Document:

exv10w40

 

OMEROS CORPORATION

2008 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the Omeros Corporation 2008 Equity
Incentive Plan (the “Plan”) shall have the same defined meanings in this Stock Option Agreement
(the “Option Agreement”).

     I. NOTICE OF STOCK OPTION GRANT

     Participant:

     Address:

     Participant has been granted an Option to purchase Common Stock of the Company, subject to the
terms and conditions of the Plan and this Option Agreement, as follows:

	 	 	 	 	 
	Date of Grant:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Vesting Commencement Date:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Exercise Price per Share:
	 	$	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Total Number of Shares Granted:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Total Exercise Price :
	 	$	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Type of Option:
	 	 	 	     Incentive Stock Option
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	     Nonstatutory Stock Option
	 
	 	 	 	 
	Term/Expiration Date:
	 	 	 	 
	 
	 	 	 

     Vesting Schedule:

     Subject to accelerated vesting as set forth below or in the Plan, this Option will be
exercisable, in whole or in part, in accordance with the following schedule:

                                                                 

 

 

     Termination Period:

     This Option will be exercisable for                      after Participant ceases to be a Service
Provider, unless such termination is due to Participant’s death or Disability, in which case this
Option will be exercisable for                      after Participant ceases to be a Service Provider.
Notwithstanding the foregoing, in no event may this Option be exercised after the Term/Expiration
Date as provided above and may be subject to earlier termination as provided in Section 13 of the
Plan.

II. AGREEMENT

     1. Grant of Option. The Administrator of the Company hereby grants to the Participant
named in the Notice of Stock Option Grant in Part I of this Agreement (“Participant”), an option
(the “Option”) to purchase the number of Shares set forth in the Notice of Stock Option Grant, at
the exercise price per Share set forth in the Notice of Stock Option Grant (the “Exercise Price”),
and subject to the terms and conditions of the Plan, which is incorporated herein by reference.
Subject to Section 18(c) of the Plan, in the event of a conflict between the terms and conditions
of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail.

          If designated in the Notice of Stock Option Grant as an Incentive Stock Option (“ISO”), this
Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option
shall be treated as a Nonstatutory Stock Option (“NSO”). Further, if for any reason this Option
(or portion thereof) shall not qualify as an ISO, then, to the extent of such nonqualification,
such Option (or portion thereof) shall be regarded as a NSO granted under the Plan. In no event
shall the Administrator, the Company or any Parent or Subsidiary or any of their respective
employees or directors have any liability to Participant (or any other person) due to the failure
of the Option to qualify for any reason as an ISO.

     2. Exercise of Option.

          (a) Right to Exercise. This Option shall be exercisable during its term in accordance
with the Vesting Schedule set out in the Notice of Stock Option Grant and with the applicable
provisions of the Plan and this Option Agreement.

          (b) Method of Exercise. This Option shall be exercisable by delivery of an exercise
notice in the form attached as Exhibit A (the “Exercise Notice”) or in a manner and
pursuant to such procedures as the Administrator may determine, which shall state the election to
exercise the Option, the number of Shares with respect to which the Option is being exercised, and
such other representations and agreements as may be required by the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares,
together with any applicable tax withholding. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price, together with any applicable tax withholding.

          No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such
exercise comply with Applicable Laws. Assuming such compliance, for income tax

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purposes the Shares shall be considered transferred to Participant on the date on which the
Option is exercised with respect to such Shares.

     3. Participant’s Representations. In the event the Shares have not been registered
under the Securities Act of 1933, as amended, at the time this Option is exercised, Participant
shall, if required by the Company, concurrently with the exercise of all or any portion of this
Option, deliver to the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit B.

     4. Lock-Up Period. Participant hereby agrees that Participant shall not offer,
pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or enter
into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of any Common Stock (or other securities) of the Company
held by Participant (other than those included in the registration) for a period specified by the
representative of the underwriters of Common Stock (or other securities) of the Company not to
exceed one hundred and eighty (180) days following the effective date of any registration statement
of the Company filed under the Securities Act (or such other period as may be requested by the
Company or the underwriters to accommodate regulatory restrictions on (i) the publication or other
distribution of research reports and (ii) analyst recommendations and opinions, including, but not
limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any
successor provisions or amendments thereto).

          Participant agrees to execute and deliver such other agreements as may be reasonably requested
by the Company or the underwriter which are consistent with the foregoing or which are necessary to
give further effect thereto. In addition, if requested by the Company or the representative of the
underwriters of Common Stock (or other securities) of the Company, Participant shall provide,
within ten (10) days of such request, such information as may be required by the Company or such
representative in connection with the completion of any public offering of the Company’s securities
pursuant to a registration statement filed under the Securities Act. The obligations described in
this Section 4 shall not apply to a registration relating solely to employee benefit plans on Form
S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating
solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in
the future. The Company may impose stop-transfer instructions with respect to the shares of Common
Stock (or other securities) subject to the foregoing restriction until the end of said one hundred
and eighty (180) day (or other) period. Participant agrees that any transferee of the Option or
shares acquired pursuant to the Option shall be bound by this Section 4.

     5. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Participant:

          (a) cash;

          (b) check;

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          (c) consideration received by the Company under a formal cashless exercise program adopted by
the Company in connection with the Plan; or

          (d) surrender of other Shares which (i) shall be valued at its Fair Market Value on the date
of exercise, and (ii) must be owned free and clear of any liens, claims, encumbrances or security
interests, if accepting such Shares, in the sole discretion of the Administrator, shall not result
in any adverse accounting consequences to the Company.

     6. Restrictions on Exercise. This Option may not be exercised until such time as the
Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon
such exercise or the method of payment of consideration for such shares would constitute a
violation of any Applicable Law.

     7. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Participant only by Participant. The terms of the Plan and this Option Agreement shall
be binding upon the executors, administrators, heirs, successors and assigns of Participant.

     8. Term of Option. This Option may be exercised only within the term set out in the
Notice of Stock Option Grant, and may be exercised during such term only in accordance with the
Plan and the terms of this Option.

     9. Tax Obligations.

          (a) Tax Withholding. Participant agrees to make appropriate arrangements with the
Company (or the Parent or Subsidiary employing or retaining Participant) for the satisfaction of
all Federal, state, local and foreign income and employment tax withholding requirements applicable
to the Option exercise. Participant acknowledges and agrees that the Company may refuse to honor
the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the
time of exercise.

          (b) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to
Participant herein is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Date of
Grant, or (ii) the date one (1) year after the date of exercise, Participant shall immediately
notify the Company in writing of such disposition. Participant agrees that Participant may be
subject to income tax withholding by the Company on the compensation income recognized by
Participant.

          (c) Code Section 409A. Under Code Section 409A, an Option that vests after December
31, 2004 (or that vested on or prior to such date but which was materially modified after October
3, 2004) that was granted with a per Share exercise price that is determined by the Internal
Revenue Service (the “IRS”) to be less than the Fair Market Value of a Share on the date of grant
(a “discount option”) may be considered “deferred compensation.” An Option that is a “discount
option” may result in (i) income recognition by Participant prior to the exercise of the Option,
(ii) an additional twenty percent (20%) federal income tax, and (iii) potential penalty and
interest charges. The “discount option” may also result in additional state income, penalty and
interest tax to the Participant. Participant acknowledges that the Company cannot and has not guaranteed that the IRS

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will agree that the per Share exercise price of this Option equals or exceeds the Fair Market
Value of a Share on the date of grant in a later examination. Participant agrees that if the IRS
determines that the Option was granted with a per Share exercise price that was less than the Fair
Market Value of a Share on the date of grant, Participant shall be solely responsible for
Participant’s costs related to such a determination.

     10. Entire Agreement; Governing Law. The Plan is incorporated herein by reference.
The Plan and this Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings and agreements of
the Company and Participant with respect to the subject matter hereof, and may not be modified
adversely to the Participant’s interest except by means of a writing signed by the Company and
Participant. This Agreement is governed by the internal substantive laws but not the choice of law
rules of Washington.

     11. No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING
PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE
COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

     Participant acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of
the terms and provisions thereof. Participant has reviewed the Plan and this Option in their
entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and
fully understands all provisions of the Option. Participant hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon any questions
arising under the Plan or this Option. Participant further agrees to notify the Company upon any
change in the residence address indicated below.

	 	 	 
	PARTICIPANT

	 	OMEROS CORPORATION
	 
	 	 
	 

	 	 
	Signature

	 	By
	 
	 	 
	 

	 	 
	Print Name

	 	Print Name
	 
	 	 
	 

	 	 
	 

	 	Title
	 
	 	 
	 
	 	 
	Residence Address
	 	 

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EXHIBIT A

2008 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

Omeros Corporation

[Address]

Attention: [Title]

     1. Exercise of Option. Effective as of today,                                         ,       
     
, the undersigned
(“Participant”) hereby elects to exercise Participant’s option (the “Option”) to purchase
                                         shares of the Common Stock (the “Shares”) of Omeros Corporation (the “Company”)
under and pursuant to the 2008 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement
dated                                         ,                      (the “Option Agreement”).

     2. Delivery of Payment. Participant herewith delivers to the Company the full
purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding
taxes due in connection with the exercise of the Option.

     3. Representations of Participant. Participant acknowledges that Participant has
received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound
by their terms and conditions.

     4. Rights as Shareholder. Until the issuance of the Shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Common Stock subject to an Award, notwithstanding the exercise of the Option.
The Shares shall be issued to Participant as soon as practicable after the Option is exercised in
accordance with the Option Agreement. No adjustment shall be made for a dividend or other right
for which the record date is prior to the date of issuance except as provided in Section 13 of the
Plan.

     5. Company’s Right of First Refusal. Before any Shares held by Participant or any
transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise
transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall
have a right of first refusal to purchase the Shares on the terms and conditions set forth in this
Section 5 (the “Right of First Refusal”).

          (a) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the
Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or
otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee
(“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee;
and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer
the

 

 

Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to
the Company or its assignee(s).

          (b) Exercise of Right of First Refusal. At any time within thirty (30) days after
receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the
Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to
any one or more of the Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.

          (c) Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by
the Company or its assignee(s) under this Section 5 shall be the Offered Price. If the Offered
Price includes consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined by the Board of Directors of the Company in good faith.

          (d) Payment. Payment of the Purchase Price shall be made, at the option of the
Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an
assignee, to the assignee), or by any combination thereof within thirty (30) days after receipt of
the Notice or in the manner and at the times set forth in the Notice.

          (e) Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be
transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s)
as provided in this Section 5, then the Holder may sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within one hundred and twenty (120) days after the date of the Notice, that
any such sale or other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this Section 5 shall continue
to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the
Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again be offered the Right of
First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

          (f) Exception for Certain Family Transfers. Anything to the contrary contained in
this Section 5 notwithstanding, the transfer of any or all of the Shares during the Participant’s
lifetime or on the Participant’s death by will or intestacy to the Participant’s immediate family
or a trust for the benefit of the Participant’s immediate family shall be exempt from the
provisions of this Section 5. “Immediate Family” as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of this
Section 5, and there shall be no further transfer of such Shares except in accordance with the
terms of this Section 5.

          (g) Termination of Right of First Refusal. The Right of First Refusal shall terminate
as to any Shares upon the earlier of (i) the first sale of Common Stock of the Company to the
general public, or (ii) a Change in Control in which the successor corporation has equity
securities that are publicly traded.

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     6. Tax Consultation. Participant understands that Participant may suffer adverse tax
consequences as a result of Participant’s purchase or disposition of the Shares. Participant
represents that Participant has consulted with any tax consultants Participant deems advisable in
connection with the purchase or disposition of the Shares and that Participant is not relying on
the Company for any tax advice.

     7. Restrictive Legends and Stop-Transfer Orders.

          (a) Legends. Participant understands and agrees that the Company shall cause the
legends set forth below or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST
REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME FOLLOWING THE EFFECTIVE DATE OF
THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES SET FORTH IN AN
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER PRIOR TO THE EXPIRATION OF SUCH
PERIOD WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER.

          (b) Stop-Transfer Notices. Participant agrees that, in order to ensure compliance
with the restrictions referred to herein, the Company may issue appropriate “stop transfer”
instructions to its transfer agent, if any, and that, if the Company transfers its own securities,
it may make appropriate notations to the same effect in its own records.

          (c) Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of

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this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote
or pay dividends to any purchaser or other transferee to whom such Shares shall have been so
transferred.

     8. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the
benefit of the successors and assigns of the Company. Subject to the restrictions on transfer
herein set forth, this Exercise Notice shall be binding upon Participant and his or her heirs,
executors, administrators, successors and assigns.

     9. Interpretation. Any dispute regarding the interpretation of this Exercise Notice
shall be submitted by Participant or by the Company forthwith to the Administrator, which shall
review such dispute at its next regular meeting. The resolution of such a dispute by the
Administrator shall be final and binding on all parties.

     10. Governing Law; Severability. This Exercise Notice is governed by the internal
substantive laws, but not the choice of law rules, of Washington. In the event that any provision
hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Exercise Notice shall continue in full force and effect.

     11. Entire Agreement. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Notice, the Plan, the Option Agreement and the Investment Representation
Statement constitute the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the Company and
Participant with respect to the subject matter hereof, and may not be modified adversely to the
Participant’s interest except by means of a writing signed by the Company and Participant.

	 	 	 
	Submitted by:

	 	Accepted by:
	PARTICIPANT

	 	OMEROS CORPORATION
	 
	 	 
	 

	 	 
	Signature

	 	By
	 
	 	 
	 

	 	 
	Print Name

	 	Print Name
	 
	 	 
	 

	 	 
	 

	 	Title
	 
	 	 
	Address:

	 	Address:
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 

	 	Date Received

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EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	PARTICIPANT

	 	:	 	 	 	 
	 
	 	 	 	 	 	 
	COMPANY

	 	:
	 	OMEROS CORPORATION	 	 
	 
	 	 	 	 	 	 
	SECURITY

	 	:
	 	COMMON STOCK	 	 
	 
	 	 	 	 	 	 
	AMOUNT

	 	:	 	 	 	 
	 
	 	 	 	 	 	 
	DATE

	 	:	 	 	 	 

     In connection with the purchase of the above-listed Securities, the undersigned Participant
represents to the Company the following:

     (a) Participant 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 Securities. Participant is acquiring these Securities for investment for
Participant’s own account only and not with a view to, or for resale in connection with, any
“distribution” thereof within the meaning of the Securities Act of 1933, as amended (the
“Securities Act”).

     (b) Participant acknowledges and understands that the Securities constitute “restricted
securities” under the Securities Act and have not been registered under the Securities Act in
reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of Participant’s investment intent as expressed herein. In this connection,
Participant understands that, in the view of the Securities and Exchange Commission, the statutory
basis for such exemption may be unavailable if Participant’s representation was predicated solely
upon a present intention to hold these Securities for the minimum capital gains period specified
under tax statutes, for a deferred sale, for or until an increase or decrease in the market price
of the Securities, or for a period of one (1) year or any other fixed period in the future.
Participant further understands that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such registration is
available. Participant further acknowledges and understands that the Company is under no
obligation to register the Securities. Participant understands that the certificate evidencing the
Securities shall be imprinted with any legend required under applicable state securities laws.

     (c) Participant is familiar with the provisions of Rule 701 and Rule 144, each promulgated
under the Securities Act, which, in substance, permit limited public resale of “restricted
securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering
subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies
under Rule 701 at the time of the grant of the Option to Participant, the exercise shall 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, ninety (90)
days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under
Rule 701 may be resold, subject to the satisfaction of the applicable conditions specified by
Rule 144, including in the case of affiliates (1) the availability of certain public information
about the Company, (2) the amount of Securities being sold during any three (3) month period not
exceeding specified limitations, (3) the resale being made in an unsolicited “broker’s
transaction”, transactions directly with a “market maker” or “riskless principal transactions” (as
those terms are defined under the Securities Exchange Act of 1934) and (4) the timely filing of a
Form 144, if applicable.

          In the event that the Company does not qualify under Rule 701 at the time of grant of the
Option, then the Securities may be resold in certain limited circumstances subject to the
provisions of Rule 144, which may require (i) the availability of current public information about
the Company; (ii) the resale to occur more than a specified period after the purchase and full
payment (within the meaning of Rule 144) for the Securities; and (iii) in the case of the sale of
Securities by an affiliate, the satisfaction of the conditions set forth in sections (2), (3) and
(4) of the paragraph immediately above.

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

	 	 	 
	 

	 	PARTICIPANT
	 
	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 

	 	 
	 

	 	Print Name
	 
	 	 
	 

	 	 
	 

	 	Date

-2-exv4w2

 

Exhibit 4.2

FORM OF SUBORDINATED NOTE

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (“DTC”) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF WILMINGTON TRUST CORPORATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.

WILMINGTON TRUST CORPORATION

8.50% SUBORDINATED NOTE DUE 2018

					
	REGISTERED
	 	 	 	CUSIP 971807AD4
	 	 	 	 	 
	NO. 1	 	 	 	 

     WILMINGTON TRUST CORPORATION, a Delaware corporation (herein called the “Company,” which term
includes any successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to

CEDE & CO.

or its registered assigns, the principal sum of TWO HUNDRED MILLION DOLLARS ($200,000,000) on April
2, 2018 (the “Maturity Date”), and to pay interest on said principal sum semi-annually on April 1
and October 1 in each year (individually referred to as an “Interest Payment Date” and collectively
as the “Interest Payment Dates”), commencing October 1, 2008 at the rate of 8.50% per annum,
computed on the basis of a 360-day year consisting of twelve 30-day months, from April 1, 2008, or
from the most recent Interest Payment Date to which interest has been paid or duly provided for,
until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the Regular Record

 

 

Date
for such interest, which shall be March 15 or September 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date, provided that interest payable on the
Maturity Date shall be payable to the Person to whom the principal hereof is payable. In the event
any Interest Payment Date is not a Business Day, interest will be paid on the next succeeding
Business Day, with the same force and effect as if made on the Interest Payment Date, and without
any interest or other payment with respect to the delay. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to the Holder of this Note not
less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange upon which the Notes of
the series shown above may be listed, and upon such notice as may be required by such exchange, all
as more fully provided in such Indenture. Payment of the principal of and interest on this Note
due on the Maturity Date will be made in immediately available funds upon presentation of the Note.
For the purposes of this Note, “Business Day” means any day, other than a Saturday or Sunday, on
which banking institutions in the Place of Payment for Notes, in the City of Wilmington, Delaware
and the City of New York, New York are open for business. Payment of the principal of and interest
on this Note will be made at the office or agency of the Company maintained for that purpose in
Wilmington, Delaware, in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided, however, that, at the
option of the Company, payment of interest (other than interest payable on the Maturity Date) may
be paid by check mailed to the address of the Person entitled thereto as such address shall appear
in the Security Register at the close of business on the Regular Record Date or by wire transfer to
an account designated by such Person in writing; and provided further that any interest payments
made on this Note while it is a Global Security shall be paid by wire transfer to an account
designated by the Depositary.

     This Note is one of a duly authorized issue of subordinated notes of the series designated
above of the Company (herein called the “Notes”), issued and to be issued under an indenture dated
as of May 4, 1998 (the “Indenture”), between the Company and Wells Fargo Bank, National Association
(as successor by merger to Norwest Bank Minnesota, National Association), as trustee (the
“Trustee”), to which Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are,
and are to be, authenticated and delivered. This Note is one of the series designated above,
limited (except as provided in the Indenture) in aggregate principal amount to $200,000,000.

     The Notes of this series are not redeemable prior to maturity and will not be subject to any
sinking fund.

     The indebtedness of the Company evidenced by the Notes of this series, including the principal
thereof and interest thereon, is, to the extent and in the manner set forth in the Indenture,
subordinate and junior in right of payment to its obligations to holders of Senior Indebtedness and
creditors in respect of General Obligations, and each Holder of Notes of this

2

 

series, by the
acceptance thereof, agrees to and shall be bound by such provisions of the Indenture.

     If an Event of Default with respect to the Notes shall occur and be continuing, the principal
of all the Notes may be declared due and payable in the manner and with the effect provided in the
Indenture. There is no right of acceleration of the payment of principal of the Notes upon a
default in the payment of interest on the Notes or in the performance of any covenant of the
Company in the Indenture or the Notes.

     Notwithstanding anything to the contrary in this Note or the Indenture, the sole remedy for an
Event of Default relating to the failure to comply with Section 6.04 of the Indenture or the
failure to comply with Section 314(a)(1) of the Trust Indenture Act of 1939 (the “TIA”), if
applicable, will for the first 270 days after the occurrence of such an Event of Default consist
exclusively of the right to receive additional interest (“Additional Interest”) on the
Securities at an annual rate of 0.05% of the principal amount of the outstanding Notes. This
Additional Interest shall be payable in the same manner and on the same dates as regular interest
payable on the Notes. The Additional Interest shall accrue on all outstanding Notes from and
including the date on which an Event of Default relating to a failure to comply with Section 6.04
of the Indenture or the failure to comply with Section 314(a)(1) of the TIA, if applicable, first
occurs to but not including the 270th day thereafter (or such earlier date on which the
Event of Default relating to a failure to comply with Section 6.04 of the Indenture or the failure
to comply with Section 314(a)(1) of the TIA, if applicable, is cured or waived prior to such
270th day). Thereafter, such Additional Interest shall cease to accrue and the
Securities may be subject to acceleration as provided in Section 7.02 of the Indenture if the Event
of Default is continuing. The provisions described in this paragraph will not affect the rights of
the Holders of Notes in the event of the occurrence of any other Event of Default.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Notes of each series under the Indenture to be affected at any time by the Company with the consent
of the Holders of a majority in principal amount of the Notes at the time Outstanding of each
series to be affected. The Indenture also contains provisions permitting the Holders of a majority
in principal amount of the Notes of each series at the time Outstanding, on behalf of the Holders
of all Notes of such series, to waive certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company which is absolute and unconditional to pay the
principal of and interest on this Note at the times, places and rate, and in the coin or currency
herein and in the Indenture prescribed.

     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Note is registrable in the Security Register of the Company, upon surrender of
this Note for registration of transfer at the office or agency of the Company in any place where

3

 

the principal of and interest on this Note are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the Note Registrar duly
executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of the same series of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees.

     The Notes are issuable only in registered form without coupons in denominations of $2,000 and
any integral multiple of $1,000 in excess of such amount. As provided in the Indenture and subject
to certain limitations therein set forth, Notes of this series are exchangeable for a like
aggregate principal amount of Notes of this series of a different authorized denomination, as
requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

     Prior to due presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

     This Note shall be construed in accordance with and governed by the laws of the State of New
York.

     All terms not defined herein shall have the respective meanings ascribed to them in the
Indenture referred to herein.

     Unless the certificate of authentication hereon has been manually executed by or on behalf of
the Trustee under such Indenture, this Note shall not be entitled to any benefits under such
Indenture or be valid or obligatory for any purpose.

[Remainder of page intentionally left blank]

4

 

     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed under its corporate
seal.

	 	 	 	 	 	 	 
	 	 	WILMINGTON TRUST CORPORATION	 	 
	Dated: April 1, 2008
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

David R. Gibson
	 	 
	 

	 	 	 	Executive Vice President and	 	 
	 

	 	 	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	ATTEST:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Gerard A. Chamberlain	 	 
	 	 	Vice President and Assistant Secretary	 	 

5

 

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated herein issued under the within-mentioned
Indenture.

Wells Fargo Bank, National Association, as Trustee.

By:
                                        
                    

               Authorized Officer

 

 

ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of this instrument,
shall be construed as though they were written out in full according to applicable laws or
regulations:

TEN COM — as tenants in common

TEN ENT — as tenants by the entireties

JT ENT — as joint tenants and not as tenants in common

UNIF
GIFT MIN ACT                      Custodian
                                        

                         (Cust)

               under Uniform Gift to Minors Act

 

(State)

Additional abbreviations may be used though not in the above list.

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

 

Name and address of assignee, including zip code, must be printed or typewritten

 

the within Note, and all rights thereunder, hereby irrevocably constituting and appointing

 

Attorney to transfer said Note on the books of the within Company, with full power of substitution
in the premises.

	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 

	 	 

	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 

	 	 

	 	 

     NOTICE: The signature to this assignment must correspond with the name as written upon the
face of the within Note in every particular, without alteration or enlargement or any change
whatever and must be guaranteed by a commercial bank or trust company having its principal office
or a correspondent in The City of New York or by a member of the New York Stock Exchange.

2

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