Document:

Form of Stock Appreciation Right Grant Agreement

 EXHIBIT 10.5 
  
 INSPIRE PHARMACEUTICALS, INC. 
  

2005 EQUITY COMPENSATION PLAN 
  
 STOCK APPRECIATION RIGHT 
  
 Inspire Pharmaceuticals, Inc. (the “Company”) has granted to you a Stock Appreciation Right (the “SAR”) under the Inspire Pharmaceuticals, Inc. 2005
Equity Compensation Plan (the “Plan”). The terms of the grant are set forth in the Stock Appreciation Right Grant Agreement provided to you (the “Agreement”). The following provides a summary of the key terms of the grant;
however, you should read the entire Agreement, along with the terms of the Plan, to fully understand the grant. 
  
 SUMMARY OF STOCK APPRECIATION RIGHT GRANT 
  

			
	Grantee:	  	________________________________________________
		
	Date of Grant:	  	________________________________________________
		
	Vesting Schedule:	  	________________________________________________
		
	Exercise Price Per Share:	  	________________________________________________
		
	Total Number of Shares Underlying SAR:	  	________________________________________________
		
	Term/Expiration Date:	  	________________________________________________

  

 INSPIRE PHARMACEUTICALS, INC. 
  
 2005 EQUITY COMPENSATION PLAN 
  

STOCK APPRECIATION RIGHT GRANT AGREEMENT 
  
 This STOCK APPRECIATION RIGHT GRANT AGREEMENT (the “Agreement”), dated as of
                         (the “Date of Grant”), is delivered by Inspire Pharmaceuticals, Inc. (the
“Company”) to                          (the “Grantee”). 
  
 RECITALS 
  
 A. The Inspire Pharmaceuticals, Inc. 2005 Equity Compensation Plan (the
“Plan”) provides for the grant of stock appreciation rights based upon the shares of common stock of the Company. The Company has decided to make a stock appreciation right grant as an inducement for the Grantee to promote the best
interests of the Company and its shareholders. A copy of the Plan is attached. 
  
 B. The Plan is administered by the Compensation Committee of the Board of Directors of the Company (the “Committee”). 
  

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows: 
  
 1. Grant of SAR. Subject to the terms and conditions set forth in this
Agreement and in the Plan, the Company hereby grants to the Grantee a Stock Appreciation Right (the “SAR”) that relates to the stock appreciation, if any, for
[                    ] shares of common stock of the Company (the “Shares”). The stock appreciation for the SAR is the amount by
which the Fair Market Value (as defined in the Plan) of the underlying Shares on the date of exercise of this SAR exceeds the base amount of the SAR. The base amount of the SAR under this Agreement equals
[$            ] per Share. The SAR shall become exercisable according to Paragraph 2 below. Any appreciation upon the exercise of the SAR shall be payable to the Grantee in Shares.

  
 2. Exercisability of SAR. The SAR shall become exercisable on
the following dates, if the Grantee is employed by, or providing service to, the Employer (as defined in the Plan) on the applicable date. For this purpose, the term “Shares” refers to the number of shares underlying that portion of the
SAR that vests in the manner described under Vest Type and Full Vest Date. The term “Vest Type” describes how those shares will vest before the Full Vest Date. For example, if Vest Type is “monthly”, those shares will vest on a
pro rata basis on each monthly anniversary of the Date of Grant. The term “Full Vest Date” is the date on which all of the shares underlying the SAR set forth in the corresponding “Shares” column will be fully vested. 

 

					
	 Shares

	 	 Vest Type

	 	 Full Vest Date

  

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 The exercisability of the SAR is cumulative, but shall not exceed one hundred percent (100%) of the Shares subject to the
SAR. If the foregoing schedule would produce fractional Shares, the number of Shares for which the SAR becomes exercisable shall be rounded down to the nearest whole Share. 
  
 3. Term of SAR. 
  
 (a) The SAR shall have a term of [            ] years from the Date of Grant and shall
terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan. 
  
 (b) Unless a later termination date is provided for in a Company-sponsored plan, policy or arrangement, or any agreement to which the Company is a party
(as provided in Section 5(f)(v) of the Plan), the SAR shall automatically terminate upon the happening of the first of the following events: 
  
 (i) The expiration of the ninety (90) day period after the Grantee ceases to be employed by, or provide service to, the Employer, if the
termination is for any reason other than Disability (as defined in the Plan), death or Misconduct (as defined in the Plan). 
  
 (ii) The expiration of the one (1) year period after the Grantee ceases to be employed by, or provide service to, the Employer on account
of the Grantee’s Disability. 
  
 (iii) The
expiration of the one (1) year period after the Grantee ceases to be employed by, or provide service to, the Employer, if the Grantee dies (x) while employed by, or providing service to, the Employer or (y) within ninety (90) days after the Grantee
ceases to be so employed or provide such services on account of a termination described in subparagraph (i) above. 
  
 (iv) The expiration of the thirty (30) day period after the date on which the Grantee ceases to be employed by, or provide service to, the
Employer on account of a termination by the Employer for Misconduct. In addition, notwithstanding the prior provisions of this Paragraph 3, if the Company determines that the Grantee has engaged in conduct that constitutes Misconduct at any time
while the Grantee is employed by, or providing service to, the Employer or after the Grantee’s termination of employment or service, the SAR shall terminate as of the thirtieth (30th) day after the date on which such Misconduct first occurred. 
  

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 Notwithstanding the foregoing, in no event may the SAR be exercised after the date that is immediately before the
[                    ] anniversary of the Date of Grant. Any portion of the SAR that is not exercisable at the time the Grantee ceases to be
employed by, or provide service to, the Employer shall immediately terminate. 
  
 4. Exercise Procedures. 
  
 (a) Subject to
the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the exercisable SAR by giving the Company written notice of intent to exercise in the manner provided in this Agreement, specifying the number of Shares as to which
the SAR is to be exercised. 
  
 (b) The Company’s delivery of
Shares upon exercise of the SAR shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Company, including such actions as Company counsel shall deem necessary
or appropriate to comply with relevant securities laws and regulations. The Company may require that the Grantee (or other person exercising the SAR after the Grantee’s death) represent that the Grantee is receiving the Shares for the
Grantee’s own account and not with a view to or for sale in connection with any distribution of the Shares, or such other representation as the Company deems appropriate. 
  
 (c) All obligations of the Company under this Agreement shall be subject to the rights of the Company to withhold amounts
required to be withheld for any taxes, if applicable. Subject to Committee approval, the Grantee may elect to satisfy any tax withholding obligation of the Employer with respect to the SAR by having Shares withheld up to an amount that does not
exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities. 
  
 5. Change in Control. The provisions of the Plan applicable to a Change in Control (as defined in the Plan) shall apply to the SAR. 
  
 6. Restrictions on Exercise. Except as the Company may otherwise permit
pursuant to the Plan, only the Grantee may exercise the SAR during the Grantee’s lifetime and, after the Grantee’s death, the SAR shall be exercisable (subject to the limitations specified in the Plan) solely by the legal representatives
of the Grantee, or by the person who acquires the right to exercise the SAR by will or by the laws of descent and distribution, to the extent that the SAR is exercisable pursuant to this Agreement. 
  
 7. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and exercise of the SAR are subject to interpretations, regulations and determinations concerning the Plan
established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the registration, qualification
or listing of the Shares, (iii) changes in capitalization of the Company and (iv) other requirements of applicable law. The Committee shall have the authority to interpret and construe the SAR pursuant to the terms of the Plan, and its decisions
shall be conclusive as to any questions arising hereunder. 
  

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 8. No Employment or Other Rights. The grant of the SAR shall not confer upon the Grantee any right to be
retained by or in the employ or service of the Employer and shall not interfere in any way with the right of the Employer to terminate the Grantee’s employment or service at any time. The right of the Employer to terminate at will the
Grantee’s employment or service at any time for any reason is specifically reserved. 
  
 9. No Shareholder Rights. Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges of a
shareholder with respect to the Shares subject to the SAR. 
  
 10.
Assignment and Transfers. Except as the Committee may otherwise permit pursuant to the Plan, the rights and interests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the
event of the death of the Grantee, by will or by the laws of descent and distribution. In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the SAR or any right hereunder, except as provided
for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the SAR by notice to the Grantee, and the SAR and all rights hereunder shall
thereupon become null and void. The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreement may be assigned by the
Company without the Grantee’s consent. 
  
 11. Applicable Law.
The validity, construction, interpretation and effect of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof. 
  
 12. Notice. Any notice to the Company provided for in this Agreement shall be
addressed to the Company in care of the Compensation Committee at 4222 Emperor Boulevard, Suite 200, Durham, North Carolina, 27703-8466, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of
the Employer, or to such other address as the Grantee may designate to the Employer in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above deposited, postage prepaid,
in a post office regularly maintained by the United States Postal Service. 
  

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 IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Agreement,
and the Grantee has executed this Agreement, effective as of the Date of Grant. 
  

			
	INSPIRE PHARMACEUTICALS, INC.
		
	 By:
	 	 
		
	 Name: 
	 	 
		
	 Title:
	 	 

  
 I hereby accept the SAR
described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement. I hereby further agree that all the decisions and determinations of the Committee shall be final and binding. 
  

			
	 Grantee: 
	 	 
		
	 Date:
	 	 

  

 - 5 -Form of Stock Award Grant Agreement

 EXHIBIT 10.6 
  
 INSPIRE PHARMACEUTICALS, INC. 
  

2005 EQUITY COMPENSATION PLAN 
  
 STOCK AWARD 
  
 Inspire Pharmaceuticals, Inc. (the “Company”) has granted to you a Stock Award (the “Award”) under the Inspire Pharmaceuticals, Inc. 2005 Equity
Compensation Plan (the “Plan”). The terms of the grant are set forth in the Stock Award Grant Agreement provided to you (the “Agreement”). The following provides a summary of the key terms of the grant; however, you should read
the entire Agreement, along with the terms of the Plan, to fully understand the grant. 
  
 SUMMARY OF STOCK AWARD GRANT 
  

			
	Grantee:	  	________________________________________________
		
	Date of Grant:	  	________________________________________________
		
	Vesting Schedule:	  	________________________________________________
		
	Purchase Price Per Share:	  	________________________________________________
		
	Total Number of Shares Granted:	  	________________________________________________

  

 INSPIRE PHARMACEUTICALS, INC. 
  
 2005 EQUITY COMPENSATION PLAN 
  
 STOCK AWARD GRANT AGREEMENT 
  
 This STOCK AWARD GRANT AGREEMENT (the “Agreement”), dated as of
                     (the “Date of Grant”), is delivered by Inspire Pharmaceuticals, Inc. (the “Company”), to
                         (the “Grantee”). 
  
 RECITALS 
  
 A. The Inspire Pharmaceuticals, Inc. 2005 Equity Compensation Plan (the “Plan”) provides for the grant of restricted stock in accordance with
the terms and conditions of the Plan. The Company has decided to make a restricted stock grant as an inducement for the Grantee to promote the best interests of the Company and its stockholders. A copy of the Plan is attached. 
  
 B. The Plan is administered by the Compensation Committee of the Board of
Directors of the Company (the “Committee”). 
  
 NOW,
THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows: 
  
 1. Restricted Stock Grant. Subject to the terms and conditions set forth in this Agreement and the Plan, the Company hereby grants to the Grantee
[            ] shares of common stock of the Company, subject to the restrictions set forth below and in the Plan (“Restricted Stock”). Shares of Restricted Stock may not
be transferred by the Grantee or subjected to any security interest until the shares have become vested pursuant to this Agreement and the Plan. 
  
 2. Vesting and Nonassignability of Restricted Stock. 
  
 The shares of Restricted Stock shall become vested, and the restrictions described in Sections 2(b) and 2(c) shall lapse, in the manner provided below, if the Grantee
continues to be employed by, or provide service to, the Employer (as defined in the Plan) from the Date of Grant until the applicable vesting date. For this purpose, the term “Shares” refers to the number of shares underlying that portion
of the Award that vests in the manner described under Vest Type and Full Vest Date. The term “Vest Type” describes how those shares will vest before the Full Vest Date. For example, if Vest Type is “monthly”, those shares will
vest on a pro rata basis on each monthly anniversary of the Date of Grant. The term “Full Vest Date” is the date on which the shares will be fully vested. 
  

					
	 Shares

	 	 Vest Type

	 	 Full Vest Date

  

 - 1 - 

 (a) Unless a later termination date is provided for in a Company-sponsored plan, policy or arrangement,
or any agreement to which the Company is a party (as provided in Section 5(f)(v) of the Plan), if the Grantee’s employment or service with the Employer terminates for any reason before the Restricted Stock is fully vested, the shares of
Restricted Stock that are not then vested shall be forfeited and must be immediately returned to the Company. 
  
 (b) During the period before the shares of Restricted Stock vest (the “Restriction Period”), the non-vested Restricted Stock may not be
assigned, transferred, pledged or otherwise disposed of by the Grantee. Any attempt to assign, transfer, pledge or otherwise dispose of the shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon
the shares, shall be null, void and without effect. 
  
 (c) The
vesting of the Grant is cumulative, but shall not exceed one hundred percent (100%) of the Shares subject to the Grant. If the foregoing schedule would produce fractional Shares, the number of Shares for which the Grant vests shall be rounded down
to the nearest whole Share. 
  
 3. Issuance of Certificates.

  
 (a) Stock certificates representing the Restricted Stock may
be issued by the Company and held in escrow by the Company until the Restricted Stock vests, or the Company may hold non-certificated shares until the Restricted Stock vests. In the event of a dividend or distribution payable in stock or other
property or a reclassification, split up or similar event during the Restriction Period, the shares or other property issued or declared with respect to the non-vested shares of Restricted Stock shall be subject to the same terms and conditions
relating to vesting as the shares to which they relate. 
  
 (b)
When the Grantee obtains a vested right to shares of Restricted Stock, a certificate representing the vested shares shall be issued to the Grantee, free of the restrictions under Paragraph 2 of this Agreement. 
  
 (c) The obligation of the Company to deliver shares upon the vesting of the
Restricted Stock shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriately to comply with relevant securities laws and regulations. 
  
 4. Change in Control. The provisions of the Plan applicable to a Change in
Control (as defined in the Plan) shall apply to the Restricted Stock. 
  

 - 2 - 

 5. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan, the terms of which are
incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant is subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in
accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the registration, qualification or listing of the shares, (iii) changes in
capitalization of the Company, and (iv) other requirements of applicable law. The Committee shall have the authority to interpret and construe the grant pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions
arising hereunder. 
  
 6. Withholding. The Grantee shall be required
to pay to the Company, or make other arrangements satisfactory to the Company to provide for the payment of, any federal, state, local or other taxes that the Employer is required to withhold with respect to the grant or vesting of the Restricted
Stock. Subject to Committee approval, the Grantee may elect to satisfy any tax withholding obligation of the Employer with respect to the Restricted Stock by having shares withheld up to an amount that does not exceed the minimum applicable
withholding tax rate for federal (including FICA), state, local and other tax liabilities. 
  
 7. No Employment or Other Rights. This grant shall not confer upon the Grantee any right to be retained by or in the employ or service of the Employer and shall not interfere in any way with the right of
the Employer to terminate the Grantee’s employment or service at any time. The right of the Employer to terminate at will the Grantee’s employment or service at any time for any reason is specifically reserved. 
  
 8. Assignment by Company. The rights and protections of the Company hereunder
shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreement may be assigned by the Company without the Grantee’s consent. 
  
 9. Applicable Law. The validity, construction, interpretation and effect of
this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof. 
  
 10. Notice. Any notice to the Company provided for in this Agreement shall be addressed to the Company in care of the
Compensation Committee at 4222 Emperor Boulevard, Suite 200, Durham, North Carolina, 27703-8466, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Employer, or to such other address
as the Grantee may designate to the Employer in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above deposited, postage prepaid, in a post office regularly maintained by
the United States Postal Service. 
  

 - 3 - 

 IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Agreement,
and the Grantee has placed his or her signature hereon, effective as of the Date of Grant. 
  

			
	INSPIRE PHARMACEUTICALS, INC.
		
	 By:
	 	 
		
	 Name:
	 	 
		
	 Title:
	 	 

  
 I hereby accept the grant of
Restricted Stock described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement. I hereby further agree that all the decisions and determinations of the Committee shall be final and binding. 
  

			
	 
	 Grantee

	
	 
	 Date

  

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