Nivalis Therapeutics, Inc. Employee Stock Purchase Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to acquire a proprietary interest in the Company through the purchase of shares of Common Stock. The Company intends that the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code and the Plan shall be interpreted in a manner that is consistent with that intent.

 

ARTICLE II: DEFINITIONS

 

Whenever the following terms are used in the Plan, they shall have the meaning specified below unless the context clearly indicates to the contrary. The singular pronoun shall include the plural where the context so indicates.

 

2.1.         “Administrator” shall mean the Committee, or such individuals to which authority to provide administrative services under this Plan has been delegated under Section 7.1 hereof.

 

2.2.         “Board” shall mean the Board of Directors of the Company.

 

2.3.         “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

2.4.         “Committee” shall mean the Compensation Committee of the Board.

 

2.5.         “Common Stock” shall mean the common stock of the Company.

 

2.6.         “Company” shall mean Nivalis Therapeutics, Inc., a Delaware corporations, including any successor thereto.

 

2.7.         “Compensation” shall mean the regular straight-time earnings or base salary, bonuses and commissions paid to an Employee from the Company as compensation for services to the Company or any Designated Subsidiary, before deduction for any salary deferral contributions made by the Employee to any tax-qualified or nonqualified deferred compensation plan, including overtime, vacation pay, holiday pay, jury duty pay, funeral leave pay, paid time off, military pay, but excluding education or tuition reimbursements, imputed income arising under any group insurance or benefit program, travel expenses, business and moving reimbursements, income received in connection with any stock options, restricted stock, restricted stock units or other compensatory equity awards, and any contributions made by the Company to any employee benefit plan.

 

2.8.         “Designated Subsidiary” shall mean each Subsidiary that has been designated by the Committee from time to time in its sole discretion as eligible to participate in the Plan.

 

 

2.9.         “Effective Date” shall mean the date this Plan is adopted by the Board, provided that the Plan is approved by the Company’s shareholders within twelve (12) months of such adoption by the Board.

 

2.10.       “Eligible Employee” shall mean an Employee who (a) who customarily works at least twenty (20) hours per week and is customarily employed for more than five (5) months in a calendar year. Notwithstanding the foregoing, the Committee may exclude from participation in the Plan any Employee that is a “highly compensated employee” of the Company or any Designated Subsidiary (within the meaning of Section 414(q) of the Code), or a sub-set of such highly compensated employees.

 

2.11.       “Employee” shall mean any person who renders services to the Company or a Designated Subsidiary as an “employee” within the meaning of Section 3401(c) of the Code pursuant to an employment relationship with such employer. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on military leave, sick leave or other leave of absence approved by the Company or Designated Subsidiary that meets the requirements of Treasury Regulation Section 1.421-1(h)(2). Where the period of leave exceeds three (3) months, or such other period specified in Treasury Regulation Section 1.421-1(h)(2), and the individual’s right to re-employment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the first day immediately following such three (3)-month period, or such other period specified in Treasury Regulation Section 1.421-1(h)(2).

 

2.12.        “Exercise Date” shall mean the last Trading Day of each Offering Period, except as provided in Section 5.2 hereof.

 

2.13.       “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

2.14.       “Fair Market Value” shall mean the closing sales price for a share of Common Stock as quoted on any established securities exchange (such as the New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market) for such date or, if there is no closing sales price for a share of Common Stock on the date in question, the closing sales price for a share of Stock on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable.  If the Common Stock is not listed on a national securities exchange, Fair Market Value shall be determined by the Administrator in its good faith discretion.

 

2.15.        “Grant Date” shall mean the first Trading Day of an Offering Period.

 

2.16.        “Offering Period” shall mean, unless otherwise determined by the Committee, a period of six months commencing on such date or dates as the Committee determines; provided, that, pursuant to Section 5, the Committee may change the duration of future Offering Periods (subject to a maximum Offering Period of twenty-seven (27) months) and/or the start and end dates of future Offering Periods.

 

2.17.       “Option” shall mean the right to purchase shares of Common Stock pursuant to the Plan during each Offering Period.

 

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2.18.       “Option Price” shall mean eighty-five percent (85%) of the lesser of the Fair Market Value of a share of Common Stock on (a) the applicable Grant Date and (b) the applicable Exercise Date; provided that in no event shall the Option Price per share of Common Stock be less than the par value per share of the Common Stock.

 

2.19.       “Parent” means any entity that is a parent corporation of the Company within the meaning of Section 424 of the Code and the regulations promulgated thereunder.

 

2.20.       “Participant” shall mean any Eligible Employee who elects to participate in the Plan.

 

2.21.       “Plan” shall mean the Nivalis Therapeutics, Inc. Employee Stock Purchase Plan, as amended from time to time.

 

2.22.       “Plan Account” shall mean a bookkeeping account established and maintained by the Company in the name of each Participant.

 

2.23.       “Subsidiary” shall mean any entity that is a subsidiary corporation of the Company within the meaning of Section 424 of the Code and the regulations promulgated thereunder.

 

2.24.       “Trading Day” shall mean a day on which the principal securities exchange on which the Common Stock is listed is open for trading or, if the Common Stock is not listed on a securities exchange, shall mean a business day, as determined by the Administrator in good faith.

 

ARTICLE III: PARTICIPATION

 

3.1.         Eligibility.

 

(a)         Any Eligible Employee employed by the Company or a Designated Subsidiary on the first day of an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of Articles IV and V hereof, and the requirements of Section 423 of the Code.

 

(b)         Notwithstanding any provision of the Plan to the contrary, no Eligible Employee shall be granted an Option under the Plan (i) to the extent that, immediately after the grant of the Option, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company or any Parent or Subsidiary and/or hold outstanding options to purchase stock possessing 5% or more of the total combined voting power or value of all classes of the capital stock of the Company or any Parent or any Subsidiary, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans of the Company or any Parent or Subsidiary accrues at a rate that exceeds $25,000 of the Fair Market Value of such stock (determined at the time the option is granted) for each calendar year in which such Option is outstanding at any time, as determined in accordance with Section 423 of the Code and the regulations promulgated thereunder.

 

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3.2.         Election to Participate; Payroll Deductions.

 

(a)         An Eligible Employee may become a Participant in the Plan by properly competing a payroll deduction authorization and submitting it to the Company, in accordance with the enrollment procedures established by the Administrator, in its sole discretion. By submitting a payroll deduction authorization, the Eligible Employee authorizes payroll deductions not to exceed 15% of the Participant’s Compensation. Amounts deducted from a Participant’s Compensation with respect to an Offering Period shall be credited to the Participant’s Plan Account.

 

(b)         During an Offering Period, a Participant may decrease the amount deducted from such Participant’s Compensation only once. To make such a change, the Participant must submit a new payroll deduction authorization authorizing the new rate of payroll deductions at least ten (10) calendar days before the Exercise Date for such Offering Period. A Participant may not increase the amount deducted from such Participant’s Compensation during an Offering Period.

 

(c)         Notwithstanding the foregoing, upon the termination of an Offering Period, each Participant in such Offering Period shall automatically participate in the immediately following Offering Period at the same payroll deduction percentage as in effect at the termination of the prior Offering Period, unless such Participant delivers to the Company a new payroll deduction authorization, or unless such Participant becomes ineligible for participation in the Plan.

 

(d)         No payroll deduction authorization shall become binding upon the Company until it has been accepted by the Administrator. The Administrator shall have the right, in its sole discretion, to reject any payroll deduction authorization that (i) does not comply with the requirements of this Plan or the deadlines, forms or procedures developed by the Administrator or (ii) is submitted by a person who is not an Eligible Employee or whose status as Eligible Employee is suspended or revoked.  Such rejection may be effected by not making payroll deductions under this Plan or, if such deductions have been made, by refunding such amounts without interest.  The rejection of a payroll deduction authorization for one or more Offering Periods shall not affect the ability or right of the Administrator to accept or reject a payroll deduction authorization for any subsequent Offering Period.

 

ARTICLE IV: PURCHASE OF SHARES

 

4.1.         Grant of Option.  Each Participant shall be granted an Option with respect to an Offering Period on the applicable Grant Date. Subject to adjustment in accordance with Sections 5.2 and 5.3 hereof and the limitations of Section 3.1(b) hereof, the number of shares of Common Stock subject to a Participant’s Option shall be determined by dividing (a) the amount in the Participant’s Plan Account on such Exercise Date by (b) the applicable Option Price; provided that in no event shall a Participant be permitted to purchase during each Offering Period more than 25,000 shares of Common Stock.  The Committee may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of shares of Common Stock that a Participant may purchase during such future Offering Periods.

 

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4.2.         Purchase of Shares.

 

(a)         On the applicable Exercise Date for an Offering Period, each Participant shall automatically and without any action on such Participant’s part be deemed to have exercised his or her Option to purchase at the applicable per share Option Price the largest number of whole shares of Common Stock which can be purchased with the amount in the Participant’s Plan Account. Any balance less than the per share Option Price that is remaining in the Participant’s Plan Account (after exercise of such Participant’s Option) shall be carried forward to the next Offering Period, unless the Participant has elected to withdraw from the Plan pursuant to Section 6.1 hereof or, pursuant to Section 6.2 hereof, such Participant has ceased to be an Eligible Employee. Any balance not carried forward to the next Offering Period in accordance with the prior sentence promptly shall be refunded to the applicable Participant. As soon as practicable following the applicable Exercise Date, the number of shares of Common Stock purchased by such Participant shall be delivered (either in share certificate or book entry form), in the Company’s sole discretion, to either (i) the Participant or (ii) an account established in the Participant’s name at a stock brokerage or other financial services firm designated by the Company.

 

(b)         If the Company is prevented by applicable securities laws from selling stock as of any date, no purchase shall be made on such date and Options shall remain in effect unless withdrawn and the purchases shall occur as soon as practicable after the Administrator determines that restrictions preventing the sale of stock have been removed or otherwise cease to exist; provided, that such Options shall expire and may not be exercised after the expiration of the twenty-seven (27) month period starting on the Grant Date applicable to such Options.

 

 

4.3.         Transferability of Rights.  An Option granted under the Plan shall not be transferable, other than by will or the applicable laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant.  No option or interest or right to the Option shall be available to pay off any debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempt at disposition of the option shall have no effect.

 

ARTICLE V: COMMON STOCK

 

5.1.         Common Stock Reserved.  Subject to adjustment as provided in Section 5.2 hereof, the maximum number of shares of Common Stock that shall be made available for sale under the Plan shall be [                        ] [Note: Number of shares to be equal to 1.5% of outstanding capital stock shares of Common Stock immediately following IPO, rounded up to the nearest hundred shares].  Shares of Common Stock made available for sale under the Plan may be authorized but unissued shares, treasury shares of Common Stock, or reacquired shares reserved for issuance under the Plan.

 

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5.2.         Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Corporate Transaction.

 

(a)         Changes in Capitalization.  In the event that any dividend or other distribution (whether in the form of cash, Common Stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, or other change in the Company’s structure affecting the Common Stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, the Committee will, in such manner as it deems equitable, adjust the number of shares and class of Common Stock that may be delivered under the Plan, the Option Price and the number of shares of Common Stock covered by each outstanding option under the Plan, and the numerical limits of Sections 4.1 and 5.1 hereof.

 

(b)         Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date, and the Offering Period shall terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Committee.  The new Exercise Date shall be before the date of the Company’s proposed dissolution or liquidation.  At least ten (10) days before the new Exercise Date, the Administrator will provide each Participant with written notice, which may be electronic, of the new Exercise Date and that the Participant’s option will be exercised automatically on such date, unless before such time, such Participant has withdrawn from the Plan pursuant to Section 6.1 hereof or, has ceased to be an Eligible Employee pursuant to Section 6.2 hereof.

 

(c)         Corporate Transaction.  In the event of the occurrence of a merger, consolidation, acquisition of property or stock, separation, reorganization or other corporate event described in Section 424 of the Code with respect to the Company, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.  In the event that the successor corporation refuses to assume or substitute for the Option, any Offering Periods then in progress shall be shortened by setting a new Exercise Date on which the Offering Period will end.  The new Exercise Date shall be before the date of the Company’s proposed sale or merger.  At least ten (10) days before the new Exercise Date, the Administrator will provide each Participant with written notice, which may be electronic, of the new Exercise Date and that the Participant’s option will be exercised automatically on such date, unless before such time, such Participant has withdrawn from the Plan pursuant to Section 6.1 hereof or, has ceased to be an Eligible Employee pursuant to Section 6.2 hereof.

 

5.3.         Insufficient Shares.  If the Administrator determines that, on a given Exercise Date, the number of shares of Common Stock with respect to which Options are to be exercised would exceed the number of shares of Common Stock remaining available for sale under the Plan on such Exercise Date, the Administrator shall make a pro rata allocation of the shares of Common Stock available for issuance on such Exercise Date in as uniform a manner as shall be practicable and as the Administrator shall determine in its sole discretion to be equitable among Participants exercising Options on such Exercise Date, and unless additional shares are authorized for issuance under the Plan, no further Offering Periods shall take place and the Plan 

 

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shall terminate.  If an Offering Period is so terminated, then the balance of the amount credited to the Participant’s Plan Account which has not been applied to the purchase of shares of Common Stock shall be paid to such Participant in one lump sum in cash within thirty (30) days after such Exercise Date, without any interest thereon.

 

5.4.         Rights as Stockholders.  With respect to shares of Common Stock subject to an Option, a Participant shall not be deemed to be a stockholder of the Company and shall not have any of the rights or privileges of a stockholder.  A Participant shall have the rights and privileges of a stockholder of the Company when, but not until, shares of Common Stock have been deposited in the designated brokerage account following exercise of his or her Option.

 

ARTICLE VI: TERMINATION OF PARTICIPATION

 

6.1.         Cessation of Contributions; Voluntary Withdrawal.  A Participant may elect to withdraw from the Plan by delivering written notice of such election to the Administrator in such form and at such time prior to the Exercise Date for the then-current Offering Period as may be established by the Administrator. A Participant electing to withdraw from the Plan will be paid all amounts then credited to the Participant’s Plan Account in a lump-sum payment in cash, without interest, within thirty (30) days after such election is received by the Administrator. Upon such election, the Participant shall cease to participate in the Plan and the Participant’s Option for such Offering Period shall automatically terminate.  If a Participant withdraws from the Offering Period, payroll deductions will not resume at the beginning of the succeeding Offering Period, unless the Participant re-enrolls in the Plan in accordance with the provisions of Article 3.

 

6.2.         Termination of Eligibility.  Upon a Participant’s ceasing to be an Eligible Employee, for any reason, such Participant’s Option for the applicable Offering Period shall automatically terminate, he or she shall be deemed to have elected to withdraw from the Plan,  and such Participant’s Plan Account shall be paid to such Participant or, in the case of his or her death, to the person or persons entitled thereto pursuant to applicable law, within thirty (30) days after such cessation of being an Eligible Employee, without any interest thereon.

 

ARTICLE VII: GENERAL PROVISIONS

 

7.1.         Administration.  The Plan shall be administered by the Committee.  The Committee may delegate administrative tasks under the Plan to the Administrator to assist in the administration of the Plan, including establishing and maintaining an individual securities account under the Plan for each Participant. The Board may at any time and from time to time exercise any and all rights and duties of the Committee or the Administrator under the Plan.

 

It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with the provisions of the Plan. The Administrator shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(i)            To establish Offering Periods;

 

(ii)           To determine when and how Options shall be granted and the provisions and terms of each Offering Period (which need not be identical);

 

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(iii)          To select Designated Subsidiaries;

 

(iv)          To develop such forms and procedures as the Administrator in its discretion deems necessary or helpful to the orderly administration of this Plan;

 

(v)           To construe and interpret the Plan, the terms of any Offering Period and the terms of the Options and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. The Administrator, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, any Offering Period or any Option, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effect, subject to Section 423 of the Code and the regulations promulgated thereunder; and

 

(vi)          To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by individuals who are foreign nationals or employed outside the United States.

 

All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon all Participants, the Company and all other interested persons. No member of the Board, the Committee or the Administrator shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the options, and all members of the Board, the Committee and the Administrator shall be fully protected by the Company in respect to any such action, determination, or interpretation.

 

7.2.         Reports.  Individual accounts shall be maintained by the Administrator for each Participant in the Plan. Statements of Plan Accounts shall be given by the Administrator to Participants at least annually, which statements shall set forth the amounts of payroll deductions, the Option Price, the number of shares purchased and the remaining cash balance, if any.

 

7.3.         No Right to Employment.  Nothing in the Plan shall be construed to give any person (including any Participant) the right to remain in the employ of the Company, a Parent or a Subsidiary or to affect the right of the Company, any Parent or any Subsidiary to terminate the employment of any person (including any Participant) at any time, with or without cause, which right is expressly reserved.

 

7.4.         Amendment and Termination of the Plan.

 

(a)         The Board may, in its sole discretion, amend, suspend or terminate the Plan at any time and for any reason; provided, however, that without approval of the Company’s stockholders given within twelve (12) months before or after action by the Board, the Plan may not be amended (i) to increase the maximum number of shares of Common Stock subject to the Plan, (ii) to change the designation or class of Eligible Employees, or (iii) in any manner that would cause the Plan to no longer be an “employee stock purchase plan” within the meaning of Section 423(b) of the Code.

 

(b)         In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, to the extent permitted under Section 423 of the Code, in its discretion and, to the extent necessary or 

 

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desirable, modify or amend the Plan to reduce or eliminate such accounting consequence. Such modifications or amendments shall not require stockholder approval or the consent of any Participant.

 

(c)         If the Plan is terminated, the Administrator may elect to terminate all outstanding Offering Periods either immediately or once shares of Common Stock have been purchased on the next Exercise Date (which may, in the discretion of the Administrator, be accelerated). If any Offering Period is terminated before its scheduled expiration, all amounts that have not been used to purchase shares of Common Stock will be returned to Participants (without interest, except as otherwise required by law) as soon as administratively practicable.

 

7.5.         Use of Funds; No Interest Paid.  All funds received by the Company by reason of purchase of Common Stock under the Plan shall be included in the general funds of the Company free of any trust or other restriction and may be used for any corporate purpose to the extent permitted by applicable law.  No interest shall be paid to any Participant or credited under the Plan.

 

7.6.         Approval by Stockholders.  No Option may be granted during any period of suspension of the Plan or after termination of the Plan.  The Plan shall be submitted for the approval of the Company’s stockholders within twelve (12) months before or after the date of the Board’s adoption of the Plan. Options may be granted prior to such stockholder approval; provided, however, that such Options shall not be exercisable prior to the time when the Plan is approved by the stockholders; provided, further that if such approval has not been obtained by the end of said twelve (12)-month period, all Options previously granted under the Plan shall thereupon terminate and be canceled and become null and void without being exercised.

 

7.7.         Conformity to Securities Laws.  Notwithstanding any other provision of the Plan, the Plan and the participation in the Plan by any individual who is then subject to Section 16 of the Exchange Act shall be subject to any additional limitations set forth in any applicable exemption rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemption.  To the extent permitted by applicable law, the Plan shall be deemed amended to the extent necessary to conform to such applicable exemption.

 

7.8.         Notice of Disposition of Shares.  Each Participant shall give the Company prompt written notice of any disposition or other transfer of any shares of Common Stock, acquired pursuant to the exercise of an Option, if such disposition or transfer is made (a) within two (2) years after the applicable Grant Date or (b) within one (1) year after the transfer of such shares of Common Stock to such Participant upon exercise of such Option.  The Company may direct that any certificates evidencing shares acquired pursuant to the Plan refer to such requirement.

 

7.9.         Tax Withholding.  The Company or any Parent or any Subsidiary shall be entitled to require payment in cash or deduction from other compensation payable to each Participant of any sums required by federal, state or local tax law to be withheld with respect to any purchase of shares of Common Stock under the Plan or any sale of such shares.

 

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7.10.       Governing Law.  The Plan and all rights and obligations thereunder shall be construed and enforced in accordance with the laws of the State of Delaware.

 

7.11.       Conditions To Issuance of Shares. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing shares of Common Stock pursuant to the exercise of an Option by a Participant, unless and until the Board or the Administrator has determined, with advice of counsel, that the issuance of such shares of Common Stock is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any securities exchange or automated quotation system on which the shares of Common Stock are listed or traded, and the shares of Common Stock are covered by an effective registration statement or applicable exemption from registration.  In addition to the terms and conditions provided herein, the Board or the Administrator may require that a Participant make such reasonable covenants, agreements, and representations as the Board or the Administrator, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. All certificates for shares of Common Stock delivered pursuant to the Plan and all shares of Common Stock issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state, or foreign securities or other laws, rules and regulations and the rules of any securities exchange or automated quotation system on which the shares of Common Stock are listed, quoted, or traded. The Administrator may place legends on any certificate or book entry evidencing shares of Common Stock to reference restrictions applicable to the shares of Common Stock. The Administrator shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Option, including a window-period limitation, as may be imposed in the sole discretion of the Administrator. Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by any applicable law, rule or regulation, the Company may, in lieu of delivering to any Participant certificates evidencing shares of Common Stock issued in connection with any Option, record the issuance of shares of Common Stock in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).

 

7.12.       Equal Rights and Privileges.  All Eligible Employees of the Company (or of any Designated Subsidiary) shall have equal rights and privileges under this Plan to the extent required under Section 423 of the Code or the regulations promulgated thereunder so that this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code or the regulations promulgated thereunder. Any provision of this Plan that is inconsistent with Section 423 of the Code or the regulations promulgated thereunder shall, without further act or amendment by the Company or the Board, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code or the regulations promulgated thereunder.

 

7.13.       Limitation on Liability.  Neither the Company nor any affiliate or anyone acting on the behalf of the Company or an affiliate shall be responsible in whole or in part for any act done in good faith or any good faith omission to act.  Without limiting the first sentence, such entities shall not be responsible for any prices at which shares of Stock are purchased or sold, the time at which any purchase or sale is made under this Plan, or the change in value of any class of stock of the Company.

 

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7.14.       Plan Document Controls.  In the event of any conflict between the provisions of this Plan and any other document or communication, this Plan shall control, and the conflicting provisions of such other document or communication shall be null and void ab initio.

 

7.15.       Severability.  In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

 

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