Document:

exv10w19

 

Exhibit 10.19

CONNETICS CORPORATION

1995 EMPLOYEE STOCK PURCHASE PLAN

(As amended and restated through October 13, 2005)

(As amended and restated through May 7, 2004)

(As amended and restated through December 12, 2002)

Adopted by the Board of Directors Feb. 17, 2000

Approved by the Stockholders May 11, 2000

1.     Purpose. The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the Company. It is the
intention of the Company to have the Plan qualify as an “Employee Stock Purchase Plan” under
Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner consistent with the
requirements of that section of the Code.

2.     Definitions.

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

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

         (c)     “Common Stock” means the Common Stock of the Company.

         (d)     “Company” means Connetics Corporation, a Delaware corporation.

         (e)     “Compensation” means all regular straight time gross earnings, excluding payments
for overtime, shift premium, incentive compensation, incentive payments, bonuses, commissions and
other compensation.

         (f)     “Continuous Status as an Employee” means the absence of any interruption or
termination of service as an Employee. Continuous Status as an Employee shall not be considered
interrupted in the case of a leave of absence agreed to in writing by the Company, provided that
such leave is for a period of not more than three (3) months or reemployment upon the expiration of
such leave is guaranteed by contract or statute.

         (g)     “Contributions” means all amounts credited to the account of a participant
pursuant to the Plan.

         (h)     “Designated Subsidiaries” means the Subsidiaries which have been designated by the
Board from time to time in its sole discretion as eligible to participate in the Plan.

         (i)     “Employee” means any person, including an Officer, who is customarily employed for
at least twenty (20) hours per week and more than five (5) months in a calendar year by the Company
or one of its Designated Subsidiaries.

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

         (k)     “Offering” means the grant of rights to purchase Common Stock of the Company under
the Plan to eligible Employees.

         (l)     “Offering Date” means the first business day of each Offering Period of the Plan.
In the case of an individual who becomes an eligible Employee after the first business day of an
Offering Period but prior to the first business day of the last calendar quarter of such Offering
Period, the term “Offering Date” means the first business day of the calendar quarter coinciding
with or next succeeding the day on which that individual becomes an eligible Employee. Options
granted after the first business day of an Offering Period will be subject to the same terms as the
options granted on the first business day of such Offering Period except that they will have a
different grant date (thus, potentially, a different exercise price) and, because they expire at
the same time as the options granted on the first business day of such Offering Period, a shorter
term.

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         (m)     “Offering Period” means a period of six (6) months commencing on December 1 and
June 1 of each year, except as otherwise set forth in Section 4(a), or such other period as the
Board of Directors may determine prior to the commencement of an Offering Period, but which period
shall not exceed twenty-four (24) months.

         (n)     “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated under the Exchange Act.

         (o)     “Option Price” means the price at which the shares are offered in a given Offering
Period, calculated as set forth in Section 7(b).

         (p)     “Plan” means this Employee Stock Purchase Plan.

         (q)     “Purchase Date” means the last day of each Offering Period (or Purchase Period, if
applicable) under the Plan.

         (r)     “Purchase Period” means a period specified as such pursuant to Section 4(b)
hereof.

         (s)     “Subsidiary” means a corporation, domestic or foreign, of which not less than 50%
of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now
exists or is hereafter organized or acquired by the Company or a Subsidiary.

3.     Eligibility.

         (a)     Any person who is an Employee as of the Offering Date of a given Offering Period shall be
eligible to participate in such Offering Period under the Plan subject to the requirements of
Section 5(a) and the limitations imposed by Section 423(b) of the Code.

         (b)     Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted
an option under the Plan (i) if, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own
stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or of any subsidiary of
the Company, or (ii) if such option would permit his or her rights to purchase stock under all
employee stock purchase plans (described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair
market value of such stock (determined at the time such option is granted) for each calendar year
in which such option is outstanding at any time.

4.     Offering Periods and Purchase Periods.

         (a)     Offering Periods. Beginning December 1, 2005, the Plan shall be implemented by a
series of Offering Periods of six (6) months duration, with new Offering Periods commencing on or
about June 1 and December 1 of each year (or at such other time or times as may be determined by
the Board of Directors). The Plan shall continue until terminated in accordance with Section 20 of
this Plan. The Board of Directors of the Company shall have the power to change the duration
and/or the frequency of Offering Periods with respect to future offerings without stockholder
approval if such change is announced at least fifteen (15) days prior to the scheduled beginning of
the first Offering Period to be affected. The terms and conditions of an Offering Period shall be
incorporated by reference into the Plan and treated as part of the Plan. The provisions of
separate Offering Periods need not be identical, but each Offering shall include (thorough
incorporation of the provisions of this Plan by reference into the document comprising the Offering
or otherwise) the Offering Period, and the substance of the provisions contained in Sections 5
through 13, inclusive. An Employee may only participate in one Offering Period at a time.

         (b)     Purchase Periods. With respect to any Offering Period, the Board may specify
shorter Purchase Periods within an Offering Period, such that the option granted on the Offering
Date shall be automatically exercised in successive installments on the Purchase Date(s) specified
by the Board. The Board of Directors of the Company shall have the power to change the duration
and/or frequency of Purchase Periods with respect to future purchases

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without stockholder approval if such change is announced at least fifteen (15) days prior to
the scheduled beginning of the first Purchase Period to be affected.

5.     Participation.

         (a)     An eligible Employee may become a participant in the Plan by completing a subscription
agreement on the form provided by the Company and filing it with the Company’s payroll office prior
to the applicable Offering Date, unless a later time for filing the subscription agreement is set
by the Board for all eligible Employees with respect to a given Offering. The subscription
agreement shall set forth the percentage of the participant’s Compensation (which shall be greater
than or equal to zero percent (0%) but not more than fifteen percent (15%)) to be paid as
Contributions pursuant to the Plan.

         (b)     Payroll deductions shall commence on the first payroll following the Offering Date and
shall end on the last payroll paid on or prior to the last Purchase Date of the Offering Period to
which the subscription agreement is applicable, unless sooner terminated by the participant as
provided in Section 10.

6.     Method of Payment of Contributions.

         (a)     The participant shall elect to have payroll deductions made on each payday during the
Offering Period in an amount greater than or equal to zero percent (0%) but not more than fifteen
percent (15%) of such participant’s Compensation on each such payday. All payroll deductions made
by a participant shall be credited to his or her account under the Plan. A participant may not
make any additional payments into such account.

         (b)     A participant may discontinue his or her participation in the Plan as provided in Section
10. To the extent permitted by the Board, a participant may increase or decrease the rate of his
or her Contributions on one occasion only during an Offering Period by completing and filing with
the Company a change of status notice. The change in rate shall be effective for the first full
payroll period commencing no fewer than ten (10) business days following the Company’s receipt of
the change of status notice, unless this change is processed more quickly.

         (c)     Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of
the Code and Section 3(b) of this Plan, a participant’s payroll deductions may be decreased to 0%
at such time during any Offering Period which is scheduled to end during the current calendar year
that the aggregate of all payroll deductions accumulated with respect to such Offering Period and
any other Offering Period ending within the same calendar year equal $25,000. Payroll deductions
shall re-commence at the rate provided in such participant’s subscription Agreement at the
beginning of the first Offering Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10.

7.     Grant of Option.

         (a)     On the Offering Date of each Offering Period, each eligible Employee participating in such
Offering Period shall be granted an option to purchase on each Purchase Date a number of shares of
the Company’s Common Stock determined by dividing such Employee’s Contributions accumulated prior
to such Purchase Date and retained in the participant’s account as of the Purchase Date by the
Option Price; provided however, that the maximum number of shares an Employee may purchase during
each Offering Period shall be determined at the Offering Date by dividing $12,500 by the fair
market value of a share of the Company’s Common Stock on the Offering Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections 3(b) and 13. The fair
market value of a share of the Company’s Common Stock shall be determined as provided in Section
7(b).

         (b)     The option price per share of the shares offered in a given Offering Period
(“Option Price”) shall not be less than the lower of eighty-five percent (85%) of the fair
market value of a share of the Company’s Common Stock on the Offering Date or eighty-five
percent (85%) of the fair market value of a share of the Company’s Common Stock on the
Purchase Date. For Offering Periods beginning on or after December 1, 2005, the Option
Price shall be an amount equal to eighty-five percent (85%) of the fair market value of a
share of the Company’s Common Stock on the Purchase Date;

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The fair market value of the Company’s Common Stock on a given date shall be determined by the
Board in its discretion based on the closing price of the Common Stock for such date (or, in the
event that the Common Stock is not traded on such date, on the immediately preceding trading date),
as reported by the National Association of Securities Dealers Automated Quotation (Nasdaq) National
Market or, if such price is not reported, the mean of the bid and asked prices per share of the
Common Stock as reported by Nasdaq or, in the event the Common Stock is listed on a stock exchange,
the fair market value per share shall be the closing price on such exchange on such date (or, in
the event that the Common Stock is not traded on such date, on the immediately preceding trading
date), as reported in The Wall Street Journal.

         (c)     In connection with each Offering made under the Plan, the Board or the Committee may
specify a maximum number of shares that may be purchased by any employee as well as a maximum
aggregate number of shares that may be purchased by all eligible employees pursuant to such
Offering. In addition, in connection with each Offering that contains more than one Purchase Date,
the Board or the Committee may specify a maximum aggregate number of shares which may be purchased
by all eligible employees on any give Purchase Date under the Offering. If the aggregate purchase
of shares upon exercise of rights granted under the Offering would exceed any such maximum
aggregate number, the Board or the Committee shall make a pro rata allocation of the shares
available in as nearly a uniform manner as is practicable and as it deems to be equitable.

8.     Exercise of Option. Unless a participant withdraws from the Plan as provided in Section
10, his or her option for the purchase of shares will be exercised automatically on each Purchase
Date of an Offering Period, and the maximum number of shares, including fractional shares, subject
to the option will be purchased at the applicable option price with the accumulated Contributions
in his or her account. The shares purchased upon exercise of an option hereunder shall be deemed
to be transferred to the participant on the Purchase Date. During his or her lifetime, a
participant’s option to purchase shares hereunder is exercisable only by him or her.

9.     Delivery. As promptly as practicable after each Purchase Date of each Offering Period,
the Company shall arrange the delivery to each participant, as appropriate, of a certificate
representing the shares purchased upon exercise of his or her option or the deposit of such number
of shares with the broker selected by the Company for administration of Plan stock purchases, as
determined by the Company. Any cash remaining to the credit of a participant’s account under the
Plan after a purchase by him or her of shares at the termination of each Offering Period, or which
is insufficient to purchase a full share of Common Stock of the Company, shall be carried over to
the next Offering Period if the Employee continues to participate in the Plan, or if the Employee
does not continue to participate, shall be returned to said participant.

10.   Voluntary Withdrawal; Termination of Employment.

         (a)     A participant may withdraw all but not less than all the Contributions credited to his or
her account under the Plan at any time prior to each Purchase Date by giving written notice to the
Company. All of the participant’s Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her option for the
current period will be automatically terminated, and no further Contributions for the purchase of
shares will be made during the Offering Period.

         (b)     Upon termination of the participant’s Continuous Status as an Employee prior to the
Purchase Date of an Offering Period for any reason, including retirement or death, the
Contributions credited to his or her account will be returned to him or her or, in the case of his
or her death, to the person or persons entitled thereto under Section 15, and his or her option
will be automatically terminated.

         (c)     If an Employee fails to remain in Continuous Status as an Employee of the Company for at
least twenty (20) hours per week during the Offering Period in which the employee is a participant,
he or she will be deemed to have elected to withdraw from the Plan and the Contributions credited
to his or her account will be returned to him or her and his or her option terminated.

         (d)     A participant’s withdrawal from an offering will not have any effect upon his or her
eligibility to participate in a succeeding offering or in any similar plan which the Company may
adopt after the date of this Plan.

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11.   Automatic Withdrawal. If on any Purchase Date in an Offering Period, the fair market
value of the shares is lower than it was on the Offering Date of such Offering Period (after taking
into account any adjustment during the Offering Period pursuant to Section 19(a)), all participants
in such Offering Period shall (a) acquire the shares reserved for the participant for such Purchase
Date, and (b) automatically be (i) withdrawn from the Offering Period following the acquisition of
shares, and (ii) enrolled in the Offering Period that commences on the next business day.

12.   Interest.

         (a)     All payroll deductions credited to the account of a participant under the Plan shall
accrue interest. In the case of participants primarily employed in Australia, such amounts credited
to a participant’s account shall be deposited with a bank in Australia. In the case of participants
primarily employed in the United States, such amounts credited to a participant’s account shall be
deposited with a bank in the United States. With respect to participants employed in other
jurisdictions, the Board shall determine the location of the bank where amounts credited to a
participant’s account shall be deposited.

         (b)     Any interest attributable to amounts credited to the account of a participant under the
Plan shall be paid to the account of the participant and shall form part of that participant’s
Contributions.

         (c)     The Company shall be entitled to deduct from the interest earned on amounts credited to
the account of a participant any bank and government charges referable to that participant’s
Contributions and an amount representing a reasonable apportionment of the cost of administering
the Plan, as determined by the Board from time to time. In addition, the Company shall be entitled
to withhold from such interest an amount sufficient to satisfy any applicable income and employment
tax withholding obligations.

         (d)     The Company shall advise each participant of the amount of interest (net of any bank,
government and administration charges deducted) earned in respect of amounts credited to the
account of a participant for the relevant tax period.

13.   Stock Subject to the Plan.

         (a)     Subject to adjustment upon changes in capitalization of the Company as provided in Section
19(a), the maximum aggregate number of Shares which may be optioned and sold under the Plan shall
be Eight Hundred Thousand (800,000) shares, plus an annual increase to be added on each November
30, equal to the lesser of:

         (i)     one half of one percent (0.5%) of the total number of shares of Common
Stock outstanding on such anniversary date; or

         (ii)     a number of shares determined by the Board prior to the anniversary
date, which number shall be less than (i) above.

The Shares may be authorized, but unissued, or reacquired Common Stock. If the total number of
shares which would otherwise be subject to options granted pursuant to Section 7(a) on the Offering
Date of an Offering Period exceeds the number of shares then available under the Plan (after
deduction of all shares for which options have been exercised or are then outstanding), the Company
shall make a pro rata allocation of the shares remaining available for option grant in as uniform a
manner as shall be practicable and as it shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of shares subject to the option
to each Employee affected thereby and shall similarly reduce the rate of Contributions, if
necessary.

         (b)     The participant will have no interest or voting right in shares covered by his or her
option until such option has been exercised.

         (c)     Shares to be delivered to a participant under the Plan will be registered in the name of
the participant or in the name of the participant and his or her spouse.

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14.   Administration. The Board, or a committee named by the Board, shall supervise and
administer the Plan and shall have full power to adopt, amend and rescind any rules deemed
desirable and appropriate for the administration of the Plan and not inconsistent with the Plan, to
determine when and how rights to purchase stock of the Company shall be granted and the provisions
of each such Offering Period (which need not be identical), to construe and interpret the Plan and
rights granted under it, and to establish, amend and revoke rules and regulations for the
administration of the Plan. The composition of the committee shall be in accordance with the
requirements to obtain or retain any available exemption from the operation of Section 16(b) of the
Exchange Act pursuant to Rule 16b-3 under the Exchange Act.

15.   Designation of Beneficiary.

         (a)     A participant may file a written designation of a beneficiary who is to receive any shares
and cash, if any, from the participant’s account under the Plan in the event of such participant’s
death subsequent to the end of an Offering Period but prior to delivery to him or her of such
shares and cash. In addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant’s account under the Plan in the event of such
participant’s death prior to the Purchase Date of an Offering Period. If a participant is married
and the designated beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.

         (b)     Such designation of beneficiary may be changed by the participant (and his or her spouse,
if any) at any time by written notice. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the time of such
participant’s death, the Company shall deliver such shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more dependents or relatives of the participant,
or if no spouse, dependent or relative is known to the Company, then to such other person as the
Company may designate.

16.   Transferability. Neither Contributions credited to a participant’s account nor any
rights with regard to the exercise of an option or to receive shares under the Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution, or as provided in Section 15) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw funds in accordance with Section 10.

17.   Use of Funds. Contributions received by the Company under the Plan shall constitute
general funds of the Company.

18.   Reports. Individual accounts will be maintained for each participant in the Plan.
Statements of account will be given to participating Employees promptly following the Purchase
Date, which statements will set forth the amounts of Contributions, the per share purchase price,
the number of shares purchased and the remaining cash balance, if any.

19.   Adjustments Upon Changes in Capitalization; Corporate Transactions.

         (a)     Adjustment. Subject to any required action by the stockholders of the Company,
the number of shares of Common Stock covered by each option under the Plan which has not yet been
exercised and the number of shares of Common Stock which have been authorized for issuance under
the Plan but have not yet been placed under option (collectively, the “Reserves”), as well as the
price per share of Common Stock covered by each option under the Plan which has not yet been
exercised, shall be proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company shall not be deemed
to have been “effected without receipt of consideration”. Such adjustment shall be made by the
Board, whose determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock subject to an option.

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         (b)     Corporate Transactions. In the event of the proposed dissolution or liquidation
of the Company, the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company with or into another
corporation, each option under the Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu of such assumption
or substitution, to shorten the Offering Period then in progress by setting a new Purchase Date
(the “New Purchase Date”). If the Board shortens the Offering Period then in progress in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board shall notify each
participant in writing, at least ten (10) days prior to the New Purchase Date, that either:

	 	 	 	(i)     the Purchase Date for his or her option has been changed to the New Purchase
Date and that his or her option will be exercised automatically on the New Purchase
Date, unless prior to such date he or she has withdrawn from the Offering Period as
provided in Section 10; or
	 
	 	 	 	(ii)     the Company shall pay to the participant on the New Purchase Date an amount in
cash, cash equivalents, or property as determined by the Board that is equal to the
excess, if any, of (A) the Fair Market Value of the shares subject to the option
over (B) the Option Price due had the participant’s option been exercised
automatically under subsection (b)(i) above. In addition, all remaining accumulated
payroll deduction amounts shall be returned to the participant.

     For purposes of this paragraph, an option granted under the Plan shall be deemed to be assumed
if, following the sale of assets or merger, the option confers the right to purchase, for each
share of option stock subject to the option immediately prior to the sale of assets or merger, the
consideration (whether stock, cash or other securities or property) received in the sale of assets
or merger by holders of Common Stock for each share of Common Stock held on the effective date of
the transaction (and if such 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 such consideration received in the sale of assets or merger was not
solely common stock of the successor corporation or its parent (as defined in Section 424(e) of the
Code), the Board may, with the consent of the successor corporation and the participant, provide
for the consideration to be received upon exercise of the option to be solely common stock of the
successor corporation or its parent equal in fair market value to the per share consideration
received by holders of Common Stock and the sale of assets or merger.

     The Board may, if it so determines in the exercise of its sole discretion, also make provision
for adjusting the Reserves, as well as the price per share of Common Stock covered by each
outstanding option, in the event that the Company effects one or more reorganizations,
recapitalizations, rights offerings or other increases or reductions of shares of its outstanding
Common Stock, and in the event of the Company being consolidated with or merged into any other
corporation.

20.   Amendment or Termination.

         (a)  The Board of Directors of the Company may at any time and for any reason suspend,
terminate or amend the Plan. Except as provided in Section 19(b), no such termination may affect
options previously granted, provided that the Plan or any one or more Offering Periods may be
terminated by the Board (or its committee) on any Purchase Date or by the Board (or its committee)
establishing a new purchase date with respect to any Offering Period and/or any Purchase Period
then in progress if the Board (or its committee) determines that the termination of the Plan or
such one or more Offering Periods is in the best interests of the Company and its stockholders.
Except as provided in Section 19 and this Section 20, no amendment may make any change in any
option theretofore granted which adversely affects the rights of any participant without the
consent of affected participants. To the extent necessary to comply with Section 423 of the Code
(or any successor rule or provision or any other Applicable Law), the Company shall obtain
stockholder approval in such a manner and to such a degree as so required.

         (b)  Without stockholder consent and without regard to whether any participant rights may be
considered to have been “adversely affected,” the Board (or its committee) shall be entitled to
limit the frequency and/or number of changes in the amount withheld during Offering Periods, change
the length of Purchase Periods

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within any Offering Period, determine the length of any future Offering Period, determine
whether future Offering Periods shall be consecutive or overlapping, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, establish additional terms,
conditions, rules or procedures to accommodate the rules or laws of applicable foreign
jurisdictions, permit payroll withholding in excess of the amount designated by a participant in
order to adjust for delays or mistakes in the Company’s processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods and/or accounting and
crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each
participant properly correspond with amounts withheld from the participant’s Compensation, and
establish such other limitations or procedures as the Board (or its committee) determines in its
sole discretion advisable and which are consistent with the Plan.

21.   Notices. All notices or other communications by a participant to the Company under or
in connection with the Plan shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person, designated by the Company for the
receipt thereof.

22.   Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an
option unless the exercise of such option and the issuance and delivery of such shares pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated under those Acts, and the requirements of any stock exchange upon which the shares may
then be listed, and shall be further subject to the approval of counsel for the Company with
respect to such compliance. As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any such exercise that
the shares are being purchased only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned applicable provisions of law.

23.   Term of Plan; Effective Date. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the stockholders of the Company.
It shall continue in effect for a term of twenty (20) years unless sooner terminated under Section
20.

24.   Additional Restrictions of Rule 16b-3. The terms and conditions of options granted
hereunder to, and the purchase of shares by, persons subject to Section 16 of the Exchange Act
shall comply with the applicable provisions of Rule 16b-3. This Plan shall be deemed to contain,
and such options shall contain, and the shares issued upon exercise thereof shall be subject to,
such additional conditions and restrictions as may be required by Rule 16b-3 to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.

25.   Plan Approval. The Plan was initially approved by the Board and the stockholders of
the Company in the year 2000. In December 2002, the Board approved an amendment and restatement of
the Plan to provide (a) that a participant may increase or decrease his or his percentage of
payroll withholding once during each Purchase Period, (b) that a participant may elect to have
payroll deductions made on each payday during an Offering Period in an amount greater than or equal
to zero percent (0%) but not more than fifteen percent (15%) of the participant’s Compensation and
(c) for certain other administrative changes, which amendments are not subject to stockholder
approval. The amendments described in the previous sentence shall be effective for Offering
Periods commencing on or after June 1, 2003. In May 2004, the Board approved and amendment and
restatement of the Plan to provide that all payroll deductions credited to the account of a
participant under the Plan shall accrue interest subject to the provisions of Section 12 of the
Plan, which amendment is not subject to stockholder approval. The amendment described in the
previous sentence shall be effective for Offering Periods commencing on or after June 1, 2004. In
October 2005, the Board approved and amendment and restatement of the Plan to (x) shorten the
length of future Offering Periods from twenty-four (24) months to six (6) months, (y) provide that
the Option Price per share for any given Offering Period shall be eighty-five percent (85%) of the
Fair Market Value of a share of the Company’s Common Stock on the Purchase Date and (z) provide for
certain other administrative changes, which amendment and restatement is not subject to stockholder
approval. The amendments described in the previous sentence shall be effective for Offering
Periods commencing on or after December 1, 2005.

* * * * * * * * * *

- 8 -

 

CONNETICS CORPORATION

1995 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

1.     I, ________________________, hereby elect to participate in the CONNETICS CORPORATION 1995
Employee Stock Purchase Plan (the “Plan”) for the Offering Period ______________, 20___ to
_______________, 20__, and subscribe to purchase shares of the Company’s Common Stock in accordance
with this Subscription Agreement and the Plan.

2.     I elect to have Contributions in the amount of ___% of my Compensation, as those terms are
defined in the Plan, applied to this purchase. I understand that this amount must be greater than
or equal to zero percent (0%) but not more than fifteen percent (15%) of my Compensation during the
Offering Period. (Please note that no fractional percentages are permitted).

3.     I hereby authorize payroll deductions from each paycheck during the Offering Period at the rate
stated in Item 2 of this Subscription Agreement. I understand that all payroll deductions made by
me shall be credited to my account under the Plan and that I may not make any additional payments
into such account. I understand that all payments made by me shall be accumulated for the purchase
of shares of Common Stock at the applicable purchase price determined in accordance with the Plan.
I further understand that, except as otherwise set forth in the Plan, shares will be purchased for
me automatically on the Purchase Date of each Offering Period unless I otherwise withdraw from the
Plan by giving written notice to the Company for such purpose.

4.     I understand that I may discontinue at any time prior to the Purchase Date my participation in
the Plan as provided in Section 10 of the Plan. I also understand that I may not increase
or decrease the rate of my Contributions during any Offering Period. However, I may change the
rate of deductions for future Offering Periods by filing a new Subscription Agreement, and any such
change will be effective as of the beginning of the next Offering Period. In addition, I
acknowledge that, unless I discontinue my participation in the Plan as provided in Section 10 of
the Plan, my election will continue to be effective for each successive Offering Period.

5.     I have received a copy of the Company’s most recent description of the Plan and a copy of the
complete “CONNETICS CORPORATION 1995 Employee Stock Purchase Plan.” I understand that my
participation in the Plan is in all respects subject to the terms of the Plan.

6.     Shares purchased for me under the Plan should be issued in the name(s) of (name of employee or
employee and spouse only):

 

 

7.     In the event of my death, I hereby designate the following as my beneficiary(ies) to receive all
payments and shares due to me under the Plan:

NAME: ________________________________________

(Please print)     (First)     (Middle)     (Last)

_____________________________________

                              (Address)

_____________________________________

_______________________

(Relationship)

- 1 -

 

8.     I understand that if I dispose of any shares received by me pursuant to the Plan within two
years after the Offering Date (the first day of the Offering Period during which I purchased such
shares) or within one year after the Purchase Date, I will be treated for federal income tax
purposes as having received ordinary compensation income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares on the Purchase Date over the
price which I paid for the shares, regardless of whether I disposed of the shares at a price less
than their fair market value at the Purchase Date. The remainder of the gain or loss, if any,
recognized on such disposition will be treated as capital gain or loss.

         I hereby agree to notify the Company in writing within 30 days after the date of any such
disposition, and I will make adequate provision for federal, state or other tax withholding
obligations, if any, which arise upon the disposition of the Common Stock. The Company may,
but will not be obligated to, withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to the sale or early disposition of Common
Stock by me.

9.     If I dispose of such shares at any time after expiration of the 2-year and 1-year holding
periods, I understand that I will be treated for federal income tax purposes as having received
compensation income only to the extent of an amount equal to the lesser of (1) the excess of the
fair market value of the shares at the time of such disposition over the purchase price which I
paid for the shares under the option, or (2) 15% of the fair market value of the shares on the
Purchase Date. The remainder of the gain or loss, if any, recognized on such disposition will be
treated as capital gain or loss.

         I understand that this tax summary is only a summary and is subject to change. I
further understand that I should consult a tax advisor concerning the tax implications of the
purchase and sale of stock under the Plan.

10.   I hereby agree to be bound by the terms of the Plan. The effectiveness of this Subscription
Agreement is dependent upon my eligibility to participate in the Plan.

SIGNATURE: _______________________

SOCIAL SECURITY #: _____________

DATE: ____________________

SPOUSE’S SIGNATURE (necessary if beneficiary is not spouse):

____________________________________

(Signature)

___________________________

(Print name)

- 2 -

 

CONNETICS CORPORATION

1995 EMPLOYEE STOCK PURCHASE PLAN

CHANGE OF STATUS NOTICE

 

     o Withdrawal From 1995 Employee Stock Purchase Plan

I, __________________________, hereby elect to withdraw my participation in the CONNETICS
CORPORATION 1995 Employee Stock Purchase Plan (the “Plan”) for the Offering Period ______________,
20___ to _______________, 20__. This withdrawal covers all Contributions credited to my account
and is effective on the date designated below.

I understand that all Contributions credited to my account will be paid to me within ten (10)
business days of receipt by the Company of this Notice of Withdrawal and that my option for the
current period will automatically terminate, and that no further Contributions for the purchase of
shares can be made by me during the Offering Period.

I further understand and agree that I shall be eligible to participate in succeeding Offering
Periods only by delivering to the Company a new Subscription Agreement.

If the undersigned is an Officer or Director of CONNETICS CORPORATION or other person subject to
Section 16 of the Securities Exchange Act of 1934, the signature below indicates that, in addition
to the foregoing, I understand that under rules promulgated by the U.S. Securities and Exchange
Commission I may not re-enroll in the Plan for a period of six (6) months after withdrawal.

2

 

 

     o Change of Beneficiary

This change of beneficiary shall terminate my previous beneficiary designation under the Plan. In
the event of my death, I hereby designate the following as my beneficiary(ies) to receive all
payments and shares due to me under the Plan:

NAME: _____________________________________

(Please print)     (First)     (Middle)     (Last)

_____________________________________

                              (Address)

_____________________________________

_______________________

(Relationship)

 

SIGNATURE: ________________________

SOCIAL SECURITY #: ____________

DATE: ___________________

SPOUSE’S SIGNATURE (necessary if beneficiary is not spouse):

____________________________________

(Signature)

__________________________

(Print name)

2exv10w56

 

Exhibit 10.56

October 14, 2004

Interval Research Corporation

c/o VULCAN

505 Fifth Ave. S, Suite 900

Seattle, WA 98104

Attn: Genni Reilly

	 	 	 
	Re:

	 	Ground Lease dated as of August 1, 1960 (“Ground Lease”), by and between The Board of
Trustees of the Leland Stanford Junior University (“Lessor”) and Clevite Corporation, covering
certain premises (the “Premises”) including that premises commonly known as 1801-1841 Page
Mill Road, Palo Alto, California, the current lessee under the Lease
being INTERVAL RESEARCH
CORPORATION, a Washington corporation (“Lessee”); and Sublease dated as of August 18, 1999 by
and between Page Mill Road Properties Inc., the predecessor-in-interest to Lessee and Incyte
Pharmaceuticals, Inc., a Delaware corporation, predecessor-in-interest to INCYTE CORPORATION,
a Delaware corporation (“Subtenant”) for premises located at 1841 Page Mill Road, Palo Alto,
California, (“Sublease Premises”), and Subsublease dated August 9, 2004 (“Subsublease”), by and
between Subtenant and CONNETICS CORPORATION, a Delaware corporation (“Subsubtenant”), for
premises (“Subsublease Premises”) consisting of approximately 19,447 square feet and located
on the first and second floors of Building E, as described in the Subsublease and commonly
known as 1841 Page Mill Road, Palo Alto, California.

Gentlemen/Ladies:

     We understand that Subtenant has entered into the Subsublease with Subsubtenant and, in
accordance with the terms of the Ground Lease, Lessee has requested the consent of Lessor to such
subletting. By execution of this letter agreement, Lessee, Subtenant, and Subsubtenant, acknowledge
and agree to the terms hereof. Lessor’s consent shall not be effective until receipt by Lessor of a
counterpart of this letter agreement duly executed by each of Lessee, Subtenant and Subsubtenant.

     1. Subject to the following provisions of this letter agreement, Lessor hereby consents to
Subtenant’s subsublease of the Subsublease Premises to Subsubtenant pursuant to the Subsublease.
This consent to subletting shall not be or be deemed to be a

n

2770
Sand Hill Road Menlo Park, CA
94025  ph • 650/926-0200

 

 

Subsublease

Interval Research/Incyte and Connetics

October 14, 2004

Page 2

consent or waiver with respect to any future transactions, whether similar or dissimilar, and any
such future transactions shall require Lessor’s prior written consent.

     2. The Subsublease is and shall remain at all times subject and subordinate in all respects to
the Ground Lease.

     3. This consent shall not modify or be deemed to modify or amend the Ground Lease in any way,
or to impose on Lessor any obligation to provide notice to, or obtain consent from Subsubtenant
with respect to amendments, defaults, waivers or any other matters pertaining to the Ground Lease
or the premises covered by the Ground Lease (“Ground Lease Premises”). Any waiver by Lessor of its
rights shall be made only by writing signed by Lessor.

     4. At Lessor’s sole option, any termination of the Ground Lease, including but not limited to
by reason of its expiration, or a voluntary surrender of the Ground Lease by Lessee, or any default
of Lessee, shall automatically and without notice or demand, terminate the Subsublease and
Subsubtenant agrees promptly to surrender the Subsublease Premises to Lessor upon such termination
without compensation from Lessor.

     5. Subsubtenant represents to Lessor that Subsubtenant is aware that detectable amounts of
hazardous substances and groundwater contaminants have come to be located beneath and/or in the
vicinity of the Ground Lease Premises and Subsublease Premises. (See, for example, State of
California – Environmental Protection Agency, Department of Toxic Substances Control Remedial
Action Orders #HSA 90/91-020 for 1801 Page Mill Road and 3170 Porter Drive dated June 13, 1991.)
Subsubtenant has made such investigations and inquiries as it deems appropriate to ascertain the
effects, if any, of such substances and contaminants on its operations and persons using the
Subsublease Premises. Lessor makes no representation or warranty with
regard to the environmental condition of the Ground Lease Premises
or the Subsublease Premises. Subsubtenant, on behalf of itself and its affiliated entities and their
respective partners, employees, successors and assigns (collectively, “Releasors”), hereby
covenants and agrees not to sue and forever releases and discharges Lessor, and its trustees,
officers, directors, agents and employees for and from any and all claims, losses, damages, causes
of action and liabilities, arising out of hazardous substances or groundwater contamination
presently existing on, under, or emanating from or to the Ground Lease Premises or Subsublease
Premises. Releasors understand and expressly waive any rights or benefits available under Section
1542 of the Civil Code of California or any similar provision in any other jurisdiction. Section
1542 provides substantially as follows: A general release does not extend to claims which the
creditor does not know or suspect to

 

 

Subsublease

Interval Research/Incyte and Connetics

October 14, 2004

Page 3

exist in his favor at the time of executing the release, which if known by him must have materially
affected his settlement with the debtor.

     6. Neither Lessee nor Subtenant nor Subsubtenant shall use any name, trademark or service mark
of Lessor or Stanford University without the prior written consent of Lessor which consent may be
given or withheld in Lessor’s sole discretion.

     7. This agreement shall not be nor be deemed to be a consent or waiver or amendment of the
Ground Lease with respect to any other or future transaction, whether similar or dissimilar, and
any other or future transaction shall require Lessor’s written consent, which consent, except as
otherwise expressly provided in the Ground Lease, may be given or withheld in Lessor’s sole
discretion.

     Please confirm your acceptance of and agreement with the terms hereof by duly executing and
delivering to the undersigned the enclosed copy hereof.

	 	 	 	 	 
	 	 	LESSOR:
	 
	 	 	 	 
	 	 	The Board of Trustees of the
	 	 	Leland Stanford Junior University
	 
	 	 	 	 
	 

	 	By:
	 	Stanford Management Company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean Snider
	 

	 	 	 	 
	 

	 	 	 	Jean Snider

Managing Director, Stanford Research Park

ACKNOWLEDGED AND AGREED:

LESSEE:

INTERVAL RESEARCH CORPORATION, a Washington corporation

	 	 	 	 
	By:

	 	/s/ Adam Healey	 
	 

	 	 	 
	Its:
	 	 	 
	 

	 	 	 
	Title:

	 	Vice President	 
	 

	 	 	 
	Dated:

	 	3/15/05	 
	 

	 	 	 

 

 

Subsublease

Interval Research/Incyte and Connetics

October 14, 2004

Page 4

SUBTENANT:

INCYTE CORPORATION, a Delaware corporation

	 	 	 	 
	By:

	 	/s/ David C. Hastings	 
	 

	 	 	 
	Its:

	 	EVP, CFO	 
	 

	 	 	 
	Title:
	 	 	 
	 

	 	 	 
	Dated:

	 	3/4/05	 
	 

	 	 	 

SUBSUBTENANT:

CONNETICS CORPORATION, a Delaware corporation

	 	 	 	 
	By:

	 	/s/ John L. Higgins	 
	 

	 	 	 
	Its:

	 	CFO	 
	 

	 	 	 
	Title:
	 	EVP	 
	 

	 	 	 
	Dated:

	 	3/1/05

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