Document:

Exhibit
10.1

 

MICROBIA,
INC.

 

1998
AMENDED AND RESTATED STOCK OPTION PLAN

 

Adopted
by Board of Directors on July 10, 1998

Amended
by Board of Directors on December 21, 1999

Approved
as Amended By Stockholders on December 21, 1998

 

Amended
and Restated Approved by the Board of Directors on May 4, 1999

Approved
By Stockholders on May 4, 1999

 

Amendment
to Amended and Restated Approved by Board of Directors on October 2, 2000

Amendment
to Amendment and Restated Approved By Stockholders on October 2, 2000

 

(Termination
Date: July 10, 2008)

 

1.             PURPOSES.

 

(a)           Eligible Stock Award Recipients. 
The persons eligible to receive Stock Awards are the Employees,
Directors and Consultants of the Company and its Affiliates.

 

(b)           Available Stock Awards. 
The purpose of the Plan is to provide a means by which eligible
recipients of Stock Awards may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of the following
Stock Awards:  (i) Incentive Stock
Options, (ii) Nonstatutory Stock Options, (iii) Stock Bonuses and (iv) rights
to acquire restricted stock.

 

(c)           General Purpose. 
The Company, by means of the Plan, seeks to retain the services of the
group of persons eligible to receive Stock Awards, to secure and retain the
services of new members of this group and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its
Affiliates.

 

2.             DEFINITIONS.

 

(a)           “Affiliate” means any parent corporation or
subsidiary corporation of the Company, whether now or hereafter existing, as
those terms are defined in Sections 424(e) and (f), respectively, of the
Code.

 

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

 

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

 

(d)           “Committee” means a committee of one or more members
of the Board appointed by the Board in accordance with subsection 3(c).

 

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(e)           “Common Stock” means the common stock of the Company.

 

(f)            “Company” means Microbia, Inc., a Delaware
corporation.

 

(g)           “Consultant” means any person, including an advisor, (i) engaged
by the Company or an Affiliate to render consulting or advisory services and
who is compensated for such services or (ii) who is a member of the Board
of Directors of an Affiliate.  However,
the term “Consultant” shall not include either Directors who are not
compensated by the Company for their services as Directors or Directors who are
merely paid a director’s fee by the Company for their services as Directors.

 

(h)           “Continuous Service” means that the Participant’s service
with the Company or an Affiliate, whether as an Employee, Director or
Consultant, is not interrupted or terminated. 
The Participant’s Continuous Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders
service to the Company or an Affiliate as an Employee, Consultant or Director
or a change in the entity for which the Participant renders such service,
provided that there is no interruption or termination of the Participant’s
Continuous Service.  For example, a
change in status from an Employee of the Company to a Consultant of an
Affiliate or a Director of the Company will not constitute an interruption of
Continuous Service.  The Board or the
chief executive officer of the Company, in that party’s sole discretion, may
determine whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave.

 

(i)            “Covered Employee” means the chief executive officer and
the four (4) other highest compensated officers of the Company for whom
total compensation is required to be reported to stockholders under the
Exchange Act, as determined for purposes of Section 162(m) of the
Code.

 

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

 

(k)           “Disability” means (i) before the Listing Date,
the inability of a person, in the opinion of a qualified physician acceptable
to the Company, to perform the major duties of that person’s position with the
Company or an Affiliate of the Company because of the sickness or injury of the
person and (ii) after the Listing Date, the permanent and total disability
of a person within the meaning of Section 22(e)(3) of the Code.

 

(l)            “Employee” means any person employed by the Company
or an Affiliate.  Mere service as a
Director or payment of a director’s fee by the Company or an Affiliate shall
not be sufficient to constitute “employment” by the Company or an Affiliate.

 

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

 

(n)           “Fair Market Value” means, as of any date, the value of the
Common Stock determined as follows:

 

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(i)            If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal
or such other source as the Board deems reliable.

 

(ii)           In the absence of such markets for the Common Stock,
the Fair Market Value shall be determined in good faith by the Board.

 

(iii)         Prior to the Listing Date, the value of the Common
Stock shall be determined in a manner consistent with 260.140.50 of Title 10 of
the California Code of Regulations.

 

(o)           “Incentive Stock Option” means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.

 

(p)           “Listing Date” means the first date upon which any
security of the Company is listed (or approved for listing) upon notice of
issuance on any securities exchange or designated (or approved for designation)
upon notice of issuance as a national market security on an interdealer
quotation system if such securities exchange or interdealer quotation system
has been certified in accordance with the provisions of Section 25100(o) of
the California Corporate Securities Law of 1968.

 

(q)           “Non-Employee Director”  means a Director of the Company who either (i) is
not a current Employee or Officer of the Company or its parent or a subsidiary,
does not receive compensation (directly or indirectly) from the Company or its
parent or a subsidiary for services rendered as a consultant or in any capacity
other than as a Director (except for an amount as to which disclosure would not
be required under Item 404(a) of Regulation S-K promulgated pursuant to
the Securities Act (“Regulation S-K”)), does not possess an interest in any
other transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(r)           “Nonstatutory Stock Option” means an Option not intended to qualify
as an Incentive Stock Option.

 

(s)           “Officer” means (i) before the Listing Date,
any person designated by the Company as an officer and (ii) on and after
the Listing Date, 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 thereunder.

 

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(t)            “Option” means an Incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to the Plan.

 

(u)           “Option Agreement” means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of an
individual Option grant.  Each Option
Agreement shall be subject to the terms and conditions of the Plan.

 

(v)            “Optionholder” means a person to whom an Option is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

 

(w)           “Outside Director” means a Director who either (i) is
not a current employee of the Company or an “affiliated corporation” (within
the meaning of Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an “affiliated
corporation” receiving compensation for prior services (other than benefits
under a tax qualified pension plan), was not an officer of the Company or an “affiliated
corporation” at any time and is not currently receiving direct or indirect
remuneration from the Company or an “affiliated corporation” for services in
any capacity other than as a Director or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

 

(x)           “Participant” means a person to whom a Stock Award is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

 

(y)           “Plan” means this Microbia, Inc. 1998
Stock Option Plan.

 

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

 

(aa)         “Securities Act” means the Securities Act of 1933, as
amended.

 

(bb)         “Stock Award” means any right granted under the Plan,
including an Option, a stock bonus and a right to acquire restricted stock.

 

(cc)         “Stock Award Agreement”  means a written agreement between the Company and a
holder of a Stock Award evidencing the terms and conditions of an individual
Stock Award grant.  Each Stock Award
Agreement shall be subject to the terms and conditions of the Plan.

 

(dd)         “Ten Percent Stockholder” means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any of its Affiliates.

 

3.             ADMINISTRATION.

 

(a)           Administration by Board. 
The Board shall administer the Plan unless and until the Board delegates
administration to a Committee, as provided in subsection 3(c).  Any interpretation of the Plan by the Board
and any decision by the Board under the Plan shall be final and binding on all
persons.

 

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(b)           Powers of Board. 
The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:

 

(i)            To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; what type or combination of types of Stock Award shall
be granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which Stock Award shall be granted to each such
person.

 

(ii)           To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations
for its administration.  The Board, in
the exercise of this power, may correct any defect, omission or inconsistency
in the Plan or in any Stock Award Agreement, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.

 

(iii)         To amend the Plan or a Stock Award as provided in Section 12.

 

(iv)          Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the Plan.

 

(c)           Delegation to Committee.

 

(i)            General. 
The Board may delegate administration of the Plan to a Committee or
Committees of one or more members of the Board, and the term “Committee” shall
apply to any person or persons to whom such authority has been delegated.  If administration is delegated to a Committee,
the Committee shall have, in connection with the administration of the Plan,
the powers theretofore possessed by the Board, including the power to delegate
to a subcommittee any of the administrative powers the Committee is authorized
to exercise (and references in this Plan to the Board shall thereafter be to
the Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board.  The Board may abolish
the Committee at any time and revest in the Board the administration of the
Plan.

 

(ii)           Committee Composition when Common
Stock is Publicly Traded.  At such time as the Common
Stock is publicly traded, in the discretion of the Board, a Committee may consist
solely of two or more Outside Directors, in accordance with Section 162(m) of
the Code, and/or solely of two or more Non-Employee Directors, in accordance
with Rule 16b-3.  Within the scope
of such authority, the Board or the Committee may (1) delegate to a
committee of one or more members of the Board who are not Outside Directors the
authority to grant Stock Awards to eligible persons who are either (a) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Stock Award or (b) not
persons with respect to whom the Company wishes to comply with Section 162(m) of
the Code and/or) (2) delegate to a committee of one or more members of the
Board who are not 

 

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Non-Employee Directors
the authority to grant Stock Awards to eligible persons who are not then
subject to Section 16 of the Exchange Act.

 

4.             SHARES SUBJECT TO THE PLAN.

 

(a)           Share Reserve. 
Subject to the provisions of Section 11 relating to adjustments
upon changes in Common Stock, the Common Stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate three million four hundred five
thousand (3,405,000) shares of Common Stock.

 

(b)           Reversion of Shares to the Share
Reserve.  If any Stock Award shall for any reason
expire or otherwise terminate, in whole or in part, without having been
exercised in full, the shares of Common Stock not acquired under such Stock
Award shall revert to and again become available for issuance under the Plan.

 

(c)           Source of Shares. 
The shares of Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

 

(d)           Share Reserve Limitation. 
Prior to the Listing and to the extent then required by Section 260.140.45
of the Title 10 of the California Code of Regulations, the total number of
shares of Common Stock issuable upon exercise of all outstanding Options and
the total number of shares of Common Stock provided for under any stock bonus
or similar plan of the Company shall not exceed the applicable percentage as
calculated in accordance with the conditions and exclusions of Section 260.140.45
of Title 10 of the California Code of Regulations, based on the shares of the
Common Stock of the Company that are outstanding at the time the calculation is
made.

 

5.             ELIGIBILITY.

 

(a)           Eligibility for Specific Stock
Awards.  Incentive Stock Options may be granted only
to Employees.  Stock Awards other than
Incentive Stock Options may be granted to Employees, Directors and Consultants.

 

(b)           Ten Percent Stockholders.

 

(i)            A Ten Percent Stockholder shall not be granted an
Incentive Stock Option unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of the Common Stock at the
date of grant and the Option is not exercisable after the expiration of five (5) years
from the date of grant.

 

(ii)           Prior to the Listing Date, a Ten Percent Stockholder
shall not be granted a Nonstatutory Stock Option unless the exercise price of
such Option is at least (i) one hundred ten percent (110%) of the Fair
Market Value of the Common Stock at the date of grant or (ii) such lower
percentage of the Fair Market Value of the Common Stock at the date of grant as
is permitted by Section 260.140.41 of Title 10 of the California Code of
Regulations at the time of the grant of the Option.

 

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(iii)         Prior to the Listing Date, a Ten Percent Stockholder
shall not be granted a restricted stock award unless the purchase price of the
restricted stock is at least (i) one hundred percent (100%) of the Fair
Market Value of the Common Stock at the date of grant or (ii) such lower
percentage of the Fair Market Value of the Common Stock at the date of grant as
is permitted by Section 260.140.41 of Title 10 of the California Code of
Regulations at the time of the grant of the Option.

 

(c)           Section 162(m) Limitation. 
Subject to the provisions of Section 11 relating to adjustments
upon changes in the shares of Common Stock, no Employee shall be eligible to be
granted Options covering more than seven hundred fifty thousand (750,000)
shares of the Common Stock during any calendar year.  This subsection 5(c) shall not apply
prior to the Listing Date and, following the Listing Date, this subsection 5(c) shall
not apply until (i) the earliest of: 
(1) the first material modification of the Plan (including any
increase in the number of shares of Common Stock reserved for issuance under
the Plan in accordance with Section 4); (2) the issuance of all of
the shares of Common Stock reserved for issuance under the Plan; (3) the
expiration of the Plan; or (4) the first meeting of stockholders at which
Directors of the Company are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first
registration of an equity security under Section 12 of the Exchange Act;
or (ii) such other date required by Section 162(m) of the Code
and the rules and regulations promulgated thereunder.

 

6.             OPTION PROVISIONS.

 

Each Option shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate.  All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant,
and, if certificates are issued, a separate certificate or certificates will be
issued for shares of Common Stock purchased on exercise of each type of
Option.  The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

 

(a)           Term. 
Subject to the provisions of subsection 5(b) regarding Ten Percent
Stockholders, no Option granted prior to the Listing Date shall be exercisable
after the expiration of ten (10) years from the date it was granted, and
no Incentive Stock Option granted on or after the Listing Date shall be
exercisable after the expiration of ten (10) years from the date it was
granted.

 

(b)           Exercise Price of an Incentive
Stock Option.  Subject to the provisions of subsection 5(b) regarding
Ten Percent Stockholders, the exercise price of each Incentive Stock Option
granted prior to the Listing Date shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on
the date the Option is granted.  The
exercise price of each Nonstatutory Stock Option granted on or after the
Listing Date shall be not less than eighty-five percent (85%) of the Fair
Market Value of the Common Stock subject to the Option is granted.  Notwithstanding the foregoing, a Nonstatutory
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such 

 

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Option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.

 

(c)           Exercise Price of a Nonstatutory
Stock Option.  Subject to the provisions of subsection 5(b) regarding
Ten Percent Stockholders, the exercise price of each Nonstatutory Stock Option
granted prior to the Listing Date shall be not less than eighty-five percent
(85%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted.  A
Nonstatutory Stock Option granted on or after the Listing Date shall be not
less than eighty-five percent (85%) of the Fair Market Value of the Common
Stock subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, a Nonstatutory
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section 424(a) of
the Code.

 

(d)           Consideration. 
The purchase price of Common Stock acquired pursuant to an Option shall
be paid, to the extent permitted by applicable statutes and regulations, either
(i) in cash at the time the Option is exercised or (ii) at the
discretion of the Board at the time of the grant of the Option (or subsequently
in the case of a Nonstatutory Stock Option) by (1) delivery to the Company
of other Common Stock, (2) according to a deferred payment or other
arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board; provided, however, that at
any time that the Company is incorporated in Delaware, payment of the Common
Stock’s “par value,” as defined in the Delaware General Corporation Law, shall
not be made by deferred payment.

 

In the case of any deferred payment arrangement,
interest shall be compounded at least annually and shall be charged at the
minimum rate of interest necessary to avoid the treatment as interest, under
any applicable provisions of the Code, of any amounts other than amounts stated
to be interest under the deferred payment arrangement.

 

(e)           Transferability of an Incentive
Stock Option.  An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder.  Notwithstanding the
foregoing, the Optionholder may, by delivering written notice to the Company,
in a form satisfactory to the Company, designate a third party who, in the
event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option.

 

(f)            Transferability of a Nonstatutory
Stock Option. A
Nonstatutory Stock Option granted prior to the Listing Date shall not be
transferable except by will or by the laws of descent and distribution and, to
the extent provided in the Option Agreement, to such further extent as
permitted by Section 260.140.41(d) of Title 10 of the California Code
of Regulations at the time of the grant of the Option, and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder.  A Nonstatutory Stock Option granted on or
after the Listing Date shall be transferable to the extent provided in the
Option Agreement.  If the Nonstatutory
Stock Option does not provide for transferability, then the Nonstatutory Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. 
Notwithstanding the foregoing, the

 

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Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

 

(g)           Vesting Generally.  The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable
in periodic installments which may, but need not, be equal.  The Option may be subject to such other terms
and conditions on the time or times when it may be exercised (which may be
based on performance or other criteria) as the Board may deem appropriate.  The vesting provisions of individual Options
may vary.  The provisions of this
subsection 6(g) are subject to any Option provisions governing the minimum
number of shares of Common Stock as to which an Option may be exercised.

 

(h)           Minimum Vesting Prior to the
Listing Date.  Notwithstanding the foregoing subsection
6(g), to the extent that the following restrictions on vesting are required by Section 260.140.41(f) of
Title 10 of the California Code of Regulations at the time of the grant of the
Option, then:

 

(i)            Termination of Continuous
Service.  In the event an Optionholder’s Continuous
Service terminates (other than upon the Optionholder’s death or Disability),
the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i) the
date three (3) months following the termination of the Optionholder’s
Continuous Service (or such longer or shorter period specified in the Option
Agreement, which period shall not be less than thirty (30) days for Options
granted prior to the Listing Date unless such termination is for cause) or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.  If, after termination, the Optionholder does
not exercise his or her Option within the time specified in the Option
Agreement, the Option shall terminate.

 

(j)            Extension of Termination Date. 
An Optionholder’s Option Agreement may also provide that if the exercise
of the Option following the termination of the Optionholder’s Continuous
Service (other than upon the Optionholder’s death or Disability) would be
prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of
the Option set forth in subsection 6(a) or (ii) the expiration of a
period of three (3) months after the termination of the Optionholder’s
Continuous Service during which the exercise of the Option would not be in
violation of such registration requirements.

 

(k)           Disability of Optionholder. 
In the event an Optionholder’s Continuous Service terminates as a result
of the Optionholder’s Disability, the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise it as of
the date of termination), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination (or
such longer or shorter period specified in the Option Agreement, which period
shall not be less than six (6) months for Options granted prior to the
Listing Date) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement.  

 

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If, after termination, the Optionholder does not exercise his or her
Option within the time specified herein, the Option shall terminate.

 

(l)            Death of Optionholder. 
In the event (i) an Optionholder’s Continuous Service terminates as
a result of the Optionholder’s death or (ii) the Optionholder dies within
the period (if any) specified in the Option Agreement after the termination of
the Optionholder’s Continuous Service for a reason other than death, then the
Option may be exercised (to the extent the Optionholder was entitled to
exercise the Option as of the date of death) by the Optionholder’s estate, by a
person who acquired the right to exercise the Option by bequest or inheritance
or by a person designated to exercise the option upon the Optionholder’s death
pursuant to subsection 6(e) or 6(f), but only within the period ending on
the earlier of (1) the date eighteen (18) months following the date of
death (or such longer or shorter period specified in the Option Agreement,
which period shall not be less than six (6) months for Options granted
prior to the Listing Date) or (2) the expiration of the term of such
Option as set forth in the Option Agreement. 
If, after death, the Option is not exercised within the time specified
herein, the Option shall terminate.

 

(m)          Early Exercise.  The Option may, but need not,
include a provision whereby the Optionholder may elect at any time before the
Optionholder’s Continuous Service terminates to exercise the Option as to any
part or all of the shares of Common Stock subject to the Option prior to the
full vesting of the Option.  Subject to
the “Repurchase Limitation” in subsection 10(h), any unvested shares of Common
Stock so purchased may be subject to a repurchase option in favor of the
Company or to any other restriction the Board determines to be appropriate.

 

(n)           Right of Repurchase. 
Subject to the “Repurchase Limitation” in subsection 10(h), the Option
may, but need not, include a provision whereby the Company may elect, prior to
the Listing Date, to repurchase all or any part of the vested shares of Common Stock
acquired by the Optionholder pursuant to the exercise of the Option.

 

(o)           Right of First Refusal. 
The Option may, but need not, include a provision whereby the Company
may elect, prior to the Listing Date, to exercise a right of first refusal
following receipt of notice from the Optionholder of the intent to transfer all
or any part of the shares of Common Stock received upon the exercise of the
Option.  Except as expressly provided in
this subsection 6(o), such right of first refusal shall otherwise comply with
any applicable provisions of the Bylaws of the Company.

 

(p)           Re-Load Options. 
Without in any way limiting the authority of the Board to make or not to
make grants of Options hereunder, the Board shall have the authority (but not
an obligation) to include as part of any Option Agreement a provision entitling
the Optionholder to a further Option (a “Re-Load Option”) in the event the
Optionholder exercises the Option evidenced by the Option Agreement, in whole
or in part, by surrendering other shares of Common Stock in accordance with
this Plan and the terms and conditions of the Option Agreement.  Any such Re-Load Option shall (i) provide
for a number of shares of Common Stock equal to the number of shares of Common
Stock surrendered as part or all of the exercise price of such Option; (ii) have
an expiration date which is the same as the expiration date of the 

 

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Option the exercise of
which gave rise to such Re-Load Option; and (iii) have an exercise price
which is equal to one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Re-Load Option on the date of exercise of the
original Option.  Notwithstanding the
foregoing, a Re-Load Option shall be subject to the same exercise price and
term provisions heretofore described for Options under the Plan.

 

Any such Re-Load Option may be an Incentive Stock
Option or a Nonstatutory Stock Option, as the Board may designate at the time
of the grant of the original Option; provided, however, that the designation of
any Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollars ($100,000) annual limitation on exercisability of
Incentive Stock Options described in subsection 10(d) and in Section 422(d) of
the Code.  There shall be no Re-Load
Options on a Re-Load Option.  Any such
Re-Load Option shall be subject to the availability of sufficient shares of
Common Stock under subsection 4(a) and the “Section 162(m) Limitation”
on the grants of Options under subsection 5(c) and shall be subject to
such other terms and conditions as the Board may determine which are not
inconsistent with the express provisions of the Plan regarding the terms of
Options.

 

7.             PROVISIONS OF STOCK AWARDS OTHER
THAN OPTIONS.

 

(a)           Stock Bonus Awards. 
Each stock bonus agreement shall be in such form and shall contain such
terms and conditions as the Board shall deem appropriate.  The terms and conditions of stock bonus agreements
may change from time to time, and the terms and conditions of separate stock
bonus agreements need not be identical, but each stock bonus agreement shall
include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

 

(i)            Consideration.  A
stock bonus may be awarded in consideration for past services actually rendered
to the Company or an Affiliate for its benefit.

 

(ii)           Vesting. 
Subject to the “Repurchase Limitation” in subsection 10(h), shares of
Common Stock awarded under the stock bonus agreement may, but need not, be
subject to a share repurchase option in favor of the Company in accordance with
a vesting schedule to be determined by the Board.

 

(iii)         Termination of Participant’s Continuous Service. 
Subject to the “Repurchase Limitation” in subsection 10(h), in the event
a Participant’s Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
as of the date of termination under the terms of the stock bonus agreement.

 

(iv)          Transferability.  For a stock bonus award made
before the Listing Date, rights to acquire shares of Common Stock under the
stock bonus agreement shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the lifetime of the
Participant only by the Participant.  For
a stock bonus award made on or after the Listing Date, rights to acquire shares
of Common Stock under the stock bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set 

 

11

 

forth in the stock bonus
agreement, as the Board shall determine in its discretion, so long as Common
Stock awarded under the stock bonus agreement remains subject to the terms of
the stock bonus agreement.

 

(b)           Restricted Stock Awards. 
Each restricted stock purchase agreement shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate.  The terms and conditions of the restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate restricted stock purchase agreements need not be
identical, but each restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

 

(i)            Purchase Price. 
Subject to the provisions of subsection 5(b) regarding Ten Percent
Shareholders, the purchase price under each restricted stock purchase agreement
shall be such amount as the Board shall determine and designate in such
restricted stock purchase agreement.  For
restricted stock awards made prior to the Listing Date, the purchase price
shall not be less than eighty-five percent (85%) of the Common Stock’s Fair
Market Value on the date such award is made or at the time the purchase is
consummated.  For restricted stock awards
made on or after the Listing Date, the purchase price shall not be less than
eighty-five percent (85%) of the Common Stock’s Fair Market Value on the date
such award is made or at the time the purchase is consummated.

 

(ii)           Consideration. 
The purchase price of Common Stock acquired pursuant to the restricted
stock purchase agreement shall be paid either: 
(i) in cash at the time of purchase; (ii) at the discretion of
the Board, according to a deferred payment or other similar arrangement with
the Participant; or (iii) in any other form of legal consideration that
may be acceptable to the Board in its discretion; provided, however, that at
any time that the Company is incorporated in Delaware, then payment of the
Common Stock’s “par value,” as defined in the Delaware General Corporation Law,
shall not be made by deferred payment.

 

(iii)         Vesting.  Subject to the “Repurchase Limitation” in
subsection 10(h), shares of Common Stock acquired under the restricted stock
purchase agreement may, but need not, be subject to a share repurchase option
in favor of the Company in accordance with a vesting schedule to be determined
by the Board.

 

(iv)          Termination of Participant’s Continuous Service. 
Subject to the “Repurchase Limitation” in subsection 10(h), in the event
a Participant’s Continuous Service terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of Common Stock held by the Participant
which have not vested as of the date of termination under the terms of the
restricted stock purchase agreement.

 

(v)            Transferability. 
For a restricted stock award made before the Listing Date, rights to
acquire shares of Common Stock under the restricted stock purchase agreement
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant.  For a
restricted stock award made on or after the Listing Date, rights to acquire
shares of Common Stock under the

 

12

 

restricted stock purchase
agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the restricted stock purchase agreement, as the
Board shall determine in its discretion, so long as Common Stock awarded under
the restricted stock purchase agreement remains subject to the terms of the
restricted stock purchase agreement.

 

8.             COVENANTS OF THE COMPANY.

 

(a)           Availability of Shares. 
During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of Common Stock required to satisfy such
Stock Awards.

 

(b)           Securities Law Compliance. 
The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
grant Stock Awards and to issue and sell shares of Common Stock upon exercise
of the Stock Awards; provided, however, that this undertaking shall not require
the Company to register under the Securities Act the Plan, any Stock Award or
any Common Stock issued or issuable pursuant to any such Stock Award.  If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such
Stock Awards unless and until such authority is obtained.

 

9.             USE OF PROCEEDS FROM STOCK.

 

Proceeds from the sale of Common Stock pursuant to
Stock Awards shall constitute general funds of the Company.

 

10.           MISCELLANEOUS.

 

(a)           Acceleration of Exercisability
and Vesting.  The Board shall have the power to accelerate
the time at which a Stock Award may first be exercised or the time during which
a Stock Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Stock Award stating the time at which it
may first be exercised or the time during which it will vest.

 

(b)           Stockholder Rights. 
No Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to
such Stock Award unless and until such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.

 

(c)           No Employment or other Service
Rights.  Nothing in the Plan or any instrument
executed or Stock Award granted pursuant thereto shall confer upon any
Participant any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Stock Award was granted or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant’s agreement
with the Company or an 

 

13

 

Affiliate or (iii) the
service of a Director pursuant to the Bylaws of the Company or an Affiliate,
and any applicable provisions of the corporate law of the state in which the Company
or the Affiliate is incorporated, as the case may be.

 

(d)           Incentive Stock Option $100,000
Limitation.  To the extent that the aggregate Fair Market
Value (determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Optionholder
during any calendar year (under all plans of the Company and its Affiliates)
exceeds one hundred thousand dollars ($100,000), the Options or portions
thereof which exceed such limit (according to the order in which they were
granted) shall be treated as Nonstatutory Stock Options.

 

(e)           Investment Assurances. 
The Company may require a Participant, as a condition of exercising or
acquiring Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring the
Common Stock subject to the Stock Award for the Participant’s own account and
not with any present intention of selling or otherwise distributing the Common
Stock.  The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if (iii) the
issuance of the shares of Common Stock upon the exercise or acquisition of
Common Stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act or (iv) as to
any particular requirement, a determination is made by counsel for the Company
that such requirement need not be met in the circumstances under the then
applicable securities laws.  The Company
may, upon advice of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or appropriate in order
to comply with applicable securities laws, including, but not limited to,
legends restricting the transfer of the Common Stock.

 

(f)            Withholding Obligations. 
To the extent provided by the terms of a Stock Award Agreement, the
Participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise or acquisition of Common Stock under a Stock Award by
any of the following means (in addition to the Company’s right to withhold from
any compensation paid to the Participant by the Company) or by a combination of
such means:  (i) tendering a cash
payment; (ii) authorizing the Company to withhold shares of Common Stock
from the shares of the Common Stock otherwise issuable to the Participant as a
result of the exercise or acquisition of Common Stock under the Stock Award; or
(iii) delivering to the Company owned and unencumbered shares of the
Common Stock.

 

(g)           Information Obligation. 
Prior to the Listing Date, to the extent required by Section 260.140.46
of Title 10 of the California Code of Regulations, the Company shall deliver
financial statements to Participants at least annually.  This subsection 9(g) shall not apply to key

 

14

 

Employees whose duties in
connection with the Company assure them access to equivalent information.

 

(h)           Repurchase Limitation. 
The terms of any repurchase option shall be specified in the Stock Award
and may be either at Fair Market Value at the time of repurchase or at not less
than the original purchase price.  To the
extent required by Section 260.140.41 and Section 260.140.42 of Title
10 of the California Code of Regulations at the time a Stock Award is made, any
repurchase option contained in a Stock Award granted prior to the Listing Date
to a person who is not an Officer, Director or Consultant shall be upon the
terms described below:

 

(i)            Fair Market Value. 
If the repurchase option gives the Company the right to repurchase the
shares of Common Stock upon termination of employment at not less than the Fair
Market Value of the shares of Common Stock to be purchased on the date of
termination of Continuous Service, then (i) the right to repurchase shall
be exercised for cash or cancellation of purchase money indebtedness for the
shares of Common Stock within ninety (90) days of termination of Continuous
Service (or in the case of shares of Common Stock issued upon exercise of Stock
Awards after such date of termination, within ninety (90) days after the date
of the exercise) or such longer period as may be agreed to by the Company and
the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of
the Code regarding “qualified small business stock”) and (ii) the right
terminates when the shares of Common Stock become publicly traded.

 

(ii)           Original Purchase Price. 
If the repurchase option gives the Company the right to repurchase the
shares of Common Stock upon termination of Continuous Service at the original
purchase price, then (i) the right to repurchase at the original purchase
price shall lapse at the rate of at least twenty percent (20%) of the shares of
Common Stock per year over five (5) years from the date the Stock Award is
granted (without respect to the date the Stock Award was exercised or became
exercisable) and (ii) the right to repurchase shall be exercised for cash
or cancellation of purchase money indebtedness for the shares of Common Stock
within ninety (90) days of termination of Continuous Service (or in the case of
shares of Common Stock issued upon exercise of Options after such date of
termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Company and the Participant (for
example, for purposes of satisfying the requirements of Section 1202(c)(3) of
the Code regarding “qualified small business stock”).

 

11.           ADJUSTMENTS UPON CHANGES IN
STOCK.

 

(a)           Capitalization Adjustments. 
If any change is made in the Common Stock subject to the Plan, or
subject to any Stock Award, without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
subsection 4(a) and the maximum number of securities subject to award to
any person pursuant to subsection 5(c), and the outstanding Stock Awards will
be appropriately adjusted in the class(es) and number of 

 

15

 

securities and price per
share of Common Stock subject to such outstanding Stock Awards.  The Board shall make such adjustments and its
determination shall be final, binding and conclusive.  (The conversion of any convertible securities
of the Company shall not be treated as a transaction “without receipt of
consideration” by the Company.)

 

(b)           Change in Control — Dissolution
or Liquidation.  In the event of a dissolution or liquidation
of the Company, then all outstanding Stock Awards shall be terminated
immediately prior to such event.

 

(c)           Change in Control — Asset Sale,
Merger, Consolidation or Reverse Merger.  In the event
of (i) a sale, lease or other disposition of substantially all of the
assets of the Company, (ii) a merger or consolidation in which the Company
is not the surviving corporation or (iii) a reverse merger in which the
Company is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise, then any
surviving corporation or acquiring corporation shall assume any Stock Awards
outstanding under the Plan or shall substitute similar Stock Awards (including
an award to acquire the same consideration paid to the stockholders in the
transaction described in this subsection 11(c)) for those outstanding under the
Plan.  In the event any surviving
corporation or acquiring corporation refuses to assume such Stock Awards or to
substitute similar Stock Awards for those outstanding under the Plan, then with
respect to Stock Awards held by Participants whose Continuous Service has not
terminated, the vesting of such Stock Awards (and, if applicable, the time
during which such Stock Awards may be exercised) shall be accelerated in full,
and the Stock Awards shall terminate if not exercised (if applicable) at or
prior to such event.  With respect to any
other Stock Awards outstanding under the Plan, such Stock Awards shall
terminate if not exercised (if applicable) prior to such event.

 

12.           AMENDMENT OF THE PLAN AND
OPTIONS.

 

(a)           Amendment of Plan. 
The Board at any time, and from time to time, may amend the Plan.  However, except as provided in Section 11
relating to adjustments upon changes in Common Stock, no amendment shall be
effective unless approved by the stockholders of the Company to the extent
stockholder approval is necessary to satisfy the requirements of Section 422
of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing
requirements.

 

(b)           Stockholder Approval. 
The Board may, in its sole discretion, submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the
Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.

 

(c)           Contemplated Amendments. 
It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible Employees
with the maximum benefits provided or to be provided under the provisions of
the Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under
it into compliance therewith.

 

16

 

(d)           No Impairment of Rights. 
Rights under any Stock Award granted before amendment of the Plan shall
not be impaired by any amendment of the Plan unless (i) the Company
requests the consent of the Participant and (ii) the Participant consents
in writing.

 

(e)           Amendment of Options. 
The Board at any time, and from time to time, may amend the terms of any
one or more Stock Awards; provided, however, that the rights under any Stock
Award shall not be impaired by any such amendment unless (i) the Company
requests the consent of the Participant and (ii) the Participant consents
in writing.

 

13.           TERMINATION OR SUSPENSION OF THE
PLAN.

 

(a)           Plan Term. 
The Board may suspend or terminate the Plan at any time.  Unless sooner terminated, the Plan shall
terminate on the day before the tenth (10th) anniversary of the date the Plan
is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier.  No Stock Awards
may be granted under the Plan while the Plan is suspended or after it is
terminated.

 

(b)           No Impairment of Rights. 
Suspension or termination of the Plan shall not impair rights and
obligations under any Stock Award granted while the Plan is in effect except
with the written consent of the Participant.

 

14.           EFFECTIVE DATE OF PLAN.

 

The Plan shall become
effective as determined by the Board, but no Option shall be exercised (or, in
the case of a stock bonus, shall be granted) unless and until the Plan has been
approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board.

 

15.           CHOICE OF LAW.

 

The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state’s conflict of laws rules.

 

17

 

ATTACHMENT
I

 

FORM OF
EARLY EXERCISE STOCK PURCHASE AGREEMENT

 

EARLY
EXERCISE STOCK PURCHASE AGREEMENT

UNDER THE
1998 STOCK OPTION PLAN

 

THIS EARLY EXERCISE STOCK PURCHASE AGREEMENT is made by and between MICROBIA, INC., a Delaware corporation (the “Company”), and                               
(“Purchaser”).

 

WITNESSETH:

 

WHEREAS, Purchaser holds a stock option dated
             to
purchase
                                
(            )
shares of common stock (“Common Stock”) of the Company (the “Option”) pursuant
to the Company’s 1998 Stock Option Plan (the “Plan”); and

 

WHEREAS, the Option consists of a Stock Option Grant Notice
and a Stock Option Agreement; and

 

WHEREAS, Purchaser desires to exercise the Option on the terms
and conditions contained herein; and

 

WHEREAS, Purchaser wishes to take advantage of the early
exercise provision of the Purchaser’s Option and therefore to enter into this
Agreement;

 

NOW, THEREFORE, IT IS AGREED between the parties as follows:

 

1.             INCORPORATION OF PLAN AND OPTION BY
REFERENCE.  This Agreement is subject to all of the terms
and conditions as set forth in the Plan and the Option.  If there is a conflict between the terms of
this Agreement and/or the Option and the terms of the Plan, the terms of the
Plan shall control.  If there is a
conflict between the terms of this Agreement and the terms of the Option, the
terms of the Option shall control. 
Defined terms not explicitly defined in this Agreement but defined in
the Plan shall have the same definitions as in the Plan.  Defined terms not explicitly defined in this
Agreement or the Plan but defined in the Option shall have the same definitions
as in the Option.

 

ATTACHMENT I

 

 

2.             PURCHASE AND SALE OF COMMON
STOCK.  Purchaser hereby agrees to purchase from the
Company, and the Company hereby agrees to sell to Purchaser, shares of the
Common Stock of the Company in accordance with the Notice of Exercise duly
executed by Purchaser and attached hereto as an exhibit.

 

3.             UNVESTED SHARE REPURCHASE OPTION

 

(a)           Repurchase Option. 
In the event Purchaser’s Continuous Service terminates, then the Company
shall have an irrevocable option (the “Repurchase Option”) for a period of
ninety (90) days after said termination (or in the case of shares issued upon
exercise of the Option after such date of termination, within ninety (90) days
after the date of the exercise), or such longer period as may be agreed to by
the Company and the Purchaser, to repurchase from Purchaser or Purchaser’s
personal representative, as the case may be, those shares that Purchaser
received pursuant to the exercise of the Option that have not as yet vested as
of such termination date in accordance with the Vesting Schedule indicated on
Purchaser’s Stock Option Grant Notice  (the “Unvested
Shares”).

 

(b)           Shares Repurchasable at Purchaser’s
Original Exercise Price.  The Company may repurchase all
or any of the Unvested Shares at a price (“Option Price”) equal to the
Purchaser’s Exercise Price for such shares as indicated on Purchaser’s Stock
Option Grant Notice.

 

4.             EXERCISE OF REPURCHASE OPTION.  The Repurchase Option shall be exercised by written
notice signed by an Officer of the Company and delivered or mailed as provided
herein.  Such notice shall identify the
number of shares of Common Stock to be purchased and shall notify Purchaser of
the time, place and date for settlement of such purchase, which shall be
scheduled by the Company within the term of the Repurchase Option set forth
above.  The Company shall be entitled to
pay for any shares of Common Stock purchased pursuant to its Repurchase Option
at the Company’s option in cash or by offset against any indebtedness owing to
the Company by Purchaser (including without limitation any Note given in
payment for the Common Stock), or by a combination of both.  Upon delivery of such notice and payment of
the purchase price in any of the ways described above, the Company shall become
the legal and beneficial owner of the Common Stock being repurchased and all
rights and interest therein or related thereto, and the Company shall have the
right to transfer to its own name the Common Stock being repurchased by the
Company, without further action by Purchaser.

 

5.             CAPITALIZATION ADJUSTMENTS TO
COMMON STOCK.  In the event of a “Capitalization
Adjustment” affecting the Company’s outstanding Common Stock as a class as
designated in the Plan, then any and all new, substituted or additional
securities or other property to which Purchaser is entitled by reason of
Purchaser’s ownership of Common Stock shall be immediately subject to the
Repurchase Option and be included in the word “Common Stock” for all purposes
of the Repurchase Option with the same force and effect as the shares of the
Common Stock presently subject to the Repurchase Option, but only to the extent
the Common Stock is, at the time, covered by such Repurchase Option.  While the total Option Price shall remain the
same after each such event, the Option Price per share of Common Stock upon
exercise of the Repurchase Option shall be appropriately adjusted.

 

ATTACHMENT I

 

 

6.             CHANGE IN CONTROL. 
In the event of a “Change in Control” as designated in the Plan, then
the Repurchase Option may be assigned by the Company to the successor of the
Company (or such successor’s parent company), if any, in connection with such
Change in Control.  To the extent the
Repurchase Option remains in effect following such Change in Control, it shall
apply to the new capital stock or other property received in exchange for the
Common Stock in consummation of the Change in Control, but only to the extent
the Common Stock was at the time covered by such right.  Appropriate adjustments shall be made to the
price per share payable upon exercise of the Repurchase Option to reflect the
Change in Control upon the Company’s capital structure; provided, however, that
the aggregate Option Price shall remain the same.

 

7.             ESCROW OF UNVESTED COMMON STOCK. 
As security for Purchaser’s faithful performance of the terms of this
Agreement and to insure the availability for delivery of Purchaser’s Common
Stock upon exercise of the Repurchase Option herein provided for, Purchaser
agrees, at the closing hereunder, to deliver to and deposit with the Secretary
of the Company or the Secretary’s designee (“Escrow Agent”), as Escrow Agent in
this transaction, three (3) stock assignments duly endorsed (with date and
number of shares blank) in the form attached hereto as an exhibit, together
with a certificate or certificates evidencing all of the Common Stock subject
to the Repurchase Option; said documents are to be held by the Escrow Agent and
delivered by said Escrow Agent pursuant to the Joint Escrow Instructions of the
Company and Purchaser set forth in an exhibit , attached hereto and
incorporated by this reference, which instructions shall also be delivered to
the Escrow Agent at the closing hereunder.

 

8.             RIGHTS OF PURCHASER. Subject to the provisions of the Option,
Purchaser shall exercise all rights and privileges of a shareholder of the
Company with respect to the shares deposited in escrow.  Purchaser shall be deemed to be the holder of
the shares for purposes of receiving any dividends that may be paid with
respect to such shares and for purposes of exercising any voting rights
relating to such shares, even if some or all of such shares have not yet vested
and been released from the Company’s Repurchase Option.

 

9.             LIMITATIONS ON TRANSFER.  In addition to any other limitation on transfer
created by applicable securities laws, Purchaser shall not sell, assign,
hypothecate, donate, encumber or otherwise dispose of any interest in the
Common Stock while the Common Stock is subject to the Repurchase Option.  After any Common Stock has been released from
the Repurchase Option, Purchaser shall not sell, assign, hypothecate, donate,
encumber or otherwise dispose of any interest in the Common Stock except in
compliance with the provisions herein and applicable securities laws.  Furthermore, the Common Stock shall be
subject to any right of first refusal in favor of the Company or its assignees
that may be contained in the Company’s Bylaws.

 

10.          RESTRICTIVE LEGENDS.  All certificates representing the Common
Stock shall have endorsed thereon legends in substantially the following forms
(in addition to any other legend which may be required by other agreements
between the parties hereto):

 

ATTACHMENT I

 

 

(a)           “THE SHARES 
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER’S
PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THIS COMPANY.  ANY TRANSFER OR ATTEMPTED
TRANSFER OF ANY SHARES SUBJECT TO SUCH OPTION IS VOID WITHOUT THE PRIOR EXPRESS
WRITTEN CONSENT OF THE COMPANY.”

 

(b)           “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(c)           “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR ITS
ASSIGNEE(S) AS PROVIDED IN THE BYLAWS OF THE COMPANY.”

 

(d)           Any legend required by appropriate blue sky officials.

 

11.           INVESTMENT REPRESENTATIONS. 
In connection with the purchase of the Common Stock, Purchaser
represents to the Company the following:

 

(a)           Purchaser is aware of the Company’s business affairs
and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the Common
Stock.  Purchaser is acquiring the Common
Stock for investment for Purchaser’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.

 

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

 

(c)           Purchaser further acknowledges and understands that
the Common Stock must be held indefinitely unless the Common Stock is
subsequently registered under the Securities Act or an exemption from such
registration is available.  Purchaser
understands that the certificate evidencing the Common Stock will be imprinted
with a legend that prohibits the transfer of the Common Stock unless the Common
Stock is registered or such registration is not required in the opinion of
counsel for the Company.

 

(d)           Purchaser is familiar with the provisions of Rules 144
and 701, under the Securities Act, as in effect from time to time, which, in
substance, permit limited public resale of “restricted securities” acquired,
directly or indirectly, from the issuer thereof (or from an affiliate of such
issuer), in a non-public offering subject to the satisfaction of certain
conditions.  Rule 

 

ATTACHMENT I

 

 

701 provides that if the issuer qualifies under Rule 701
at the time of issuance of the securities, such issuance 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, the
securities exempt under Rule 701 may be sold by Purchaser ninety (90) days
thereafter, subject to the satisfaction of certain of the conditions specified
by Rule 144 and the market stand-off provision described in Purchaser’s
Stock Option Agreement.

 

In the event that the sale of the Common Stock does not qualify under Rule 701
at the time of purchase, then the Common Stock may be resold by Purchaser in
certain limited circumstances subject to the provisions of Rule 144, which
requires, among other things: (i) the availability of certain public
information about the Company and (ii) the resale occurring following the
required holding period under Rule 144 after the Purchaser has purchased,
and made full payment of (within the meaning of Rule 144), the securities
to be sold.

 

(e)           Purchaser further understands that at the time
Purchaser wishes to sell the Common Stock there may be no public market upon
which to make such a sale, and that, even if such a public market then exists, the
Company may not be satisfying the current public current information
requirements of Rule 144 or 701, and that, in such event, Purchaser would
be precluded from selling the Common Stock under Rule 144 or 701 even if
the minimum holding period requirement had been satisfied.

 

12.           SECTION 83(b) ELECTION. 
Purchaser understands that Section 83(a) of the Code, taxes as
ordinary income the difference between the amount paid for the Common Stock and
the fair market value of the Common Stock as of the date any restrictions on
the Common Stock lapse.  In this context,
“restriction” includes the right of the Company to buy back the Common Stock
pursuant to the Repurchase Option set forth above.  Purchaser understands that Purchaser may
elect to be taxed at the time the Common Stock is purchased, rather than when
and as the Repurchase Option expires, by filing an election under Section 83(b) (an
“83(b) Election”) of the Code with the Internal Revenue Service within
thirty (30) days from the date of purchase. 
Even if the fair market value of the Common Stock at the time of the
execution of this Agreement equals the amount paid for the Common Stock, the 83(b) Election
must be made to avoid income under Section 83(a) in the future.  Purchaser understands that failure to file
such an 83(b) Election in a timely manner may result in adverse tax
consequences for Purchaser.  Purchaser
further understands that Purchaser must file an additional copy of such 83(b) Election
with his or her federal income tax return for the calendar year in which the
date of this Agreement falls.  Purchaser
acknowledges that the foregoing is only a summary of the effect of United
States federal income taxation with respect to purchase of the Common Stock hereunder,
and does not purport to be complete. 
Purchaser further acknowledges that the Company has directed Purchaser
to seek independent advice regarding the applicable provisions of the Code, the
income tax laws of any municipality, state or foreign country in which
Purchaser may reside, and the tax consequences of Purchaser’s death.  Purchaser assumes all responsibility for
filing an 83(b) Election and paying all taxes resulting from such election
or the lapse of the restrictions on the Common Stock.

 

ATTACHMENT I

 

 

13.           REFUSAL TO TRANSFER.  The Company shall not be required (a) to transfer
on its books any shares of Common Stock of the Company which shall have been
transferred in violation of any of the provisions set forth in this Agreement
or (b) to treat as owner of such shares or to accord the right to vote as
such owner or to pay dividends to any transferee to whom such shares shall have
been so transferred.

 

14.           NO EMPLOYMENT RIGHTS.  This Agreement is not an employment contract and
nothing in this Agreement shall affect in any manner whatsoever the right or
power of the Company (or a parent or subsidiary of the Company) to terminate
Purchaser’s employment for any reason at any time, with or without cause and
with or without notice.

 

15.           MISCELLANEOUS.

 

(a)           Notices.  Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery
or sent by telegram or fax or upon deposit in the United States Post Office, by
registered or certified mail with postage and fees prepaid, addressed to the
other party hereto at such party’s address hereinafter shown below its
signature or at such other address as such party may designate by ten (10) days’
advance written notice to the other party hereto.

 

(b)           Successors and Assigns.  This Agreement shall inure to the benefit of
the successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, be binding upon Purchaser, Purchaser’s successors,
and assigns. The Company may assign the Repurchase Option hereunder at any time
or from time to time, in whole or in part.

 

(c)           Attorneys’ Fees; Specific
Performance.  Purchaser shall reimburse the Company for
all costs incurred by the Company in enforcing the performance of, or
protecting its rights under, any part of this Agreement, including reasonable
costs of investigation and attorneys’ fees. It is the intention of the parties
that the Company, upon exercise of the Repurchase Option and payment of the
Option Price, pursuant to the terms of this Agreement, shall be entitled to
receive the Common Stock, in specie, in order to have such Common Stock
available for future issuance without dilution of the holdings of other
shareholders.  Furthermore, it is
expressly agreed between the parties that money damages are inadequate to
compensate the Company for the Common Stock and that the Company shall, upon
proper exercise of the Repurchase Option, be entitled to specific enforcement
of its rights to purchase and receive said Common Stock.

 

(d)           Governing Law; Venue.  This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.  The parties agree that any action brought by
either party to interpret or enforce any provision of this Agreement shall be
brought in, and each party agrees to, and does hereby, submit to the
jurisdiction and venue of, the appropriate state or federal court for the
district encompassing the Company’s principal place of business.

 

(e)           Further Execution.  The parties agree to take all such further action(s) as
may reasonably be necessary to carry out and consummate this Agreement as soon
as 

 

ATTACHMENT I

 

 

practicable, and to take whatever steps may be
necessary to obtain any governmental approval in connection with or otherwise
qualify the issuance of the securities that are the subject of this Agreement.

 

(f)            Independent Counsel. 
Purchaser acknowledges that this Agreement has been prepared on behalf
of the Company by Hale and Dorr LLP, counsel to the Company and that Hale and
Dorr LLP does not represent, and is not acting on behalf of, Purchaser.  Purchaser has been provided with an
opportunity to consult with Purchaser’s own counsel with respect to this
Agreement.

 

(g)           Entire Agreement; Amendment.  This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes and merges
all prior agreements or understandings, whether written or oral.  This Agreement may not be amended, modified
or revoked, in whole or in part, except by an agreement in writing signed by
each of the parties hereto.

 

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

 

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

 

ATTACHMENT 1

 

 

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

 

	
   

  	
  MICROBIA,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:  

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  320 Bent Street

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cambridge, MA
  02141

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

ATTACHMENTS:

 

	
  Exhibit A

  	
   

  	
  Assignment
  Separate from Certificate

  
	
  Exhibit B

  	
   

  	
  Joint Escrow
  Instructions

  
	
  Exhibit C

  	
   

  	
  Section 83(b) Election

  

 

ATTACHMENT I

 

 

EXHIBIT A

 

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED,
                                              
hereby sells, assigns and transfers unto MICROBIA, INC.,
a Delaware corporation (the “Company”), pursuant to the Repurchase Option under
that certain Early Exercise Stock Purchase Agreement, dated
                              
by and between the undersigned and the Company (the “Agreement”),
                              
(                              )
shares of Common Stock of the Company standing in the undersigned’s name on the
books of the Company represented by Certificate No(s).
                              
and does hereby irrevocably constitute and appoint the Company’s Secretary
attorney to transfer said Common Stock on the books of the Company with full
power of substitution in the premises. 
This Assignment may be used only in accordance with and subject to the
terms and conditions of the Agreement, in connection with the repurchase of
shares of Common Stock issued to the undersigned pursuant to the Agreement, and
only to the extent that such shares remain subject to the Company’s Repurchase
Option under the Agreement.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name)

  

 

[INSTRUCTION:  Please do not
fill in any blanks other than the “Signature” line and the “Print Name”
line.  The purpose of this Assignment is
to enable the Company to exercise its Repurchase Option set forth in the
Agreement without requiring additional signatures on the part of Purchaser.]

 

ATTACHMENT I

 

 

EXHIBIT B

 

JOINT ESCROW INSTRUCTIONS

 

Assistant Secretary

Microbia, Inc.

c/o Hale and Dorr LLP

60 State Street

Boston, MA 02109-1816

 

Dear Sir or Madam:

 

As Escrow Agent for both MICROBIA,
INC., a Delaware corporation (“Company”), and the undersigned
purchaser of Common Stock of the Company (“Purchaser”), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of that certain Early Exercise Stock Purchase Agreement (“Agreement”),
dated                               
to which a copy of these Joint Escrow Instructions is attached as Exhibit B,
in accordance with the following instructions:

 

1.             In the event the Company or an assignee shall elect to
exercise the Repurchase Option set forth in the Agreement, the Company or its
assignee will give to Purchaser and you a written notice specifying the number
of shares of Common Stock to be purchased, the purchase price, and the time for
a closing hereunder at the principal office of the Company.  Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice
in accordance with the terms of said notice.

 

2.             At the closing you are directed (a) to date any
stock assignments necessary for the transfer in question, (b) to fill in
the number of shares being transferred, and (c) to deliver same, together
with the certificate evidencing the shares of Common Stock to be transferred,
to the Company against the simultaneous delivery to you of the purchase price (which
may include suitable acknowledgment of cancellation of indebtedness) of the
number of shares of Common Stock being purchased pursuant to the exercise of
the Repurchase Option.

 

3.             Purchaser irrevocably authorizes the Company to
deposit with you any certificates evidencing shares of Common Stock to be held
by you hereunder and any additions and substitutions to said shares as
specified in the Agreement.  Purchaser
does hereby irrevocably constitute and appoint you as the Purchaser’s
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.

 

4.             This escrow shall terminate upon expiration or
exercise in full of the Repurchase Option, whichever occurs first.

 

ATTACHMENT 1

 

 

5.             If at the time of termination of this escrow you
should have in your possession any documents, securities, or other property
belonging to Purchaser, you shall deliver all of same to Purchaser and shall be
discharged of all further obligations hereunder; provided,
however, that if at the time of termination of this escrow you are
advised by the Company that the property subject to this escrow is the subject
of a pledge or other security agreement, you shall deliver all such property to
the pledgeholder or other person designated by the Company.

 

6.             Except as otherwise provided in these Joint Escrow Instructions,
your duties hereunder may be altered, amended, modified or revoked only by a
writing signed by all of the parties hereto.

 

7.             You shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by you to be genuine and to have been signed or presented by the
proper party or parties or their assignees. 
You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.

 

8.             You are hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court.  In case you obey or comply
with any such order, judgment or decree of any court, you shall not be liable
to any of the parties hereto or to any other person, firm or corporation by
reason of such compliance, notwithstanding any such order, judgment or decree
being subsequently reversed, modified, annulled, set aside, vacated or found to
have been entered without jurisdiction.

 

9.             You shall not be liable in any respect on account of
the identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.

 

10.          You shall not be liable for the outlawing of any
rights under any statute of limitations with respect to these Joint Escrow
Instructions or any documents deposited with you.

 

11.          Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be Secretary of the Company or if you shall
resign by written notice to each party. 
In the event of any such termination, the Company may appoint any
officer or assistant officer of the Company as successor Escrow Agent and
Purchaser hereby confirms the appointment of such successor or successors as
the Purchaser’s attorney-in-fact and agent to the full extent of your
appointment.

 

12.          If you reasonably require other or further instruments
in connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

 

ATTACHMENT I

 

 

13.          It is understood and agreed that should any dispute
arise with respect to the delivery and/or ownership or right of possession of
the securities, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or
defend any such proceedings.

 

14.          Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery,
including delivery by express courier or five days after deposit in the United
States Post Office, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties hereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
days’ advance written notice to each of the other parties hereto:

 

	
   

  	
  COMPANY:

  	
  MICROBIA, INC.

  	
   

  
	
   

  	
   

  	
  320 Bent Street

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cambridge, MA 02141

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ESCROW AGENT:

  	
  Assistant Secretary

  	
   

  
	
   

  	
   

  	
  Microbia, Inc.

  	
   

  
	
   

  	
   

  	
  c/o Hale and Dorr LLP

  	
   

  
	
   

  	
   

  	
  60 State Street

  	
   

  
	
   

  	
   

  	
  Boston, MA 02109-1816

  	
   

  

 

15.          By signing these Joint Escrow Instructions you become
a party hereto only for the purpose of said Joint Escrow Instructions; you do
not become a party to the Agreement.

 

16.          You shall be entitled to employ such legal counsel and
other experts (including without limitation the firm of Hale and Dorr LLP) as
you may deem necessary properly to advise you in connection with your
obligations hereunder.  You may rely upon
the advice of such counsel, and may pay such counsel reasonable compensation
therefor.  The Company shall be
responsible for all fees generated by such legal counsel in connection with
your obligations hereunder.

 

17.          This instrument shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.  It is understood and agreed
that references to “you” or “your” herein refer to the original Escrow Agent
and to any and all successor Escrow Agents. 
It is understood and agreed that the Company may at any time or from
time to time assign its rights under the Agreement and these Joint Escrow
Instructions in whole or in part.

 

ATTACHMENT I

 

 

18.          This Agreement shall be governed by and interpreted
and determined in accordance with the laws of the Commonwealth of
Massachusetts, as such laws are applied by Massachusetts courts to contracts
made and to be performed entirely in Massachusetts by residents of that state.

 

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MICROBIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PURCHASER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ESCROW AGENT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

ATTACHMENT I

 

 

EXHIBIT C

 

SECTION 83(b) ELECTION

 

NOTE: For the applicable IRS address, call the IRS at
(800) 829-1040.

 

Director of Internal Revenue

Internal Revenue Service Center

	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
	
  (city)

  	
   

  	
  (state)

  	
   

  	
  (zip)

  	
   

  

 

Re:          Election under Section 83(b)

 

IRS Representative:

 

This statement
constitutes an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended from time to time.

 

Pursuant to Treasury Regulation Section 1.83-2,
the following information is submitted:

 

	
  1.

  	
  Name:

  	
   

  	
   

  	
   

  	
  (“Purchaser”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Social Security No.:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Property Description:

  	
   

  	
   

  	
  shares of Common Stock
  of

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Microbia, Inc.

  	
   

  	
   

  
							

 

3.             The date on which property was transferred is
                                              .

 

4.             The taxable year for which the election is made is the
calendar year           .

 

5.             Restrictions:

 

“If, on or before four
years following
                                  
(the “Vesting Commencement Date”), the employment of the Purchaser by the
Corporation terminates for any reason, the 

 

ATTACHMENT I

 

 

Corporation shall have
the option to repurchase some or all of the property (depending upon the date
of such termination) for a price equal to the cost of the property repurchased.”

 

“The sale of the property
could subject Purchaser to suit under Section 16(b) of the Securities
Exchange Act of 1934.”

 

6.             The fair market value at the time of transfer of the
property with respect to which this election is being made, determined without
regard to any restriction other than a restriction which by its terms will
never lapse, is $              
per share.

 

7.             The amount paid by the undersigned taxpayer for the
property is
$                                .

 

8.             A copy of this statement has been furnished to MICROBIA, INC. and the transferee of the property if
different from the Purchaser.

 

Dated: 
                              .

 

 

Very truly yours,

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  

 

ATTACHMENT I

 

 

ATTACHMENT II

 

STOCK OPTION GRANT NOTICE

 

MICROBIA, INC.

STOCK OPTION GRANT NOTICE

 

1998 STOCK OPTION PLAN

 

Microbia, Inc.
(the “Company”), pursuant to its 1998 Stock Option Plan (the “Plan”), hereby
grants to Optionholder an option to purchase the number of shares of the
Company’s Common Stock set forth below. 
This option is subject to all of the terms and conditions as set forth
herein and in the Stock Option Agreement, the Plan and the Notice of Exercise,
all of which are attached hereto and incorporated herein in their entirety.

 

Optionholder:

Date of Grant:

Vesting Commencement Date:

Number of Shares Subject to Option:

Exercise Price (Per Share):

Total Exercise Price:

Expiration Date:

 

	
  Type of Grant:

  	
  o 
  Incentive Stock Option

  	
   

  	
  o 
  Nonstatutory Stock Option

  
	
   

  	
   

  	
   

  	
   

  
	
  Exercise Schedule:

  	
  o  Same as Vesting Schedule

  	
   

  	
  o  Early Exercise Permitted

  
	
   

  	
   

  	
   

  	
   

  
	
  Vesting Schedule:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Payment:

  	
  By
  cash or check.

  

 

Additional Terms/Acknowledgements:  The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock Option
Agreement and the Plan.  Optionholder
further acknowledges that as of the Date of Grant, this Grant Notice, the Stock
Option Agreement and the Plan set forth the entire understanding between
Optionholder and the Company regarding the acquisition of stock in the Company
and supersede all prior oral and written agreements on that subject with the
exception of (i) options previously granted and delivered to Optionholder
under the Plan, and (ii) the following agreements only:

 

	
   

  	
  Other Agreements:

  	
   

  
	
   

  	
   

  	
   

  

 

	
  MICROBIA, INC.

  	
              OPTIONHOLDER:

  

 

ATTACHMENT II

 

 

	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Signature

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  

 

Attachments:  Stock Option
Agreement, 1998 Stock Option Plan and Notice of Exercise

 

Attachment I [To Grant Notice]

 

STOCK OPTION AGREEMENT

 

MICROBIA, INC.

1998 STOCK OPTION PLAN

 

STOCK OPTION AGREEMENT 

(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)

 

Pursuant
to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option
Agreement, Microbia, Inc. (the “Company”) has granted you an option under
its 1998 Stock Option Plan (the “Plan”) to purchase the number of shares of the
Company’s Common Stock indicated in your Grant Notice at the exercise price
indicated in your Grant Notice.  Defined
terms not explicitly defined in this Stock Option Agreement but defined in the
Plan shall have the same definitions as in the Plan.

 

The
details of your option are as follows:

 

1.             VESTING.  Subject to the limitations
contained herein, your option will vest as provided in your Grant Notice,
provided that vesting will cease upon the termination of your Continuous
Service.

 

2.             NUMBER
OF SHARES AND EXERCISE PRICE.  The number of
shares of Common Stock subject to your option and your exercise price per share
referenced in your Grant Notice may be adjusted from time to time for
Capitalization Adjustments, as provided in the Plan.

 

3.             EXERCISE
PRIOR TO VESTING (“EARLY EXERCISE”).  If permitted in
your Grant Notice (i.e., the “Exercise Schedule” indicates that “Early Exercise”
of your option is permitted) and subject to the provisions of your option, you
may elect at any time that is both (i) during the period of your
Continuous Service and (ii) during the term of your option, to exercise
all or part of your option, including the nonvested portion of your option;
provided, however, that:

 

(a)           a partial exercise of your
option shall be deemed to cover first vested shares of Common Stock and then the
earliest vesting installment of unvested shares of Common Stock;

 

ATTACHMENT II

 

 

(b)           any shares of Common Stock
so purchased from installments that have not vested as of the date of exercise
shall be subject to the purchase option in favor of the Company as described in
the Company’s form of Early Exercise Stock Purchase Agreement;

 

(c)           you shall enter into the
Company’s form of Early Exercise Stock Purchase Agreement with a vesting
schedule that will result in the same vesting as if no early exercise had
occurred; and

 

(d)           if your option is an
incentive stock option, then, as provided in the Plan, to the extent that the
aggregate Fair Market Value (determined at the time of grant) of the shares of
Common Stock with respect to which your option plus all other incentive stock
options you hold are exercisable for the first time by you during any calendar
year (under all plans of the Company and its Affiliates) exceeds one hundred
thousand dollars ($100,000), your option(s) or portions thereof that
exceed such limit (according to the order in which they were granted) shall be
treated as nonstatutory stock options.

 

4.             METHOD
OF PAYMENT.  Payment of the
exercise price is due in full upon exercise of all or any part of your
option.  You may elect to make payment of
the exercise price in cash or by check or in any other manner permitted by your Grant Notice,
which may include one or more of the following:

 

(a)           In the Company’s sole
discretion at the time your option is exercised and provided that at the time
of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street Journal, pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board that, prior to
the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.

 

(b)           Provided that at the time of
exercise the Common Stock is publicly traded and quoted regularly in The Wall Street Journal, by delivery of already-owned shares
of Common Stock either that you have held for the period required to avoid a
charge to the Company’s reported earnings (generally six months) or that you
did not acquire, directly or indirectly from the Company, that are owned free
and clear of any liens, claims, encumbrances or security interests, and that
are valued at Fair Market Value on the date of exercise.  “Delivery” for these purposes, in the sole
discretion of the Company at the time you exercise your option, shall include
delivery to the Company of your attestation of ownership of such shares of
Common Stock in a form approved by the Company. 
Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption
of the Company’s stock.

 

(c)           Pursuant to the following
deferred payment alternative:

 

(i)            Not less than one hundred
percent (100%) of the aggregate exercise price, plus accrued interest, shall be
due four (4) years from date of exercise or, at the Company’s election,
upon termination of your Continuous Service.

 

ATTACHMENT II

 

 

(ii)           Interest shall be compounded
at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions
of the Code, of any portion of any amounts other than amounts stated to be
interest under the deferred payment arrangement.

 

(iii)         At any time that the Company
is incorporated in Delaware, payment of the Common Stock’s “par value,” as
defined in the Delaware General Corporation Law, shall be made in cash and not
by deferred payment.

 

(iv)          In order to elect the
deferred payment alternative, you must, as a part of your written notice of
exercise, give notice of the election of this payment alternative and, in order
to secure the payment of the deferred exercise price to the Company hereunder,
if the Company so requests, you must tender to the Company a promissory note
and a security agreement covering the purchased shares of Common Stock, both in
form and substance satisfactory to the Company, or such other or additional
documentation as the Company may request.

 

5.             WHOLE
SHARES.  You may exercise your option
only for whole shares of Common Stock.

 

6.             SECURITIES
LAW COMPLIANCE.  Notwithstanding
anything to the contrary contained herein, you may not exercise your option
unless the shares of Common Stock issuable upon such exercise are then
registered under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.  The exercise of your option must also comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.

 

7.             TERM.  The term of your option
commences on the Date of Grant and expires upon the earliest of the following:

 

(a)           three (3) months after
the termination of your Continuous Service for any reason other than your
Disability or death, provided that if during any part of such three- (3-) month
period your option is not exercisable solely because of the condition set forth
in the preceding paragraph relating to “Securities Law Compliance,” your option
shall not expire until the earlier of the Expiration Date or until it shall
have been exercisable for an aggregate period of three (3) months after
the termination of your Continuous Service;

 

(b)           twelve (12) months after the
termination of your Continuous Service due to your Disability;

 

(c)           eighteen (18) months after
your death if you die either during your Continuous Service or within three (3) months
after your Continuous Service terminates;

 

(d)           the Expiration Date
indicated in your Grant Notice; or

 

(e)           the tenth (10th) anniversary
of the Date of Grant.

 

ATTACHMENT II

 

 

If
your option is an incentive stock option, note that, to obtain the federal
income tax advantages associated with an “incentive stock option,” the Code
requires that at all times beginning on the date of grant of your option and
ending on the day three (3) months before the date of your option’s
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability.  The
Company has provided for extended exercisability of your option under certain
circumstances for your benefit but cannot guarantee that your option will
necessarily be treated as an “incentive stock option” if you continue to
provide services to the Company or an Affiliate as a Consultant or Director
after your employment terminates or if you otherwise exercise your option more
than three (3) months after the date your employment terminates.

 

8.             EXERCISE.

 

(a)           You may exercise the vested
portion of your option (and the unvested portion of your option if your Grant
Notice so permits) during its term by delivering a Notice of Exercise (in a
form designated by the Company) together with the exercise price to the
Secretary of the Company, or to such other person as the Company may designate,
during regular business hours, together with such additional documents as the
Company may then require.

 

(b)           By exercising your option
you agree that, as a condition to any exercise of your option, the Company may
require you to enter into an arrangement providing for the payment by you to
the Company of any tax withholding obligation of the Company arising by reason
of (1) the exercise of your option, (2) the lapse of any substantial
risk of forfeiture to which the shares of Common Stock are subject at the time
of exercise, or (3) the disposition of shares of Common Stock acquired
upon such exercise.

 

(c)           If your option is an
incentive stock option, by exercising your option you agree that you will
notify the Company in writing within fifteen (15) days after the date of any
disposition of any of the shares of the Common Stock issued upon exercise of
your option that occurs within two (2) years after the date of your option
grant or within one (I) year after such shares of Common Stock are
transferred upon exercise of your option.

 

(d)           By exercising your option
you agree that the Company (or a representative of the underwriter(s) may,
in connection with the first underwritten registration of the offering of any
securities of the Company under the Securities Act, require that you not sell,
dispose of, transfer, make any short sale of, grant any option for the purchase
of, or enter into any hedging or similar transaction with the same economic
effect as a sale, any shares of Common Stock or other securities of the Company
held by you, for a period of time specified by the underwriter(s) (not to
exceed one hundred eighty (180) days) following the effective date of the
registration statement of the Company filed under the Securities Act.  You further agree to execute and deliver such
other agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or that are
necessary to give further effect thereto. 
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to your shares of Common Stock until
the end of such period.

 

9.             TRANSFERABILITY.  Your option is not
transferable, except by will or by the laws of descent and distribution, and is
exercisable during your life only by you. 
Notwithstanding the 

 

ATTACHMENT II

 

 

foregoing, by delivering written notice to the Company, in a form
satisfactory to the Company, you may designate a third party who, in the event
of your death, shall thereafter be entitled to exercise your option.

 

10.          RIGHT OF FIRST REFUSAL.  Shares of Common Stock that
you acquire upon exercise of your option are subject to any right of first
refusal that may be described in the Company’s bylaws in effect at such time
the Company elects to exercise its right. 
The Company’s right of first refusal shall expire on the Listing Date.

 

11.          RIGHT OF REPURCHASE.  To the extent provided in
the Company’s bylaws as amended from time to time, the Company shall have the
right to repurchase all or any part of the shares of Common Stock you acquire
pursuant to the exercise of your option.

 

12.          OPTION NOT A SERVICE CONTRACT.  Your option is not an
employment or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue in the
employ of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment.  In addition,
nothing in your option shall obligate the Company or an Affiliate, their
respective shareholders, Boards of Directors, Officers or Employees to continue
any relationship that you might have as a Director or Consultant for the
Company or an Affiliate.

 

13.          WITHHOLDING OBLIGATIONS.

 

(a)           At the time you exercise
your option, in whole or in part, or at any time thereafter as requested by the
Company, you hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for (including
by means of a “cashless exercise” pursuant to a program developed under Regulation
T as promulgated by the Federal Reserve Board to the extent permitted by the
Company), any sums required to satisfy the federal, state, local and foreign
tax withholding obligations of the Company or an Affiliate, if any, which arise
in connection with your option.

 

(b)           Upon your request and
subject to approval by the Company, in its sole discretion, and compliance with
any applicable conditions or restrictions of law, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the exercise
of your option a number of whole shares of Common Stock having a Fair Market
Value, determined by the Company as of the date of exercise, not in excess of
the minimum amount of tax required to be withheld by law.  If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise of
your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of
the Code, covering the aggregate number of shares of Common Stock acquired upon
such exercise with respect to which such determination is otherwise deferred,
to accelerate the determination of such tax withholding obligation to the date
of exercise of your option. 
Notwithstanding the filing of such election, shares of Common Stock
shall be withheld solely from fully vested shares of Common Stock determined as
of the date of exercise of your option that are otherwise issuable to you upon
such exercise.  Any adverse consequences
to you arising in connection with such share withholding procedure shall be
your sole responsibility.

 

ATTACHMENT II

 

 

(c)           You may not exercise your
option unless the tax withholding obligations of the Company and/or any Affiliate
are satisfied.  Accordingly, you may not
be able to exercise your option when desired even though your option is vested,
and the Company shall have no obligation to issue a certificate for such shares
of Common Stock or release such shares of Common Stock from any escrow provided
for herein.

 

14.          NOTICES.  Any notices provided for in
your option or the Plan shall be given in writing and shall be deemed
effectively given upon receipt or, in the case of notices delivered by mail by
the Company to you, five (5) days after deposit in the United States mail,
postage prepaid, addressed to you at the last address you provided to the
Company.

 

15.          GOVERNING PLAN DOCUMENT.  Your option is subject to
all the provisions of the Plan, the provisions of which are hereby made a part
of your option, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan.  In the event of any conflict
between the provisions of your option and those of the Plan, the provisions of
the Plan shall control.

 

Attachment II [To Grant Notice]

 

1998 STOCK OPTION PLAN

 

Attachment III [To Grant Notice]

 

NOTICE OF EXERCISE

 

ATTACHMENT II

 

 

ATTACHMENT III

 

INCENTIVE STOCK OPTION CERTIFICATE

 

MICROBIA, INC.

 

Incentive Stock Option Certificate Granted Under the 1998

Amended and Restated Stock Option Plan

 

This
Certificate evidences the grant by Microbia, Inc., a Delaware corporation
(the “Company”), to the person named below (the “Participant” or “you”), of an
option to purchase, in whole or in part, shares of common stock (the “Shares”),
$.001 par value per share of the Company (“Common Stock”) exercisable on the
following terms and conditions and those set forth on the pages attached
to this Certificate and in the Company’s 1998 Amended and Restated Stock Option
Plan (the “Plan”).  It is intended that
the option evidenced by this Certificate shall be an incentive stock option as
defined in Section 422 of the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context,
the terms “Participant” and “you,” as used in this option, shall be deemed to
include any person who acquires the right to exercise this option validly under
its terms.  Defined terms not expressly
defined in this Certificate but defined in the Plan shall have the same
definitions as in the Plan.

 

Name of Participant:

Number of Shares:

Exercise Price Per Share:

Grant Date:

Expiration Date:

Vesting Commencement Date:

Early Exercise Permitted:

Payment Method:

 

Vesting Schedule.

 

The
option will become exercisable (“vest”) as to    % of the
original number of Shares on the first anniversary of the Grant Date and as to
an additional    % of the original number of Shares at the
end of each successive full period following the first anniversary of the Grant
Date until fully vested.  This option
shall expire upon, and will not be exercisable after, the Expiration Date.  The right of exercise shall be cumulative so
that to the extent the option is not exercised in any period to the maximum
extent permissible it shall continue to be exercisable, in whole or in part,
with respect to all shares for which it is vested until the earlier of the
Expiration Date or the termination of this option pursuant to its terms,
provided, however, that unless otherwise required to avoid the forfeiture of
vested options, option exercises may be made only once per calendar year.

 

ATTACHMENT III

 

 

By
acceptance of this option, you agree to the terms and conditions hereof and
acknowledge receipt of a copy of the 1998 Amended and Restated Stock Option
Plan.

 

	
   

  	
   

  	
  MICROBIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

ATTACHMENT III

 

 

1.             Exercise of
Option.

 

(a)           Form of Exercise.  For each election to exercise this option,
you must send to the Company, and the Company must receive, at its principal
office: (1) a completed election in the form attached hereto as Addendum
A, (2) this Certificate, and (3) payment in full in cash, check; or
such other form of payment permitted by this certificate.  You may purchase less than the number of
shares covered hereby, provided that no partial exercise of this option may be
for any fractional share.

 

(b)           Withholding.  By exercising your option you agree that, as
a condition to any exercise of your option, the Company may require you to
enter an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of(1) the exercise
of your option, (2) the lapse of any substantial risk of forfeiture to
which the shares are subject at the time of exercise or (3) the
disposition of shares acquired upon such exercise.

 

(c)           Disposition Notification.  By exercising your option you agree that you
will notify the Company in writing within fifteen (15) days after the day of
any disposition of any of the shares of Common Stock issued upon exercise of
your option that occurs within two (2) years after the date of your option
grant within one (1) year after such shares of Common Stock are
transferred upon exercise of your option.

 

(d)           Agreement in Connection with
any Underwritten Offering of Securities.  By exercising your option you agree that the
Company (or a representative of the underwriters) may, in connection with the
first underwritten registration of a public offering of any securities of the
Company under the Securities Act, require that you not sell, dispose of,
transfer, make any short sale of, grant any option for the purchase of, or
enter into any hedging or similar transaction with the same economic effect as
a sale, any shares of Common Stock or other securities held by you, for a
period of time specified by the underwriters(s) (not to exceed one hundred
eighty (180) days) following the effective date of the registration statement
of the Company filed under the Securities Act. 
You further agree to execute and deliver such other agreements as may be
reasonably requested by the Company and/or the underwriter(s) that are
consistent with the foregoing or which are necessary to give further effect
thereto.  In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to your Common Stock until the end of such period.

 

(e)           Securities Law Compliance.  Notwithstanding anything to the contrary
contained herein, your option may not be exercised unless the shares issuable
upon exercise of your option are then registered under the Securities Act or,
if such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act. The exercise of your option must also comply with other
applicable laws and regulations governing the option, and the option may not be
exercised if the Company determines that the exercise would not be in material
compliance with such laws and regulations.

 

(f)            Continuous Relationship with
the Company Required.  Except as
otherwise provided in this Section I, this option may not be exercised unless
you, at the time you exercise 

 

ATTACHMENT III

 

 

this option, are and have been at all times since the Grant Date, in
Continuous Service as an employee, officer or director of, or consultant or
advisor to, the Company or any parent or subsidiary of the Company as defined
in Section 424(e) or (f) of the Code (an “Eligible Participant”).

 

(g)           Termination of Relationship
with the Company.  If you
cease to be an Eligible Participant for any reason, except as provided in
paragraphs (h) and (i) below, your right to exercise this option
shall terminate three months after such cessation, provided that if during any
part of such three month period the option is not exercisable solely because of
the condition set forth in paragraph (e) above, the option shall not
expire until it has been exercisable for an aggregate period, after termination
of your Continuous Service, equal to the sum of (i) the number of days
following such termination during which this option was not exercisable solely
because of the conditions set forth in paragraph (e) above and (ii) three
months (but in no event after the Expiration Date), and further provided that
this option shall be exercisable only to the extent that you were entitled to
exercise this option on the date of such cessation.  Notwithstanding the foregoing, if you, at any
time prior to the Expiration Date, violate the noncompetition, non-solicitation
or confidentiality provisions of any employment contract, confidentiality,
non-solicitation or nondisclosure agreement or other agreement between you and
the Company, the right to exercise this option shall terminate immediately upon
written notice to you from the Company describing such violation.

 

(h)           Exercise Period Upon
Disability.  If your
employment is terminated due to Disability, this option shall be exercisable,
within the period of 12 months following the date of your termination, provided
that this option shall be exercisable only to the extent that this option was
exercisable by you on the date of such termination, and further provided that
this option shall not be exercisable after the Expiration Date.

 

(i)            Exercise Period Upon Death.  If you die prior to the Expiration Date and
either during your Continuous Service or within three months after your
Continuous Service terminates, this option shall be exercisable within the
period of 18 months following your death, by (i) your estate, (ii) a
person who acquired the right to exercise this option by bequest or inheritance
or (iii) a person designated by you to exercise the option upon your death
pursuant to Section 6 below, provided that this option shall be
exercisable only to the extent that this option was exercisable by you on the
date of your death, and further provided that this option shall not be
exercisable after the Expiration Date.

 

2.             Withholding.

 

(a)           At the time this option is
exercised, in whole or in part, or at any time thereafter as requested by the
Company, you hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provisions for (including
by means of a “cashless exercise” pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board to the extent
permitted by the Company), any sums required to satisfy the federal, state,
local and foreign tax withholding obligations of the Company or any Affiliate,
if any, which arise in connection with this option.

 

ATTACHMENT III

 

 

(b)           Upon your request and
subject to approval by the Company, in its sole discretion, and compliance with
any applicable conditions or restrictions of law, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the exercise
of this option a number of whole shares having a Fair Market Value, determined
by the Company as of the date of exercise, not in excess of the minimum amount
of tax required to be withheld by law. 
If the date of determination of any tax withholding obligation is
deferred to a date later than the date of exercise of this option, share withholding
pursuant to the preceding sentence shall not be permitted unless you make a
proper and timely election under Section 83(b) of the Code, covering
the aggregate number of shares of Common Stock acquired upon such exercise with
respect to which such determination is otherwise deferred, to accelerate the
determination of such tax withholding obligation to the date of exercise of
this option.  Notwithstanding the filing
of such election, shares shall be withheld solely from fully vested shares of
Common Stock determined as of the date of exercise of this option that are
otherwise issuable to you upon such exercise. 
Any adverse consequences to you arising in connection with such share
withholding procedure shall be your sole responsibility.

 

(c)           This option is not
exercisable unless the tax withholding obligations of the Company and/or any
Affiliate are satisfied.  Accordingly, in
such event, you may not be able to exercise this option when desired even
though this option is vested and the Company shall have no obligation to issue
a certificate for such shares or release such shares from any escrow provided
for herein.

 

3.             Incentive Stock
Option Status.

 

To
obtain the federal income tax advantages associated with an “incentive stock
option,” the Code requires that at all times beginning on the date of grant of
the option and ending on the day three months before the date of the option’s
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability.  The
Company has provided for extended exercisability of your option under
circumstances for your benefit, but cannot guarantee that this option will
necessarily be treated as an “incentive stock option” if you provide service to
the Company or an Affiliate as a Consultant or Director or if you exercise your
option more than three months after the date of your employment with the
Company or an Affiliate terminates.

 

4.             Exercise Prior
to Vesting (“Early Exercise”).  If permitted in this certificate and subject
to the provisions of this certificate, you may elect at any time that is both (i) during
the period of Continuous Service and (ii) during the term of this option,
to exercise all or part of this option, including the nonvested portion of this
option; provided, however, that:

 

(a)           a partial exercise of this
option shall be deemed to cover first vested shares and then the earliest
vesting installment of unvested shares;

 

(b)           any shares so purchased from
installments which have not vested as of the date of exercise shall be subject
to the purchase option in favor of the Company as described in the Company’s
form of Early Exercise Stock Purchase Agreement;

 

ATTACHMENT III

 

 

(c)           you shall enter into the Company’s form of
Early Exercise Stock Purchase Agreement with a vesting schedule that will
result in the same vesting as if no early exercise had occurred; and

 

(d)           as provided in the Plan, to the extent that
the aggregate Fair Market Value (determined at the time of grant) of stock with
respect to which this option plus all other incentive stock options you hold
are exercisable for the first time by you during any calendar year (under all
plans of the Company and its Affiliates) exceeds one hundred thousand dollars
($100,000), the options or portions thereof that exceed such limit (according
to the order in which they were granted) shall be treated as nonstatutory stock
options.

 

5.             Right of First
Refusal/Right of Repurchase.  Vested shares that are received upon exercise
of this option are subject to any right of first refusal that may be described
in the Company’s bylaws in effect at such time as the Company elects to
exercise its right.  The Company’s right
of first refusal shall expire on the date of the closing of the first
registration of a public offering of equity securities of the Company under Section 12
of the Exchange Act.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the Company
shall have the right to repurchase all or any part of the shares received
pursuant to the exercise of this option.

 

6.             Nontransferability
of Option.

 

This
option may not be sold, assigned, transferred, pledged or otherwise encumbered
by you, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during your lifetime, this option shall be
exercisable only by you.  Notwithstanding
the foregoing, by delivering written notice to the Company, in a form satisfactory
to the Company, you may designate a third party who, in the event of your
death, shall thereafter be entitled to exercise this option.

 

7.             Notices.  Any notices provided for by this Certificate
or the Plan shall be given in writing and shall be deemed effectively given
upon receipt or, in the case of notices delivered by the Company to you, five
days after deposit in the United States mail, postage prepaid, addressed to you
at the last address you provided to the Company.

 

8.             Provisions of
the Plan.

 

This
option is subject to the provisions of the Plan, a copy of which is “furnished
to the Participant with this option.  In
the event of any conflict between the provisions of this option and those of
the Plan, the provisions of the Plan shall control.

 

Addendum A

 

NOTICE OF EXERCISE

 

(Incentive Stock Option Granted Under the

1998 Amended and Restated Stock Option Plan)

 

ATTACHMENT III

 

 

ATTACHMENT IV

NONSTATUTORY STOCK OPTION CERTIFICATE

 

MICROBIA, INC.

 

Nonstatutory Stock Option Certificate Granted Under

the 1998 Amended and Restated Stock Option Plan

 

This
Certificate evidences the grant by Microbia, Inc., a Delaware corporation
(the “Company”), to the person named below (the “Participant” or “you”), of an
option to purchase, in whole or in part, shares of common stock (the “Shares”),
$.001 par value per share, of the Company (“Common Stock”) exercisable on the
following terms and conditions and those set forth on the pages attached
to this Certificate and in the Company’s 1998 Amended and Restated Stock Option
Plan (the “Plan”). It is intended that the option evidenced by this Certificate
shall not be an incentive stock option as defined in Section 422 of the
Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the “Code”).  Except as
otherwise indicated by the context, the terms “Participant” and “you,” as used
in this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms. 
Defined terms not expressly defined in this Certificate but defined in
the Plan shall have the same definitions as in the Plan.

 

Participant:

Number of Shares:

Exercise Price Per Share:

Grant Date:

Expiration Date:

Vesting Commencement Date:

Early Exercise Permitted:

Payment Method:

 

Vesting Schedule.

 

The option will become exercisable (“vest”)
as to     % of the original number of Shares on the first
anniversary of the Grant Date and as to an additional     %
of the original number of Shares at the end of each successive full
                            
period following the first anniversary of the Grant Date until fully
vested.  This option shall expire upon,
and will not be exercisable after, the Expiration Date.  The right of exercise shall be cumulative so
that to the extent the option is not exercised in any period to the maximum
extent permissible it shall continue to be exercisable, in whole or in part,
with respect to all shares for which it is vested until the earlier of the
Expiration Date or the termination of this option pursuant to its terms,
provided, however, that unless otherwise required to avoid the forfeiture of
vested options, option exercises may be made only once per calendar year.

 

ATTACHMENT IV

 

 

By
acceptance of this option, you agree to the terms and conditions hereof and
acknowledge receipt of a copy of the 1998 Amended and Restated Stock Option
Plan.

 

	
   

  	
   

  	
   

  	
  MICROBIA, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
  Title:

  

 

ATTACHMENT IV

 

 

1.             Exercise of
Option.

 

(a)           Form of Exercise.  For each election to exercise this option,
you must send to the Company, and the Company must receive, at its principal
office: (1) a completed, election exercise in the form attached as Addendum
A, (2) this Certificate, and (3) payment in full in cash, check
or such other form of payment permitted by this Certificate.  You may purchase less than the number of
shares covered hereby, provided that no partial exercise of this option may be
for any fractional share.

 

(b)           Withholding.  By exercising your option you agree that, as
a condition to any exercise of your option, the Company may require you to
enter an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the
exercise of your option, (2) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise or (3) the
disposition of shares acquired upon such exercise.

 

(c)           Agreement in Connection with any Underwritten
Offering of Securities.  By
exercising your option you agree that the Company (or a representative of the
underwriters) may, in connection with the first underwritten registration of a
public offering of any securities of the Company under the Securities Act,
require that you not sell, dispose of, transfer, make any short sale of, grant
any option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale, any shares of Common Stock
or other securities held by you, for a period of time specified by the underwriters(s) (not
to exceed one hundred eighty (180) days) following the effective date of the
registration statement of the Company filed under the Securities Act.  You further agree to execute and deliver such
other agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or which are
necessary to give further effect thereto. 
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to your Common Stock until the end of
such period.

 

(d)           Securities Law Compliance.  Notwithstanding anything to the contrary
contained herein, your option may not be exercised unless the shares issuable
upon exercise of your option are then registered under the Securities Act or,
if such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act.  The exercise of your
option must also comply with other applicable laws and regulations governing
the option, and the option may not be exercised if the Company determines that
the exercise would not be in material compliance with such laws and
regulations.

 

(e)           Continuous Relationship with the Company
Required.  Except as
otherwise provided in this Section 1, this option may not be exercised
unless you, at the time you exercise this option, are, and have been at all
times since the Grant Date, in Continuous Service as an employee, officer or
director of, or consultant or advisor to, the Company or any parent or
subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).

 

ATTACHMENT IV

 

 

(f)            Termination of Relationship with the Company.  If you cease to be an Eligible Participant
for any reason, except as provided in paragraphs (g) and (h) below,
your right to exercise this option shall terminate three months after such
cessation, provided that if during any part of such three month period the
option is not exercisable solely because of the condition set forth in
paragraph (d) above, the option shall not expire until it has been
exercisable for an aggregate period, after termination of Continuous Service,
equal to the sum of (i) the number of days following such termination
during which this option was not exercisable solely because of the conditions
set forth in paragraph (d) above and (ii) three months (but in no
event after the Expiration Date), and further provided that this option shall
be exercisable only to the extent that you were entitled to exercise this
option on the date of such cessation. 
Notwithstanding the foregoing, if you, at any time prior to the
Expiration Date, violate the non-competition, nonsolicitation or confidentiality
provisions of any employment contract, confidentiality, nonsolicitation or
nondisclosure agreement or other agreement between you and the Company, the
right to exercise this option shall terminate immediately upon written notice
to you from the Company describing such violation.

 

(g)           Exercise Period Upon Disability.  If your employment is terminated due to
Disability, this option shall be exercisable, within the period of 12 months
following the date of your termination, provided that this option shall be
exercisable only to the extent that this option was exercisable by you on the
date of such termination, and further provided that this option shall not be
exercisable after the Expiration Date.

 

(h)           Exercise Period Upon Death.  If you die prior to the Expiration Date and
either during your Continuous Service or within three months after your
Continuous Service terminates, this option shall be exercisable within the
period of 18 months following your death, by (i) your estate, (ii) a
person who acquired the right to exercise this option by bequest or inheritance
or (iii) a person designated by you to exercise the option upon your death
pursuant to Section 5 below, provided that this option shall be
exercisable only to the extent that this option was exercisable by you on the
date of your death, and further provided that this option shall not be
exercisable after the Expiration Date.

 

2.             Withholding.

 

(a)           At the time this option is exercised, in
whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you,
and otherwise agree to make adequate provisions for (including by means of a “cashless
exercise” pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or any Affiliate, if any, which arise in connection
with this option.

 

(b)           Upon your request and subject to approval by
the Company, in its sole discretion, and compliance with any applicable
conditions or restrictions of law, the Company may withhold from fully vested
shares of Common Stock otherwise issuable to you upon the exercise of this
option a number of whole shares having a Fair Market Value, determined by the
Company as of the date of exercise, not in excess of the minimum amount of tax
required to be withheld by law.  If the
date of determination of any tax withholding obligation is deferred to a date
later than the 

 

ATTACHMENT IV

 

 

date of exercise of this option, share withholding pursuant to the
preceding sentence shall not be permitted unless you make a proper and timely
election under Section 83(b) of the Code, covering the aggregate
number of shares of Common Stock acquired upon such exercise with respect to
which such determination is otherwise deferred, to accelerate the determination
of such tax withholding obligation to the date of exercise of this option.  Notwithstanding the filing of such election,
shares shall be withheld solely from fully vested shares of Common Stock
determined as of the date of exercise of this option that are otherwise
issuable to you upon such exercise.  Any
adverse consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.

 

(c)           This option is not exercisable unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied.  Accordingly, in such event, you may not be
able to exercise this option when desired even though this option is vested and
the Company shall have no obligation to issue a certificate for such shares or
release such shares from any escrow provided for herein.

 

3.             Exercise Prior
to Vesting (“Early Exercise”).  If permitted in this certificate and subject
to the provisions of this certificate, you may elect at any time that is both (i) during
the period of Continuous Service and (ii) during the term of this option,
to exercise all or part of this option, including the nonvested portion of this
option; provided, however, that:

 

(a)           a partial exercise of this option shall be
deemed to cover first vested shares and then the earliest vesting installment
of unvested shares;

 

(b)           any shares so purchased from installments
which have not vested as of the date of exercise shall be subject to the
purchase option in favor of the Company as described in the Company’s form of
Early Exercise Stock Purchase Agreement; and

 

(c)           you shall enter into the Company’s form of
Early Exercise Stock Purchase Agreement with a vesting schedule that will
result in the same vesting as if no early exercise had occurred.

 

4.             Right of First
Refusal/Right of Repurchase.  Vested shares that are received upon exercise
of this option are subject to any right of first refusal that may be described
in the Company’s bylaws in effect at such time as the Company elects to
exercise its right.  The Company’s right
of first refusal shall expire on the date of the closing of the first
registration of a public offering of equity securities of the Company under Section 12
of the Exchange Act.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.

 

5.             Nontransferability
of Option.

 

This
option may not be sold, assigned, transferred, pledged or otherwise encumbered
by you, either voluntarily or by operation oflaw, except by will or the laws of
descent and distribution, and, during your lifetime, this option shall be
exercisable only by you.  Notwithstanding
the foregoing, by delivering written notice to the Company, in a form 

 

ATTACHMENT IV

 

 

satisfactory to the Company, you may designate a third party who, in
the event of your death, shall thereafter be entitled to exercise this option.

 

6.             Notices.  Any notices provided for by this Certificate
or the Plan shall be given in writing and shall be deemed effectively given
upon receipt or, in the case of notices delivered by the Company to you, five
days after deposit in the United States mail, postage prepaid, addressed to you
at the last address you provided to the Company.

 

7.             Provisions of
the Plan.

 

This
option is subject to the provisions of the Plan, a copy of which is furnished
to the Participant with this option. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.

 

Addendum A

 

NOTICE OF EXERCISE

 

(Nonstatutory Stock Option Granted

Under the 1998 Amended and Restated Stock Option
Plan)

 

ATTACHMENT IV

 

 

ATTACHMENT V

NOTICE OF EXERCISE

 

NOTICE OF EXERCISE

 

(Stock Option Granted Under the

1998 Amended and Restated Stock Option Plan)

 

Ironwood Pharmaceuticals, Inc.

320 Bent Street

	
  Cambridge, MA 
  02141

  	
   

  	
  Date of Exercise:

  	
   

  

 

Ladies and Gentlemen:

 

This constitutes notice
under my stock option that I elect to purchase the number of shares of Series B
Common Stock of Ironwood Pharmaceuticals, Inc. (the “Company”) set forth
below.

 

	
   

  	
  Stock Option dated:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of shares as to which option is exercised:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Certificates to be issued in name of:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Exercise price per share:

  	
  $

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of cash or check payment delivered herewith:

  	
  $

  

 

By this exercise, I agree
(i) to provide such additional documents as you may require pursuant to
the terms of the 1998 Amended and Restated Stock Option Plan, (ii) to
provide for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option, and (iii) to
notify you in writing within fifteen (15) days after the date of any
disposition of any of the shares of Series B Common Stock issued upon 

 

ATTACHMENT V

 

 

exercise of this
option that occurs within two (2) years after the date of grant of this
option or within one (1) year after such shares of Series B Common
Stock are issued upon exercise of this option.

 

I hereby make the
following certifications and representations with respect to the number of
shares of Series B Common Stock of the Company (the “Shares”), which are
being acquired by me for my own account upon exercise of the Option as set
forth above:

 

I acknowledge that the
Shares have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), and are deemed to constitute “restricted securities”
under Rule 701 and “control securities” under Rule 144 promulgated
under the Securities Act.  I warrant and
represent to the Company that I have no present intention of distributing or
selling said Shares, except as permitted under the Securities Act and any
applicable state securities laws.

 

I further acknowledge
that I will not be able to resell the Shares for at least ninety (90) days
after the stock of the Company becomes publicly traded (i.e., subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934) under Rule 701 and that more restrictive conditions apply to
affiliates of the Company under Rule 144.

 

I further acknowledge
that all certificates representing any of the Shares subject to the provision
of the Option shall have endorsed thereon appropriate legends reflecting the
foregoing limitations, as well as any legends reflecting restrictions pursuant
to the Company’s Certificate of Incorporation, Bylaws and/or applicable
securities laws.

 

I further agree that, if
required by the Company (or a representative of the underwriters) in connection
with the first underwritten registration of the offering of any securities of
the Company under the Securities Act, I will not sell or otherwise transfer or
dispose of any shares of Series B Common Stock or other securities of the
Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Securities Act as may be requested by the Company or the
representative of the underwriters.  I
further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  

 

ATTACHMENT VExhibit 10.2

 

IRONWOOD PHARMACEUTICALS, INC.

 

AMENDED AND
RESTATED 2002 STOCK INCENTIVE PLAN

 

1.                                       Purpose

 

The purpose of this Amended and Restated 2002 Stock Incentive Plan (the
“Plan”) of Ironwood Pharmaceuticals, Inc., a Delaware  corporation
(the “Company”), is to advance the interests of the Company’s stockholders by
enhancing the Company’s ability to attract, retain and motivate persons who
make (or are expected to make) important contributions to the Company by
providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company’s stockholders.  Except where the context otherwise requires,
the term “Company” shall include any of the Company’s present or future parent
or subsidiary corporations as defined in Sections 424(e) or (f) of
the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the “Code”) and any other business venture (including, without
limitation, joint venture or limited liability company) in which the Company
has a controlling interest, as determined by the Board of Directors of the
Company (the “Board”).

 

2.                                       Eligibility

 

All of the Company’s employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock awards, or other
stock-based awards (each, an “Award”) under the Plan.  Each person who has been granted an Award
under the Plan shall be deemed a “Participant”.

 

3.                                       Administration and Delegation

 

(a)                                  Administration by Board of Directors. 
The Plan will be administered by the Board.  The Board shall have authority to grant
Awards and to adopt, amend and repeal such administrative rules, guidelines and
practices relating to the Plan as it shall deem advisable.  The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency.  All decisions by the Board shall be made in
the Board’s sole discretion and shall be final and binding on all persons
having or claiming any interest in the Plan or in any Award.  No director or person acting pursuant to the
authority delegated by the Board shall be liable for any action or
determination relating to or under the Plan made in good faith.

 

(b)                                 Appointment of Committees. 
To the extent permitted by applicable law, the Board may delegate any or
all of its powers under the Plan to one or more committees or subcommittees of
the Board (a “Committee”).  All
references in the Plan to the “Board” shall mean the Board or a Committee of
the Board or to the executive officers referred to in Section

 

 

3(c) to
the extent that the Board’s powers or authority under the Plan have been
delegated to such Committee or executive officers.

 

(c)                                  Delegation to Executive Officers. 
To the extent permitted by applicable law, the Board may delegate to one
or more executive officers of the Company the power to grant Awards to
employees or officers of the Company or any of its present or future subsidiary
corporations and to exercise such other powers under the Plan as the Board may
determine, provided that the Board shall fix the terms of the Awards to be
granted by such executive officers (including the exercise price of such
Awards, which may include a formula by which the exercise price will be
determined) and the maximum number of shares subject to Awards that the
executive officers may grant; provided further, however, that no executive
officer shall be authorized to grant Awards to any “executive officer” of the
Company (as defined by Rule 3b-7 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined
by Rule 16a-1 under the Exchange Act).

 

4.                                       Stock Available for Awards. 
Subject to adjustment under Section 8, Awards may be made under the
Plan for (i) up to 4,700,000 shares of common stock, $.001 par value per
share, of the Company (the “Common Stock”) and (ii) such additional shares
of Common Stock as are reserved for issuance under the Company’s Amended and
Restated 1998 Stock Option Plan that are not subject to or represented by
outstanding stock options or other stock awards, including shares underlying
stock options or other stock awards that have been, or in the future are,
repurchased or canceled, terminated, surrendered or otherwise expire without
delivery of shares of Common Stock by the Company, subject, however, in the
case of Incentive Stock Options (as hereinafter defined), to any limitations
under the Code.  If any Award granted
under this Plan expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part (including as
the result of shares of Common Stock subject to such Award being repurchased by
the Company at the original issuance price pursuant to a contractual repurchase
right) or results in any Common Stock not being issued, the unused Common Stock
covered by such Award shall again be available for the grant of Awards under
the Plan, subject, however, in the case of Incentive Stock Options (as
hereinafter defined), to any limitations under the Code.  Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.  At no time while there is any Option (as
defined below) outstanding and held by a Participant who was a resident of the
State of California on the date of grant of such Option, shall the total number
of shares of Common Stock issuable upon exercise of all outstanding options and
the total number of shares provided for under any stock bonus or similar plan
of the Company exceed the applicable percentage as calculated in accordance
with the conditions and exclusions of Section 260.140.45 of the California
Code of Regulations, based on the shares of the Company which are outstanding
at the time the calculation is made.

 

5.                                       Stock Options

 

(a)                                  General.  The Board may
grant options to purchase Common Stock (each, an “Option”) and determine the
number of shares of Common Stock to be covered by each Option, the exercise
price of each Option and the conditions and limitations applicable to the
exercise of each Option, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.  An Option which is not intended to be an
Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory
Stock Option”.

 

2

 

(b)                                 Incentive Stock Options. 
An Option that the Board intends to be an “incentive stock option” as
defined in Section 422 of the Code (an “Incentive Stock Option”) shall
only be granted to employees of the Company and shall be subject to and shall
be construed consistently with the requirements of Section 422 of the
Code.  The Company shall have no
liability to a Participant, or any other party, if an Option (or any part
thereof) which is intended to be an Incentive Stock Option is not an Incentive
Stock Option.

 

(c)                                  Exercise Price. 
The Board shall establish the exercise price at the time each Option is
granted and specify it in the applicable option agreement.

 

(d)                                 Duration of Options. 
Each Option shall be exercisable at such times and subject to such terms
and conditions as the Board may specify in the applicable option agreement.

 

(e)                                  Exercise of Option. 
Options may be exercised by delivery to the Company of a written notice
of exercise signed by the proper person or by any other form of notice (including
electronic notice) approved by the Board together with payment in full as
specified in Section 5(f) for the number of shares for which the
Option is exercised.

 

(f)                                    Payment Upon Exercise. 
Common Stock purchased upon the exercise of an Option granted under the
Plan shall be paid for as follows:

 

(1)                                  in cash or by check, payable to the order
of the Company;

 

(2)                                  except as the Board may, in its sole
discretion, otherwise provide in an option agreement, by (i) delivery of
an irrevocable and unconditional undertaking by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay the exercise price and
any required tax withholding or (ii) delivery by the Participant to the
Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price and any required tax withholding;

 

(3)                                  when the Common Stock is registered under
the Securities Exchange Act of 1934 (the “Exchange Act”), by delivery of shares
of Common Stock owned by the Participant valued at their fair market value as
determined by (or in a manner approved by) the Board in good faith (“Fair
Market Value”), provided (i) such method of payment is then permitted
under applicable law and (ii) such Common Stock, if acquired directly from
the Company, was owned by the Participant at least six months prior to such
delivery;

 

(4)                                  to the extent permitted by the Board, in
its sole discretion by (i) delivery of a promissory note of the Participant
to the Company on terms determined by the Board, or (ii) payment of such
other lawful consideration as the Board may determine; or

 

(5)                                  by any combination of the above permitted
forms of payment.

 

(g)                                 Substitute Options. 
In connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock of an entity,
the Board may grant Options in substitution for any options or other stock or
stock-based awards granted by such entity or an affiliate thereof.  Substitute Options may be granted on such
terms as the Board 

 

3

 

deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.

 

6.                                       Restricted Stock

 

(a)                                  Grants.  The Board may
grant Awards entitling recipients to acquire shares of Common Stock, subject to
the right of the Company to repurchase all or part of such shares at their
issue price or other stated or formula price (or to require forfeiture of such
shares if issued at no cost) from the recipient in the event that conditions
specified by the Board in the applicable Award are not satisfied prior to the
end of the applicable restriction period or periods established by the Board
for such Award (each, a “Restricted Stock Award”).

 

(b)                                 Terms and Conditions. 
The Board shall determine the terms and conditions of any such
Restricted Stock Award, including the conditions for repurchase (or forfeiture)
and the issue price, if any.

 

(c)                                  Stock Certificates. 
Any stock certificates issued in respect of a Restricted Stock Award
shall be registered in the name of the Participant and, unless otherwise
determined by the Board, deposited by the Participant, together with a stock
power endorsed in blank, with the Company (or its designee).  At the expiration of the applicable
restriction periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or if
the Participant has died, to the beneficiary designated, in a manner determined
by the Board, by a Participant to receive amounts due or exercise rights of the
Participant in the event of the Participant’s death (the “Designated
Beneficiary”).  In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant’s estate.

 

7.                                       Other Stock-Based Awards

 

The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.

 

8.                                       Adjustments for Changes in Common Stock
and Certain Other Events

 

(a)                                  Changes in Capitalization. 
In the event of any stock split, reverse stock split, stock dividend,
recapitalization, combination of shares, reclassification of shares, spin-off
or other similar change in capitalization or event, or any distribution to
holders of Common Stock other than a normal cash dividend, (i) the number
and class of securities available under this Plan, (ii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iii) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (iv) the terms of each other outstanding Award
shall be appropriately adjusted by the Company (or substituted Awards may be
made, if applicable) to the extent the Board shall determine, in good faith,
that such an adjustment (or substitution) is necessary and appropriate.  If this Section 8(a) applies and Section 8(c) also
applies to any event, Section 8(c) shall be applicable to such event,
and this Section 8(a) shall not be applicable.

 

4

 

(b)                                 Liquidation or Dissolution. 
In the event of a proposed liquidation or dissolution of the Company,
the Board shall upon written notice to the Participants provide that all then
unexercised Options will (i) become exercisable in full as of a specified
time at least 10 business days prior to the effective date of such liquidation
or dissolution and (ii) terminate effective upon such liquidation or
dissolution, except to the extent exercised before such effective date.  The Board may specify the effect of a
liquidation or dissolution on any Restricted Stock Award or other Award granted
under the Plan at the time of the grant of such Award.

 

(c)                                  Reorganization Events

 

(1)                                  Definition.  A “Reorganization
Event” shall mean:  (a) any merger
or consolidation of the Company with or into another entity as a result of
which all of the Common Stock of the Company is converted into or exchanged for
the right to receive cash, securities or other property or (b) any
exchange of all of the Common Stock of the Company for cash, securities or
other property pursuant to a share exchange transaction.

 

(2)                                  Consequences of a Reorganization Event on
Options.  Upon the occurrence of a Reorganization
Event, or the execution by the Company of any agreement with respect to a
Reorganization Event, the Board shall provide that all outstanding Options
shall be assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof).  For purposes hereof, an Option shall be
considered to be assumed if, following consummation of the Reorganization
Event, the Option confers the right to purchase, for each share of Common Stock
subject to the Option immediately prior to the consummation of the Reorganization
Event, the consideration (whether cash, securities or other property) received
as a result of the Reorganization Event by holders of Common Stock for each
share of Common Stock held immediately prior to the consummation of the
Reorganization Event (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Reorganization Event is not solely
common stock of the acquiring or succeeding corporation (or an affiliate
thereof), the Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received upon the exercise of
Options to consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in fair market value to the
per share consideration received by holders of outstanding shares of Common
Stock as a result of the Reorganization Event.

 

Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or substitute
for, such Options, then the Board shall, upon written notice to the
Participants, provide that all then unexercised Options will become exercisable
in full as of a specified time prior to the Reorganization Event and will
terminate immediately prior to the consummation of such Reorganization Event,
except to the extent exercised by the Participants before the consummation of
such Reorganization Event; provided, however, that in the event of a
Reorganization Event under the terms of which holders of Common Stock will
receive upon consummation thereof a cash payment for each share of Common Stock
surrendered pursuant to such Reorganization Event (the “Acquisition Price”),
then the Board may instead provide that all outstanding Options shall terminate
upon consummation of such Reorganization Event and that each Participant shall
receive, in exchange therefor, a cash payment equal to the amount (if any) by
which (A) the Acquisition Price 

 

5

 

multiplied by the number of shares of Common Stock
subject to such outstanding Options (whether or not then exercisable), exceeds (B) the
aggregate exercise price of such Options. 
To the extent all or any portion of an Option becomes exercisable solely
as a result of the first sentence of this paragraph, upon exercise of such
Option the Participant shall receive shares subject to a right of repurchase by
the Company or its successor at the Option exercise price.  Such repurchase right (1) shall lapse at
the same rate as the Option would have become exercisable under its terms and (2) shall
not apply to any shares subject to the Option that were exercisable under its
terms without regard to the first sentence of this paragraph.

 

If any Option provides that it may be exercised for shares of Common
Stock which remain subject to a repurchase right in favor of the Company, upon
the occurrence of a Reorganization Event, any shares of restricted stock
received upon exercise of such Option shall be treated in accordance with Section 8(c)(3) as
if they were a Restricted Stock Award.

 

(3)                                  Consequences of a Reorganization Event on
Restricted Stock Awards.  Upon the occurrence of a
Reorganization Event, the repurchase and other rights of the Company under each
outstanding Restricted Stock Award shall inure to the benefit of the Company’s
successor and shall apply to the cash, securities or other property which the
Common Stock was converted into or exchanged for pursuant to such
Reorganization Event in the same manner and to the same extent as they applied
to the Common Stock subject to such Restricted Stock Award.

 

(4)                                  Consequences of a Reorganization Event on
Other Awards.  The Board shall specify the effect of a
Reorganization Event on any other Award granted under the Plan at the time of
the grant of such Award.

 

9.                                       General Provisions Applicable to Awards

 

(a)                                  Transferability of Awards. 
Except as the Board may otherwise determine or provide in an Award,
Awards shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and distribution, and,
during the life of the Participant, shall be exercisable only by the
Participant.  References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.

 

(b)                                 Documentation. 
Each Award shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. 
Each Award may contain terms and conditions in addition to those set
forth in the Plan.

 

(c)                                  Board Discretion. 
Except as otherwise provided by the Plan, each Award may be made alone
or in addition or in relation to any other Award.  The terms of each Award need not be
identical, and the Board need not treat Participants uniformly.

 

(d)                                 Termination of Status. 
The Board shall determine the effect on an Award of the disability,
death, retirement, authorized leave of absence or other  change in the employment or other status of a
Participant and the extent to which, and the period during which, the
Participant, the Participant’s legal representative, conservator, guardian or
Designated Beneficiary may exercise rights under the Award.

 

6

 

(e)                                  Withholding. 
Each Participant shall pay to the Company, or make provision
satisfactory to the Board for payment of, any taxes required by law to be
withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. 
Except as the Board may otherwise provide in an Award, when the Common
Stock is registered under the Exchange Act, Participants may satisfy such tax
obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value; provided, however, that the total tax withholding
where stock is being used to satisfy such tax obligations cannot exceed the
Company’s minimum statutory withholding obligations (based on minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to such supplemental taxable income).  The Company may, to the extent permitted by
law, deduct any such tax obligations from any payment of any kind otherwise due
to a Participant.

 

(f)                                    Amendment of Award. 
The Board may amend, modify or terminate any outstanding Award,
including but not limited to, substituting therefor another Award of the same
or a different type, changing the date of exercise or realization, and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the Participant’s consent to such action shall be required unless the
Board determines that the action, taking into account any related action, would
not materially and adversely affect the Participant.

 

(g)                                 Conditions on Delivery of Stock. 
The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove restrictions from shares previously delivered
under the Plan until (i) all conditions of the Award have been met or
removed to the satisfaction of the Company, (ii) in the opinion of the
Company’s counsel, all other legal matters in connection with the issuance and
delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market rules and
regulations, and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may consider
appropriate to satisfy the requirements of any applicable laws, rules or
regulations.

 

(h)                                 Acceleration. 
The Board may at any time provide that any Award shall become
immediately exercisable in full or in part, free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.

 

10.                                 Miscellaneous

 

(a)                                  No Right To Employment or Other Status. 
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company.  The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan, except as expressly provided
in the applicable Award.

 

(b)                                 No Rights As Stockholder. 
Subject to the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a stockholder with respect to
any shares of Common Stock to be distributed with respect to an Award until
becoming the record holder of such shares. 
Notwithstanding the foregoing, in the event the Company effects a split
of 

 

7

 

the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

 

(c)                                  Effective Date and Term of Plan. 
The Plan shall become effective on the date on which it is adopted by
the Board.  No Awards shall be granted
under the Plan after the completion of ten years from the earlier of (i) the
date on which the Plan was adopted by the Board or (ii) the date the Plan
was approved by the Company’s stockholders, but Awards previously granted may
extend beyond that date.

 

(d)                                 Amendment of Plan. 
The Board may amend, suspend or terminate the Plan or any portion
thereof at any time.

 

(e)                                  Authorization of Sub-Plans. 
The Board may from time to time establish one or more sub-plans under
the Plan for purposes of satisfying applicable blue sky, securities or tax laws
of various jurisdictions.  The Board
shall establish such sub-plans by adopting supplements to this Plan containing (i) such
limitations on the Board’s discretion under the Plan as the Board deems
necessary or desirable or (ii) such additional terms and conditions not
otherwise inconsistent with the Plan as the Board shall deem necessary or desirable.  All supplements adopted by the Board shall be
deemed to be part of the Plan, but each supplement shall apply only to
Participants within the affected jurisdiction and the Company shall not be
required to provide copies of any supplement to Participants in any
jurisdiction which is not the subject of such supplement.

 

(f)                                    Governing Law. 
The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.

 

8

 

IRONWOOD
PHARMACEUTICALS, INC.

 

2002
STOCK INCENTIVE PLAN

 

CALIFORNIA
SUPPLEMENT

 

Pursuant
to Section 10(e) of the Plan, the Board has adopted this supplement
for purposes of satisfying the requirements of Section 25102(o) of
the California Corporations Code:

 

Any
Awards granted under the Plan to a Participant who is a resident of the State
of California on the date of grant (a “California Participant”) shall be
subject to the following additional limitations, terms and conditions:

 

1.                                       Additional Limitations on Options.

 

(a)                                  Minimum Vesting Rate. 
Except in the case of Options granted to California Participants who are
officers, directors, consultants or advisors of the Company or its affiliates
(which Options may become exercisable at whatever rate is determined by the
Board), Options granted to California Participants shall become exercisable at
a rate of no less than 20% per year over five years from the date of grant; provided,
that, such Options may be subject to such reasonable forfeiture
conditions as the Board may choose to impose and which are not inconsistent
with Section 260.140.41 of the California Code of Regulations.

 

(b)                                 Minimum Exercise Price. 
The exercise price of Options granted to California Participants may not
be less than 85% of the Fair Market Value of the Common Stock on the date of
grant in the case of a Nonstatutory Stock Option or less than 100% of the Fair
Market Value of the Common Stock on the date of grant in the case of an
Incentive Stock Option; provided, however, that if the California
Participant is a person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or its parent or
subsidiary corporations, the exercise price shall be not less than 110% of the
Fair Market Value of the Common Stock on the date of grant.

 

(c)                                  Maximum Duration of Options. 
No Options granted to California Participants will be granted for a term
in excess of 10 years.

 

(d)                                 Minimum Exercise Period Following
Termination.  Unless a California Participant’s employment
is terminated for cause (as defined in any contract of employment between the
Company and such Participant, or if none, in the instrument evidencing the
grant of such Participant’s Option), in the event of termination of employment
of such Participant, he or she shall have the right to exercise an Option, to
the extent that he or she was otherwise entitled to exercise such Option on the
date employment terminated, as follows: (i) at least six months from the
date of termination, if termination was caused by such Participant’s death or “permanent
and total disability” (within the meaning of Section 22(e)(3) of the
Code) and (ii) at least 30 days from the date of termination, if
termination was caused other than by such Participant’s death or “permanent and
total disability” (within the meaning of Section 22(e)(3) of the
Code).

 

S - 1

 

(e)                                  Limitation on Repurchase Rights. 
If an Option granted to a California Participant gives the Company the
right to repurchase shares of Common Stock issued pursuant to the Plan upon
termination of employment of such Participant, the terms of such repurchase
right must comply with Section 260.140.41(k) of the California Code
of Regulations.

 

2.                                       Additional Limitations for Restricted Stock Awards.

 

(a)                                  Minimum Purchase Price. 
The purchase price for a Restricted Stock Award granted to a California
Participant shall be not less than 85% of the Fair Market Value of the Common
Stock at the time such Participant is granted the right to purchase shares
under the Plan or at the time the purchase is consummated; provided, however,
that if such Participant is a person who owns stock possessing more than 10% of
the total combined voting power or value of all classes of stock of the Company
or its parent or subsidiary corporations, the purchase price shall be not less
than 100% of the Fair Market Value of the Common Stock at the time such
Participant is granted the right to purchase shares under the Plan or at the
time the purchase is consummated.

 

(b)                                 Limitation of Repurchase Rights. 
If a Restricted Stock Award granted to a California Participant gives
the Company the right to repurchase shares of Common Stock issued pursuant to
the Plan upon termination of employment of such Participant, the terms of such
repurchase right must comply with Section 260.140.42(h) of the
California Code of Regulations.

 

3.                                       Additional Limitations for Other Stock-Based Awards. 
The terms of all Awards granted to a California Participant under Section 7
of the Plan shall comply, to the extent applicable, with Section 260.140.41
or Section 260.140.42 of the California Code of Regulations.

 

4.                                       Additional Limitations on Transferability of Awards. 
Except as provided in the next sentence, Awards granted to California
Participants shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and distribution, and,
during the life of such Participant, shall be exercisable only by such
Participant.  Notwithstanding the
foregoing, the Board may, in the case of Nonstatutory Stock Options, allow them
to be transferred to an inter vivos or testamentary trust in which the Options
are to be passed to beneficiaries upon the death of the trustor (settlor) or by
gift to “immediate family” as that term is defined in Rule 16a-1(e) under
the Exchange Act.

 

5.                                       Additional Requirement to Provide Information to
California Participants.  The Company shall provide to
each California Participant and to each California Participant who acquires
Common Stock pursuant to the Plan, not less frequently than annually, copies of
annual financial statements (which need not be audited).  The Company shall not be required to provide
such statements to key employees whose duties in connection with the Company
assure their access to equivalent information.

 

6.                                       Additional Limitations on Timing of Awards. 
No Award granted to a California Participant shall become exercisable,
vested or realizable, as applicable to such Award, unless 

 

S - 2

 

the
Plan has been approved by the Company’s stockholders within 12 months before or
after the date the Plan was adopted by the Board.

 

7.             Additional
Limitations Relating to Definition of Fair Market Value.  For purposes of Section 1(b) and 2(a) of
this supplement, “Fair Market Value” shall be determined in a manner not
inconsistent with Section 260.140.50 of the California Code of Regulation.

 

S - 3

 

ATTACHMENT
I

Incentive
Stock Option Agreement (Standard Vesting 1)

 

IRONWOOD PHARMACEUTICALS, INC.

 

Incentive Stock Option Agreement (Standard Vesting 1)

Granted Under
Amended and Restated 2002  Stock
Incentive Plan

 

1.                                       Grant of Option.

 

This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on                                         ,
20        (the “Grant
Date”) to
                                ,
an employee of the Company (the “Participant”), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company’s Amended and
Restated 2002 Stock Incentive Plan (the “Plan”), a total of                               
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $                    per Share, with a vesting commencement date of
                                  ,
20       (the “Vesting Commencement Date”).  Unless earlier terminated, this option shall
expire on
                                ,
20        (the “Final
Exercise Date”).

 

It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context,
the term “Participant”, as used in this option, shall be deemed to include any
person who acquires the right to exercise this option validly under its terms.

 

2.                                       Vesting Schedule.

 

(a)          This option will become exercisable (“vest”)
as to 25% of the original number of Shares on the first  anniversary
of the Vesting Commencement Date and as to an additional 2.08333% of the
original number of Shares at the end of each successive  one-month  period following the first anniversary of the Vesting
Commencement Date until the fourth anniversary of the Vesting Commencement
Date.  The shares subject to the portion
of this option that are not yet exercisable are referred to herein as “Unvested
Shares,” and the shares subject to the portion of this option that had become
exercisable are referred to herein as “Vested Shares.”

 

The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it
shall continue to be exercisable, in whole or in part, with respect to all
shares for which it is vested until the earlier of the Final Exercise Date or
the termination of this option under Section 3 hereof or the Plan,
provided, however, that unless otherwise required to avoid the forfeiture of
vested options, option exercises may be made only once per calendar year.

 

(b)                                 Early Exercise. Not withstanding the vesting schedule
set forth in paragraph (a), the Participant may elect to exercise this option
as to the Unvested Shares (in addition to the Vested Shares) if simultaneously
with such exercise the Participant enters into Stock Restriction 

 

ATTACHMENT I

 

 

Agreement with the Company in the form attached hereto
as Exhibit A (the “Stock Restriction Agreement”). The Stock
Restriction Agreement provides that the Unvested Shares shall be subject to a
right of repurchase (the “Purchase Option”) in favor of the Company in the
event that the Participant ceases to be an employee of the Company, as that
term is defined in the Plan.

 

3.                                       Exercise of Option.

 

(a)          Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.

 

(b)         Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).

 

(c)          Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be
exercisable only to the extent that the Participant was entitled to exercise
this option on the date of such cessation. 
Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition or confidentiality provisions of
any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing  such
violation.

 

(d)         Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable
only to the extent that this option was exercisable by the Participant on the
date of his or her death or disability, and further provided that this option
shall not be exercisable after the Final Exercise Date.

 

(e)          Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement 

 

ATTACHMENT I

 

 

between the Participant and the Company), as determined by the Company,
which determination shall be conclusive. 
The Participant shall be considered to have been discharged for “Cause”
if the Company determines, within 30 days after the Participant’s resignation,
that discharge for cause was warranted.

 

4.                                       Right of First Refusal/Right of Repurchase.

 

(a)          Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.

 

(b)         The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any
transferee to whom any such Shares shall have been sold or transferred.

 

5.                                       Agreement in Connection with Public
Offering.

 

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

 

6.                                       Withholding.

 

No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.

 

7.                                       Nontransferability of Option.

 

This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.

 

ATTACHMENT I

 

 

8.                                       Disqualifying Disposition.

 

If the Participant disposes of Shares acquired upon
exercise of this option within two years from the Grant Date or one year after
such Shares were acquired pursuant to exercise of this option, the Participant
shall notify the Company in writing of such disposition.

 

9.                                       Provisions of the Plan.

 

This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.

 

10.                                 Participant’s Acknowledgements.

 

By acceptance of this option, the Participant agrees to the terms and
conditions hereof and acknowledges receipt of a copy of the Plan.

 

IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.

 

	
   

  	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter Hecht

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
						

 

Addendum A

 

NOTICE OF STOCK OPTION EXERCISE

 

Exhibit A

 

IRONWOOD PHARMACEUTICALS, INC.

 

Stock Restriction
Agreement

 

Exhibit A to
Stock Restriction Agreement

 

IRONWOOD PHARMACEUTICALS, INC.

Joint Escrow
Instructions

 

Exhibit B to
Stock Restriction Agreement

 

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

 

ATTACHMENT I

 

 

ATTACHMENT
II

Incentive
Stock Option Agreement (Standard Vesting 2)

 

IRONWOOD PHARMACEUTICALS, INC.

 

Incentive Stock Option Agreement (Standard Vesting 2)

Granted Under
Amended and Restated 2002  Stock
Incentive Plan

 

1.                                       Grant of Option.

 

This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on                                         ,
20          (the
“Grant Date”) to
                                ,
an employee of the Company (the “Participant”), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company’s Amended and
Restated 2002 Stock Incentive Plan (the “Plan”), a total of                               
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $                    per Share, with a vesting commencement date of
                                  ,
20       (the “Vesting Commencement Date”).  Unless earlier terminated, this option shall
expire on
                                ,
20        (the “Final
Exercise Date”).

 

It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context,
the term “Participant”, as used in this option, shall be deemed to include any
person who acquires the right to exercise this option validly under its terms.

 

2.                                       Vesting Schedule.

 

(a)          This option will become exercisable (“vest”)
as to 1.25% of the original number of
Shares on each monthly anniversary of the Vesting Commencement Date for the
first 36 months, and as to 4.5833% of the original number of Shares as of each
subsequent monthly anniversary of the Vesting Commencement Date until fully
vested. The shares subject to the portion of this option that are not
yet exercisable are referred to herein as “Unvested Shares,” and the shares
subject to the portion of this option that had become exercisable are referred
to herein as “Vested Shares.”

 

The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it
shall continue to be exercisable, in whole or in part, with respect to all
shares for which it is vested until the earlier of the Final Exercise Date or
the termination of this option under Section 3 hereof or the Plan,
provided, however, that unless otherwise required to avoid the forfeiture of
vested options, option exercises may be made only once per calendar year.

 

(b)                                 Early Exercise. Not withstanding the vesting schedule
set forth in paragraph (a), the Participant may elect to exercise this option
as to the Unvested Shares (in addition to the Vested Shares) if simultaneously
with such exercise the Participant enters into Stock Restriction 

 

ATTACHMENT II

 

 

Agreement with the Company in the form attached hereto
as Exhibit A (the “Stock Restriction Agreement”). The Stock
Restriction Agreement provides that the Unvested Shares shall be subject to a
right of repurchase (the “Purchase Option”) in favor of the Company in the
event that the Participant ceases to be an employee of the Company, as that
term is defined in the Plan.

 

3.                                       Exercise of Option.

 

(a)          Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.

 

(b)         Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).

 

(c)          Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be
exercisable only to the extent that the Participant was entitled to exercise
this option on the date of such cessation. 
Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition or confidentiality provisions of
any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing  such violation.

 

(d)         Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable
only to the extent that this option was exercisable by the Participant on the
date of his or her death or disability, and further provided that this option
shall not be exercisable after the Final Exercise Date.

 

(e)          Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement 

 

ATTACHMENT II

 

 

between the Participant and the Company), as determined by the Company,
which determination shall be conclusive. 
The Participant shall be considered to have been discharged for “Cause”
if the Company determines, within 30 days after the Participant’s resignation,
that discharge for cause was warranted.

 

4.                                       Right of First Refusal/Right of Repurchase.

 

(a)          Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.

 

(b)         The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any
transferee to whom any such Shares shall have been sold or transferred.

 

5.                                       Agreement in Connection with Public
Offering.

 

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

 

6.                                       Withholding.

 

No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.

 

7.                                       Nontransferability of Option.

 

This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.

 

ATTACHMENT II

 

 

8.                                       Disqualifying Disposition.

 

If the Participant disposes of Shares acquired upon
exercise of this option within two years from the Grant Date or one year after
such Shares were acquired pursuant to exercise of this option, the Participant
shall notify the Company in writing of such disposition.

 

9.                                       Provisions of the Plan.

 

This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.

 

10.                                 Participant’s Acknowledgements.

 

By acceptance of this option, the Participant agrees to the terms and
conditions hereof and acknowledges receipt of a copy of the Plan.

 

IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.

 

	
   

  	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter Hecht

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
						

 

Addendum A

 

NOTICE OF STOCK OPTION EXERCISE

 

Exhibit A

 

IRONWOOD PHARMACEUTICALS, INC.

 

Stock Restriction
Agreement

 

Exhibit A to
Stock Restriction Agreement

 

IRONWOOD PHARMACEUTICALS, INC.

Joint Escrow
Instructions

 

Exhibit B to
Stock Restriction Agreement

 

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

 

ATTACHMENT II

 

 

ATTACHMENT
III

Nonstatutory
Stock Option Agreement

 

IRONWOOD PHARMACEUTICALS, INC.

 

Nonstatutory Stock Option Agreement

Granted Under
Amended and Restated 2002  Stock Incentive
Plan

 

1.                                       Grant of Option.

 

This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on                                         ,
20        (the “Grant
Date”) to
                                ,
[an employee / a consultant] of the Company (the “Participant”), of an option
to purchase, in whole or in part, on the terms provided herein and in the
Company’s Amended and Restated 2002 Stock Incentive Plan (the “Plan”), a total
of                               
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $                    per Share, with a vesting commencement date of
                                  ,
20       (the “Vesting Commencement Date”).  Unless earlier terminated, this option shall
expire on
                                ,
20        (the “Final
Exercise Date”).

 

It is intended that the option evidenced by this agreement shall not be
an incentive stock option as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, and any regulations promulgated thereunder
(the “Code”).  Except as otherwise
indicated by the context, the term “Participant”, as used in this option, shall
be deemed to include any person who acquires the right to exercise this option
validly under its terms.

 

2.                                       Vesting Schedule.

 

(a)          This option will become exercisable (“vest”)
as
                                                  .  The shares subject to the portion of this
option that are not yet exercisable are referred to herein as “Unvested Shares,”
and the shares subject to the portion of this option that had become
exercisable are referred to herein as “Vested Shares.”

 

The right of exercise shall be cumulative so that to the extent the option
is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan, provided,
however, that unless otherwise required to avoid the forfeiture of vested
options, option exercises may be made only once per calendar year.

 

(b)                                 Early Exercise. Not withstanding the vesting schedule
set forth in paragraph (a), the Participant may elect to exercise this option
as to the Unvested Shares (in addition to the Vested Shares) if simultaneously
with such exercise the Participant enters into Stock Restriction Agreement with
the Company in the form attached hereto as Exhibit A (the “Stock
Restriction Agreement”). The Stock Restriction Agreement provides that the
Unvested Shares shall be subject to a right of repurchase (the “Purchase Option”)
in favor of the Company in the event 

 

ATTACHMENT III

 

 

that the Participant ceases to be [an employee / a
consultant] of the Company, as that term is defined in the Plan.

 

3.                                       Exercise of Option.

 

(a)          Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.

 

(b)         Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).

 

(c)          Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be
exercisable only to the extent that the Participant was entitled to exercise
this option on the date of such cessation. 
Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition or confidentiality provisions of
any employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Participant from
the Company describing  such
violation.

 

(d)         Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable
only to the extent that this option was exercisable by the Participant on the
date of his or her death or disability, and further provided that this option
shall not be exercisable after the Final Exercise Date.

 

(e)          Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the Participant
and the Company), as determined by the Company, which determination shall be
conclusive.  The Participant shall be
considered to have been discharged for “Cause” if 

 

ATTACHMENT III

 

 

the Company determines, within 30 days after the Participant’s
resignation, that discharge for cause was warranted.

 

4.                                       Right of First Refusal/Right of Repurchase.

 

(a)          Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.

 

(b)         The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any transferee
to whom any such Shares shall have been sold or transferred.

 

5.                                       Agreement in Connection with Public
Offering.

 

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

 

6.                                       Withholding.

 

No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.

 

7.                                       Nontransferability of Option.

 

This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the Participant.

 

ATTACHMENT III

 

 

8.                                       Provisions of the Plan.

 

This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.

 

9.                                       Participant’s Acknowledgements.

 

By
acceptance of this option, the Participant agrees to the terms and conditions
hereof and acknowledges receipt of a copy of the Plan.

 

IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.

 

	
   

  	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter Hecht

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
						

 

ATTACHMENT III

 

 

Addendum A

 

NOTICE OF STOCK OPTION EXERCISE

 

Date:                      

 

Ironwood Pharmaceuticals, Inc.

320 Bent Street

Cambridge, MA  02141

 

Attention:  Secretary

 

Dear Sir or Madam:

 

I am
the holder of a                   Stock
Option granted to me under the Ironwood Pharmaceuticals, Inc. (the “Company”)
Amended and Restated 2002 Stock Incentive Plan on
                    
for the purchase of
                    
shares of Series B Common Stock of the Company at a purchase price of
$                    
per share.

 

I
hereby exercise my option to purchase
                  
shares of Series B Common Stock (the “Shares”), for which I have enclosed
                    
in the amount of
                .  Please register my stock certificate as
follows:

 

	
  Name(s):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tax I.D. #:

  	
   

  	
   

  

 

I
represent, warrant and covenant as follows:

 

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

 

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

 

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

 

ATTACHMENT III

 

 

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

 

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

 

	
  Very truly yours,

  
	
   

  
	
   

  
	
   

  	
   

  
	
  (Signature)

  

 

ATTACHMENT III

 

 

Exhibit A

 

IRONWOOD PHARMACEUTICALS, INC.

 

Stock Restriction
Agreement

 

AGREEMENT
made this
             day of
                          ,
20      , between Ironwood Pharmaceuticals, Inc.,
a Delaware  corporation (the “Company”), and
                                                
(the “Participant”).

 

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

 

1.                                       Purchase of Shares.

 

The
Company shall issue and sell to the Participant, and the Participant shall
purchase from the Company, subject to the terms and conditions set forth in
this Agreement and the Company’s Amended and Restated 2002 Stock Incentive Plan
(the “Plan”),
                  
shares (the “Shares”) of Series B Common Stock, $.001 par value, of the
Company (“Series B Common Stock”), at a purchase price of
$         per share.  The aggregate purchase price for the Shares
shall be paid by the Participant by check payable to the order of the Company
or such other method as may be acceptable to the Company.  Upon receipt by the Company of payment for
the Shares, the Company shall issue to the Participant one or more certificates
in the name of the Participant for that number of Shares purchased by the
Participant.  The Participant agrees that
the Shares shall be subject to the purchase options set forth in
Sections 2 and 5 of this Agreement and the restrictions on transfer set
forth in Section 4 of this Agreement.

 

2.                                       Purchase Option.

 

(a)          In the event that the Participant ceases
to be employed by the Company for any reason or no reason, with or without
cause, prior to
                            ,
20      , the Company shall have the right and
option (the “Purchase Option”) to purchase from the Participant, for a sum of
$         per share (the “Option Price”),
some or all of the Unvested Shares (as defined below).

 

“Unvested
Shares” means the total number of Shares multiplied by the Applicable
Percentage at the time the Purchase Option becomes exercisable by the
Company.  The “Applicable Percentage”
shall be
                                                    ,

 

For
purposes of this Agreement, employment with the Company shall include
employment with a parent or subsidiary of the Company.

 

3.                                       Exercise of Purchase Option and Closing.

 

(a)          The Company may exercise the Purchase
Option by delivering or mailing to the Participant (or his estate), within 60
days after the termination of the employment of the 

 

ATTACHMENT III

 

 

Participant with the Company, a written notice of
exercise of the Purchase Option.  Such
notice shall specify the number of Shares to be purchased.  If and to the extent the Purchase Option is
not so exercised by the giving of such a notice within such 60-day period, the
Purchase Option shall automatically expire and terminate effective upon the
expiration of such 60-day period.

 

(b)         Within 10 days after delivery to the
Participant of the Company’s notice of the exercise of the Purchase Option
pursuant to subsection (a) above, the Participant (or his estate)
shall, pursuant to the provisions of the Joint Escrow Instructions referred to
in Section 7 below, tender to the Company at its principal offices the
certificate or certificates representing the Shares which the Company has
elected to purchase in accordance with the terms of this Agreement, duly
endorsed in blank or with duly endorsed stock powers attached thereto, all in
form suitable for the transfer of such Shares to the Company.  Promptly following its receipt of such
certificate or certificates, the Company shall pay to the Participant the
aggregate Option Price for such Shares (provided that any delay in making such
payment shall not invalidate the Company’s exercise of the Purchase Option with
respect to such Shares).

 

(c)          After the time at which any Shares are
required to be delivered to the Company for transfer to the Company pursuant to
subsection (b) above, the Company shall not pay any dividend to the
Participant on account of such Shares or permit the Participant to exercise any
of the privileges or rights of a stockholder with respect to such Shares, but
shall, in so far as permitted by law, treat the Company as the owner of such
Shares.

 

(d)         The Option Price may be payable, at the
option of the Company, in cancellation of all or a portion of any outstanding
indebtedness of the Participant to the Company or in cash (by check) or both.

 

(e)          The Company shall not purchase any
fraction of a Share upon exercise of the Purchase Option, and any fraction of a
Share resulting from a computation made pursuant to Section 2 of this
Agreement shall be rounded to the nearest whole Share (with any one-half Share
being rounded upward).

 

(f)            The Company may assign its Purchase
Option to one or more persons or entities.

 

4.                                       Restrictions on Transfer.

 

(a)          The Participant shall not sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively “transfer”) any Shares, or any interest therein, that
are subject to the Purchase Option, except that the Participant may transfer
such Shares (i) to or for the benefit of any spouse, children, parents,
uncles, aunts, siblings, grandchildren and any other relatives approved by the
Board of Directors (collectively, “Approved Relatives”) or to a trust
established solely for the benefit of the Participant and/or Approved
Relatives, provided that such Shares shall remain subject to this
Agreement (including without limitation the restrictions on transfer set forth
in this Section 4, the Purchase Option and the right of first refusal set
forth in Section 5) and such permitted transferee shall, as a condition to
such transfer, deliver to the Company a written instrument confirming that such
transferee shall be bound by all of the terms and conditions of this Agreement
or (ii) as part of the sale of all or substantially all of the shares of
capital stock of the Company (including pursuant to a 

 

ATTACHMENT III

 

 

merger or consolidation), provided that, in accordance with the
Plan, the securities or other property received by the Participant in
connection with such transaction shall remain subject to this Agreement.

 

(b)         The Participant shall not transfer any
Shares, or any interest therein, that are no longer subject to the Purchase
Option, except in accordance with Section 5 below.

 

5.                                       Right of First Refusal.

 

(a)          Any shares that
are purchased pursuant to this Agreement are subject to any right of first
refusal that may be described in the Company’s by-laws in effect at such time
as the Company elects to exercise its right. 
The Company’s right of first refusal shall expire on the date of the
closing of the first registration of a public offering of equity securities
under Section 12 of the Exchange Act of 1934, as amended.  In addition, to the extent provided in the
Company’s by-laws as amended from time to time, the Company shall have the
right to repurchase all or any part of the shares purchased pursuant to this
agreement.

 

6.                                       Effect of Prohibited Transfer.

 

The
Company shall not be required (a) to transfer on its books any of the
Shares which have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (b) to treat as owner of such
Shares or to pay dividends to any transferee to whom any such Shares shall have
been sold or transferred.

 

7.                                       Agreement in Connection with Public Offering.

 

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

 

8.                                       Escrow.

 

The
Participant shall, upon the execution of this Agreement, execute Joint Escrow
Instructions in the form attached to this Agreement as Exhibit A.  The Joint Escrow Instructions shall be
delivered to the Secretary of the Company, as escrow agent thereunder.  The Participant shall deliver to such escrow
agent a stock assignment duly endorsed in blank, in the form attached to this
Agreement as Exhibit B, and hereby instructs the Company to deliver
to such escrow agent, on behalf of the Participant, the certificate(s) evidencing
the Shares issued hereunder.  Such
materials shall be held by such escrow agent pursuant to the terms of such
Joint Escrow Instructions.

 

ATTACHMENT III

 

 

9.                                       Restrictive Legends.

 

All
certificates representing Shares shall have affixed thereto legends in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:

 

“The shares of stock
represented by this certificate are subject to restrictions on transfer and an
option to purchase set forth in a certain Stock Restriction Agreement between
the corporation and the registered owner of these shares (or his predecessor in
interest), and such Agreement is available for inspection without charge at the
office of the Secretary of the corporation.”

 

“The shares represented
by this certificate have not been registered under the Securities Act of 1933,
as amended, and may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such Act or an opinion of
counsel satisfactory to the corporation to the effect that such registration is
not required.”

 

10.                                 Adjustments for Stock Splits, Stock Dividends, etc.

 

If
from time to time during the term of the Purchase Option there is any stock
split, stock dividend, stock distribution or other reclassification of the
Common Stock of the Company, any and all new, substituted or additional
securities to which the Participant is entitled by reason of his/her ownership
of the Shares shall be immediately subject to the Purchase Option, the
restrictions on transfer and other provisions of this Agreement in the same
manner and to the same extent as the Shares, and the Option Price shall be
appropriately adjusted.

 

11.                                 Provisions of the Plan.

 

(a)          This Agreement is subject to the
provisions of the Plan, a copy of which is furnished to the Participant with
this Agreement.

 

(b)         As provided in the Plan, upon the
occurrence of a Reorganization Event (as defined in the Plan), the repurchase
and other rights of the Company hereunder shall inure to the benefit of the
Company’s successor and shall apply to the cash, securities or other property
which the Shares were converted into or exchanged for pursuant to such
Reorganization Event in the same manner and to the same extent as they applied
to the Shares under this Agreement.  If,
in connection with a Reorganization Event, a portion of the cash, securities
and/or other property received upon the conversion or exchange of the Shares is
to be placed into escrow to secure indemnification or similar obligations, the
mix between the vested and unvested portion of such cash, securities and/or
other property that is placed into escrow shall be the same as the mix between
the vested and unvested portion of such cash, securities and/or other property
that is not subject to escrow.

 

12.                                 Investment Representations.

 

The
Participant represents, warrants and covenants as follows:

 

ATTACHMENT III

 

 

(a)          The Participant is purchasing the Shares
for his own account for investment only, and not with a view to, or for sale in
connection with, any distribution of the Shares in violation of the Securities
Act, or any rule or regulation under the Securities Act.

 

(b)         The Participant has had such opportunity
as he has deemed adequate to obtain from representatives of the Company such
information as is necessary to permit him to evaluate the merits and risks of
his investment in the Company.

 

(c)          The Participant has sufficient experience
in business, financial and investment matters to be able to evaluate the risks
involved in the purchase of the Shares and to make an informed investment
decision with respect to such purchase.

 

(d)         The Participant can afford a complete
loss of the value of the Shares and is able to bear the economic risk of
holding such Shares for an indefinite period.

 

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

 

13.                                 Withholding Taxes; Section 83(b) Election.

 

(a)          The Participant acknowledges and agrees
that the Company has the right to deduct from payments of any kind otherwise
due to the Participant any federal, state or local taxes of any kind required
by law to be withheld with respect to the purchase of the Shares by the
Participant or the lapse of the Purchase Option.

 

(b)         The Participant has reviewed with the
Participant’s own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement.  The Participant is relying
solely on such advisors and not on any statements or representations of the
Company or any of its agents.  The
Participant understands that the Participant (and not the Company) shall be
responsible for the Participant’s own tax liability that may arise as a result
of this investment or the transactions contemplated by this Agreement.  The Participant understands that it may be
beneficial in many circumstances to elect to be taxed at the time the Shares
are purchased rather than when and as the Company’s Purchase Option expires by
filing an election under Section 83(b) of the Code with the I.R.S.
within 30 days from the date of purchase.

 

THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE
PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE
ELECTION UNDER SECTION 83(b), EVEN IF THE PARTICIPANT REQUESTS THE

 

ATTACHMENT III

 

 

COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
THE PARTICIPANT’S BEHALF.

 

14.                                 Miscellaneous.

 

(a)          No Rights to Employment. 
The Participant acknowledges and agrees that the vesting of the Shares
pursuant to Section 2 hereof is earned only by continuing service as [an
employee / a consultant/ a director] at the will of the Company (not through
the act of being hired or purchasing shares hereunder).  The Participant further acknowledges and
agrees that the transactions contemplated hereunder and the vesting schedule
set forth herein do not constitute an express or implied promise of continued
engagement as an employee or consultant [or director] for the vesting period,
for any period, or at all.

 

(b)         Severability. 
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.

 

(c)          Waiver.  Any provision
for the benefit of the Company contained in this Agreement may be waived,
either generally or in any particular instance, by the Board of Directors of
the Company.

 

(d)         Binding Effect. 
This Agreement shall be binding upon and inure to the benefit of the
Company and the Participant and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in Sections 4 and 5 of this Agreement.

 

(e)          Notice.  All notices
required or permitted hereunder shall be in writing and deemed effectively
given upon personal delivery or five days after deposit in the United States
Post Office, by registered or certified mail, postage prepaid, addressed to the
other party hereto at the address shown beneath his or its respective signature
to this Agreement, or at such other address or addresses as either party shall
designate to the other in accordance with this Section 12(e).

 

(f)            Pronouns.  Whenever the
context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.

 

(g)         Entire Agreement. 
This Agreement and the Plan constitute the entire agreement between the
parties, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.

 

(h)         Amendment.  This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Participant.

 

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

 

ATTACHMENT III

 

 

(j)             Participant’s Acknowledgments. 
The Participant acknowledges that he or she: (i) has read this
Agreement; (ii) has been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of the Participant’s own choice or
has voluntarily declined to seek such counsel; (iii) understands the terms
and consequences of this Agreement; (iv) is fully aware of the legal and
binding effect of this Agreement; and (v) understands that the law firm of
Hale and Dorr LLP, is acting as counsel to the Company in connection with the
transactions contemplated by the Agreement, and is not acting as counsel for
the Participant.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.

 

	
   

  	
  IRONWOOD PHARMACEUTICALS,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name of Participant]

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  

 

ATTACHMENT III

 

 

Exhibit A to
Stock Restriction Agreement

 

IRONWOOD PHARMACEUTICALS, INC.

 

Joint Escrow
Instructions

 

                  ,
20      

 

Secretary

Ironwood Pharmaceuticals, Inc.

320 Bent Street

Cambridge, MA 02141

 

Dear Sir:

 

As
Escrow Agent for Ironwood Pharmaceuticals, Inc., a Delaware corporation,
and its successors in interest under the Stock Restriction Agreement (the “Agreement”)
of even date herewith, to which a copy of these Joint Escrow Instructions is
attached (the “Company”), and the undersigned person (“Holder”), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of the Agreement in accordance with the following instructions:

 

1.                                       Appointment.  Holder
irrevocably authorizes the Company to deposit with you any certificates
evidencing Shares (as defined in the Agreement) to be held by you hereunder and
any additions and substitutions to said Shares. 
For purposes of these Joint Escrow Instructions, “Shares” shall be
deemed to include any additional or substitute property.  Holder does hereby irrevocably constitute and
appoint you as his attorney-in-fact and agent for the term of this escrow to
execute with respect to such Shares all documents necessary or appropriate to
make such Shares negotiable and to complete any transaction herein
contemplated.  Subject to the provisions
of this paragraph 1 and the terms of the Agreement, Holder shall exercise
all rights and privileges of a stockholder of the Company while the Shares are
held by you.

 

2.                                       Closing of Purchase.

 

(a)          Upon any purchase by the Company of the
Shares pursuant to the Agreement, the Company shall give to Holder and you a
written notice specifying the purchase price for the Shares, as determined
pursuant to the Agreement, and the time for a closing hereunder (the “Closing”)
at the principal office of the Company. 
Holder and the Company hereby irrevocably authorize and direct you to
close the transaction contemplated by such notice in accordance with the terms
of said notice.

 

ATTACHMENT III

 

 

(b)         At the Closing, you are directed (a) to
date the stock assignment form or forms necessary for the transfer of the
Shares, (b) to fill in on such form or forms the number of Shares being
transferred, and (c) to deliver same, together with the certificate or
certificates evidencing the Shares to be transferred, to the Company against
the simultaneous delivery to you of the purchase price for the Shares being
purchased pursuant to the Agreement.

 

3.                                       Withdrawal.  The Holder
shall have the right to withdraw from this escrow any Shares as to which the
Purchase Option (as defined in the Agreement) has terminated or expired.

 

4.                                       Duties of Escrow Agent.

 

(a)          Your duties hereunder may be altered,
amended, modified or revoked only by a writing signed by all of the parties
hereto.

 

(b)         You shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed by you to be genuine and to have been signed or presented
by the proper party or parties.  You
shall not be personally liable for any act you may do or omit to do hereunder
as Escrow Agent or as attorney-in-fact of Holder while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.

 

(c)          You are hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person or Company, excepting only orders or process of courts of law, and
are hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court.  In case you obey
or comply with any such order, judgment or decree of any court, you shall not
be liable to any of the parties hereto or to any other person, firm or Company
by reason of such compliance, notwithstanding any such order, judgment or
decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.

 

(d)         You shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver the Agreement or any documents
or papers deposited or called for hereunder.

 

(e)          You shall be entitled to employ such
legal counsel and other experts as you may deem necessary properly to advise
you in connection with your obligations hereunder and may rely upon the advice
of such counsel.

 

(f)            Your rights and responsibilities as
Escrow Agent hereunder shall terminate if (i) you cease to be Secretary of
the Company or (ii) you resign by written notice to each party.  In the event of a termination under
clause (i), your successor as Secretary shall become Escrow Agent
hereunder; in the event of a termination under clause (ii), the Company
shall appoint a successor Escrow Agent hereunder.

 

(g)         If you reasonably require other or
further instruments in connection with these Joint Escrow Instructions or
obligations in respect hereto, the necessary parties hereto shall join in
furnishing such instruments.

 

ATTACHMENT III

 

 

(h)         It is understood and agreed that should
any dispute arise with respect to the delivery and/or ownership or right of
possession of the securities held by you hereunder, you are authorized and
directed to retain in your possession without liability to anyone all or any
part of said securities until such dispute shall have been settled either by
mutual written agreement of the parties concerned or by a final order, decree
or judgment of a court of competent jurisdiction after the time for appeal has expired
and no appeal has been perfected, but you shall be under no duty whatsoever to
institute or defend any such proceedings.

 

(i)             These Joint Escrow Instructions set forth
your sole duties with respect to any and all matters pertinent hereto and no
implied duties or obligations shall be read into these Joint Escrow
Instructions against you.

 

(j)             The Company shall indemnify you and hold
you harmless against any and all damages, losses, liabilities, costs, and
expenses, including attorneys’ fees and disbursements, for anything done or
omitted to be done by you as Escrow Agent in connection with this Agreement or
the performance of your duties hereunder, except such as shall result from your
gross negligence or willful misconduct.

 

5.                                       Notice.  Any notice
required or permitted hereunder shall be given in writing and shall be deemed
effectively given upon personal delivery or upon deposit in the United States
Post Office, by registered or certified mail with postage and fees prepaid,
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten days’
advance written notice to each of the other parties hereto.

 

	
  COMPANY:

  	
  Michael Higgins

  Ironwood Pharmaceuticals, Inc.

  320 Bent Street

  Cambridge, MA 02141

  
	
   

  	
   

  
	
  HOLDER:

  	
  Notices to Holder shall
  be sent to the address set forth below Holder’s signature below.

  
	
   

  	
   

  
	
  ESCROW AGENT:

  	
  Secretary

  Ironwood Pharmaceuticals, Inc.

  320 Bent Street

  Cambridge, MA 02141

  

 

6.                                       Miscellaneous.

 

(a)          By signing these Joint Escrow
Instructions, you become a party hereto only for the purpose of said Joint
Escrow Instructions, and you do not become a party to the Agreement.

 

(b)         This instrument shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

 

ATTACHMENT III

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date Signed:

  	
   

  
				

 

	
  ESCROW AGENT:

  	
   

  
	
   

  	
   

  
	
  IRONWOOD
  PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title: Secretary

  	
   

  

 

ATTACHMENT III

 

 

Exhibit B to
Stock Restriction Agreement

 

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED, 
I,                                      ,
hereby sell, assign and transfer unto Ironwood Pharmaceuticals, Inc. (the “Company”)                                 (                  )
shares of the Series B Common Stock, $0.001 par value per share, of the
Company standing in my name on the books of said Company represented by
Certificate(s) Number
                    
herewith, and do hereby irrevocably constitute and appoint the Company’s
Secretary as transfer agent to transfer the said stock on the books of the
Company with full power of substitution in the premises.

 

	
   

  	
  Dated:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  

 

IN PRESENCE OF

 

 

	
   

  	
   

  	
   

  

 

 

NOTICE:
The signature(s) to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration, enlargement, or any change whatever and must be guaranteed by a
commercial bank, trust company or member firm of the Boston, New York or
Midwest Stock Exchange.

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