Document:

Exhibit 10.2

 

DERMIRA, INC.

2010 EQUITY INCENTIVE PLAN

 

As Adopted on October 15, 2010

and Amended on August 3, 2011, March 22, 2013, July 11, 2013, April 29, 2014 and August 14, 2014

 

1.                                      PURPOSE.  The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, its Parent and Subsidiaries by offering eligible persons an opportunity to participate in the Company’s future performance through the grant of Awards covering Shares.  Capitalized terms not defined in the text are defined in Section 14 hereof.  Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701, grants may be made pursuant to this Plan that do not qualify for exemption under Rule 701 or Section 25102(o).  Any requirement of this Plan that is required in law only because of Section 25102(o) need not apply if the Committee so provides.

 

2.                                      SHARES SUBJECT TO THE PLAN.

 

2.1                               Number of Shares Available.  Subject to Sections 2.2 and 11 hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan will be 14,249,356 Shares.  Subject to Sections 2.2, 4.10 and 11 hereof, Shares that are subject to issuance upon exercise of an Option for any reason other than exercise of such Option, Shares that are repurchased by the Company at the original purchase price or forfeited, and shares subject to Awards that are otherwise cancelled, forfeited, settled in cash or that expire by their terms will again be available for grant and issuance in connection with other Awards.  At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all Awards granted and outstanding under this Plan.

 

2.2                               Adjustment of Shares.  In the event that the number of outstanding shares of the Company’s Common Stock is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company without consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARS, and (c) the Purchase Prices of and/or number of Shares subject to other outstanding Awards will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities laws; provided, however, that fractions of a Share will not be issued but will either be paid in cash at the Fair Market Value of such fraction of a Share or will be rounded down to the nearest whole Share, as determined by the Committee; and provided, further, that the Exercise Price of any Option or SAR may not be decreased to below the par value of the Shares.

 

3.                                      PLAN FOR BENEFIT OF SERVICE PROVIDERS

 

3.1                               Eligibility.  The Committee will have the authority to select persons to receive Awards. ISOs (as defined in Section 4 hereof) may be granted only to employees (including officers and directors who are also employees) of the Company or of a Parent or Subsidiary of the Company.  NQSOs (as defined in Section 4 hereof) and all other types of Awards may be granted to employees, officers, directors and consultants of the Company or any Parent or Subsidiary of the Company; provided such consultants render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction when Rule 701 is to apply to the Award granted for such services.  A person may be granted more than one Award under this Plan.

 

3.2                               No Obligation to Employ.  Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to

 

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continue any other relationship with, the Company or any Parent or Subsidiary or limit in any way the right of the Company or any Parent or Subsidiary to terminate Participant’s employment or other relationship at any time, with or without Cause.

 

4.                                      OPTIONS.  The Committee may grant Options to eligible persons described in Section 3 hereof and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following.

 

4.1                               Form of Option Grant.  Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an NQSO (“Stock Option Agreement”), and will be in such form and contain such provisions (which need not be the same for each Participant) as the Committee may from time to time approve, and which will comply with and be subject to the terms and conditions of this Plan.

 

4.2                               Date of Grant.  The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, unless a later date is otherwise specified by the Committee.  The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

 

4.3                               Exercise Period.  Options may be exercisable immediately but subject to repurchase pursuant to Section 10 hereof or may be exercisable within the times or upon the events determined by the Committee as set forth in the Stock Option Agreement governing such Option; provided, however, that (a) no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and (b) no ISO granted to a person who directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary (“Ten Percent Shareholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted.  The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

 

4.4                               Exercise Price.  The Exercise Price of an Option will be determined by the Committee when the Option is granted and shall not be less than the Fair Market Value per Share unless expressly determined in writing by the Committee on the Option’s date of grant; provided that the Exercise Price of an ISO granted to a Ten Percent Shareholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant.  Payment for the Shares purchased must be made in accordance with Section 8 hereof.

 

4.5                               Method of Exercise.  Options may be exercised only by delivery to the Company of a written stock option exercise agreement (the “Exercise Agreement”) in a form approved by the Committee (which need not be the same for each Participant).  The Exercise Agreement will state (a) the number of Shares being purchased, (b) the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and (c) such representations and agreements regarding Participant’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws.  Each Participant’s Exercise Agreement may be modified by (i) agreement of Participant and the Company or (ii) substitution by the Company, upon becoming a public company, in order to add the payment terms set forth in Section 8.1 that apply to a public company and such other terms as shall be necessary or advisable in order to exercise a public company option.  Upon exercise of an Option, Participant shall execute and deliver to the Company the Exercise Agreement then in effect, together with payment in full of the Exercise Price for the number of Shares being purchased and payment of any applicable taxes.

 

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4.6                               Termination.  Subject to earlier termination pursuant to Sections 11 and 13.1 hereof and notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the following terms and conditions.

 

4.6.1                     Other than Death or Disability or for Cause.  If the Participant is Terminated for any reason other than death, Disability or for Cause, then the Participant may exercise such Participant’s Options only to the extent that such Options are exercisable as to Vested Shares upon the Termination Date or as otherwise determined by the Committee.  Such Options must be exercised by the Participant, if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than thirty (30) days, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be an NQSO) but in any event, no later than the expiration date of the Options.

 

4.6.2                     Death or Disability.  If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than for Cause), then Participant’s Options may be exercised only to the extent that such Options are exercisable as to Vested Shares by Participant on the Termination Date or as otherwise determined by the Committee.  Such options must be exercised by Participant (or Participant’s legal representative or authorized assignee), if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination Date (or within such shorter time period, not less than six (6) months, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee, with any exercise beyond (a) three (3) months after the Termination Date when the Termination is for any reason other than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code, or (b) twelve (12) months after the Termination Date when the Termination is for Participant’s disability, within the meaning of Section 22(e)(3) of the Code, deemed to be an NQSO) but in any event no later than the expiration date of the Options.

 

4.6.3                     For Cause.  If the Participant is terminated for Cause, the Participant may exercise such Participant’s Options, but not to an extent greater than such Options are exercisable as to Vested Shares upon the Termination Date and Participant’s Options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee.

 

4.7                               Limitations on Exercise.  The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent Participant from exercising the Option for the full number of Shares for which it is then exercisable.

 

4.8                               Limitations on ISOs.  The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) will not exceed One Hundred Thousand Dollars ($100,000).  If the Fair Market Value of Shares on the date of grant with respect to which ISOs are exercisable for the first time by a Participant during any calendar year exceeds One Hundred Thousand Dollars ($100,000), then the Options for the first One Hundred Thousand Dollars ($100,000) worth of Shares to become exercisable in such calendar year will be ISOs and the Options for the amount in excess of One Hundred Thousand Dollars ($100,000) that become exercisable in that calendar year will be NQSOs.  In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date (as defined in Section 13.1 hereof) to provide for a different limit on the Fair Market Value of Shares permitted to be

 

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subject to ISOs, then such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

 

4.9                               Modification, Extension or Renewal.  The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted.  Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code.  Subject to Section 4.10 hereof, the Committee may reduce the Exercise Price of outstanding Options without the consent of Participants by a written notice to them; provided, however, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 4.4 hereof for Options granted on the date the action is taken to reduce the Exercise Price; provided, further, that the Exercise Price will not be reduced below the par value of the Shares, if any.

 

4.10                        No Disqualification.  Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant, to disqualify any Participant’s ISO under Section 422 of the Code.  In no event shall the total number of Shares issued (counting each reissuance of a Share that was previously issued and then forfeited or repurchased by the Company as a separate issuance) under the Plan upon exercise of ISOs exceed 109,393,560 Shares (adjusted in proportion to any adjustments under Section 2.2 hereof) over the term of the Plan.

 

5.                                      RESTRICTED STOCK.  A Restricted Stock Award is an offer by the Company to sell to an eligible person Shares that are subject to certain specified restrictions.  The Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the Purchase Price, the restrictions to which the Shares will be subject, and all other terms and conditions of the Restricted Stock Award, subject to the following terms and conditions.

 

5.1                               Form of Restricted Stock Award.  All purchases under a Restricted Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (“Restricted Stock Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.  The Restricted Stock Award will be accepted by the Participant’s execution and delivery of the Restricted Stock Purchase Agreement and full payment for the Shares to the Company within thirty (30) days from the date the Restricted Stock Purchase Agreement is delivered to the person.  If such person does not execute and deliver the Restricted Stock Purchase Agreement along with full payment for the Shares to the Company within such thirty (30) days, then the offer will terminate, unless otherwise determined by the Committee.

 

5.2                               Purchase Price.  The Purchase Price of Shares sold pursuant to a Restricted Stock Award will be determined by the Committee on the date the Restricted Stock Award is granted or at the time the purchase is consummated.  Payment of the Purchase Price must be made in accordance with Section 8 hereof.

 

5.3                               Restrictions.  Restricted Stock Awards may be subject to the restrictions set forth in Sections 9 and 10 hereof or, with respect to a Restricted Stock Award to which Section 25102(o) is to apply, such other restrictions not inconsistent with Section 25102(o).

 

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6.                                      RESTRICTED STOCK UNITS.

 

6.1                               Awards of Restricted Stock Units.  A Restricted Stock Unit (“RSU”) is an Award covering a number of Shares that may be settled in cash, or by issuance of those Shares at a date in the future.  No Purchase Price shall apply to an RSU settled in Shares other than the payment of the aggregate par value of all Shares issuable upon such settlement. All grants of Restricted Stock Units will be evidenced by an Award Agreement that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.

 

6.2                               Form and Timing of Settlement.  To the extent permissible under applicable law, the Committee may permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned, provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code (or any successor) and any regulations or rulings promulgated thereunder.  Payment may be made in the form of cash or whole Shares or a combination thereof, all as the Committee determines.

 

7.                                      STOCK APPRECIATION RIGHTS.

 

7.1                               Awards of SARs.  Stock Appreciation Rights (“SARs”) may be settled in cash, or Shares (which may consist of Restricted Stock or RSUs), having a value equal to the value determined by multiplying the difference between the Fair Market Value on the date of exercise over the Exercise Price and the number of Shares with respect to which the SAR is being settled.  All grants of SARs made pursuant to this Plan will be evidenced by an Award Agreement that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.

 

7.2                               Exercise Period and Expiration Date.  A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR.  The Award Agreement shall set forth the Expiration Date; provided that no SAR will be exercisable after the expiration of ten years from the date the SAR is granted.

 

7.3                               Exercise Price.  The Committee will determine the Exercise Price of the SAR when the SAR is granted, and which may not be less than the Fair Market Value on the date of grant and may be settled in cash or in Shares.

 

7.4                               Termination.  Subject to earlier termination pursuant to Sections 11 and 13.1 hereof and notwithstanding the exercise periods set forth in the Award Agreement, exercise of SARs will always be subject to the following terms and conditions.

 

7.4.1                     Other than Death or Disability or for Cause.  If the Participant is Terminated for any reason other than death, Disability or for Cause, then the Participant may exercise such Participant’s SARs only to the extent that such SARs are exercisable as to vested Shares upon the Termination Date or as otherwise determined by the Committee.  SARs must be exercised by the Participant, if at all, as to all or some of the vested Shares calculated as of the Termination Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than thirty (30) days, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee) but in any event, no later than the expiration date of the SARs.

 

7.4.2                     Death or Disability.  If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than for Cause), then Participant’s SARs may be exercised only to the extent that such SARs are exercisable as to vested Shares by Participant on the Termination Date or as otherwise determined by the Committee.

 

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Such SARs must be exercised by Participant (or Participant’s legal representative or authorized assignee), if at all, as to all or some of the vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination Date (or within such shorter time period, not less than six (6) months, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee) but in any event no later than the expiration date of the SARs.

 

7.4.3                     For Cause.  If the Participant is terminated for Cause, the Participant may exercise such Participant’s SARs, but not to an extent greater than such SARs are exercisable as to vested Shares upon the Termination Date and Participant’s SARs shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee.

 

8.                                      PAYMENT FOR PURCHASES AND EXERCISES.

 

8.1                               Payment in General.  Payment for Shares acquired pursuant to this Plan may be made in cash (by check) or, where expressly approved for the Participant by the Committee and where permitted by law:

 

(a)                     by cancellation of indebtedness of the Company owed to the Participant;

 

(b)                     by surrender of shares of the Company that are clear of all liens, claims, encumbrances or security interests and: (i) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (ii) that were obtained by Participant in the public market;

 

(c)                      by tender of a full recourse promissory note having such terms as may be approved by the Committee and bearing interest at a rate sufficient to avoid imputation of income under Sections 483 and 1274 of the Code; provided, however, that Participants who are not employees or directors of the Company will not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares; provided, further, that the portion of the Exercise Price or Purchase Price, as the case may be, equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the laws under which the Company is then incorporated or organized;

 

(d)                     by waiver of compensation due or accrued to the Participant from the Company for services rendered;

 

(e)                      by participating in a formal cashless exercise program implemented by the Committee in connection with the Plan;

 

(f)                       subject to compliance with applicable law and solely in the discretion of the Committee, by exercising as set forth below, provided that a public market for the Company’s Common Stock exists:

 

(i)                                     through a “same day sale” commitment from the Participant and a broker-dealer whereby the Participant irrevocably elects to exercise the Award and to sell a portion of the Shares so purchased sufficient to pay the total Exercise Price or Purchase Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price or Purchase Price directly to the Company; or

 

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(ii)                                  through a “margin” commitment from the Participant and a broker-dealer whereby the Participant irrevocably elects to exercise the Award and to pledge the Shares so purchased to the broker-dealer in a margin account as security for a loan from the broker-dealer in the amount of the total Exercise Price or Purchase Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price or Purchase Price directly to the Company; or

 

(g)                      by any combination of the foregoing or any other method of payment approved by the Committee.

 

8.2                               Withholding Taxes.

 

8.2.1                     Withholding Generally.  Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy applicable tax withholding requirements prior to the delivery of any certificate or certificates for such Shares.  Whenever, under this Plan, payments in satisfaction of Awards are to be made in cash by the Company, such payment will be net of an amount sufficient to satisfy applicable tax withholding requirements.

 

8.2.2                     Stock Withholding.  When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Committee may in its sole discretion allow the Participant to satisfy the minimum tax withholding obligation by electing to have the Company withhold from the Shares to be issued up to the minimum number of Shares having a Fair Market Value on the date that the amount of tax to be withheld is to be determined that is not more than the minimum amount to be withheld; but in no event will the Company withhold Shares if such withholding would result in adverse accounting consequences to the Company.  Any elections by a Participant to have Shares withheld for this purpose will be made in accordance with the requirements established by the Committee for such elections and be in writing in a form acceptable to the Committee.

 

9.                                      RESTRICTIONS ON AWARDS.

 

9.1                               Transferability.  Except as permitted by the Committee, Awards granted under this Plan, and any interest therein, will not be transferable or assignable by Participant, other than by will or by the laws of descent and distribution, and, with respect to NQSOs, by instrument to an inter vivos or testamentary trust in which the NQSOs are to be passed to beneficiaries upon the death of the trustor (settlor), or by gift to “family member” as that term is defined in Rule 701, and may not be made subject to execution, attachment or similar process.  During the lifetime of the Participant an Award will be exercisable only by the Participant or Participant’s legal representative and any elections with respect to an Award may be made only by the Participant or Participant’s legal representative. The terms of an Option shall be binding upon the executor, administrator, successors and assigns of the Participant who is a party thereto.

 

9.2                               Securities Law and Other Regulatory Compliance.  Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act, grants may be made pursuant to this Plan that do not qualify for exemption under Rule 701 or Section 25102(o).  Any requirement of this Plan which is required in law only because of Section 25102(o) need not apply with respect to a particular Award to which Section 25102(o) will not apply.  An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect

 

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on the date of grant of the Award and also on the date of exercise or other issuance.  Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable, and/or (b) compliance with any exemption, completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable.  The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the exemption, registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure so do.

 

9.3                               Exchange and Buyout of Awards.  The Committee may, at any time or from time to time, authorize the Company, with the consent of the respective Participants, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards.  The Committee may at any time buy from a Participant an Award previously granted with payment in cash, Shares (including Restricted Stock) or other consideration, based on such terms and conditions as the Committee and the Participant may agree.

 

10.                               RESTRICTIONS ON SHARES.

 

10.1                        Privileges of Stock Ownership.  No Participant will have any of the rights of a stockholder with respect to any Shares until such Shares are issued to the Participant.  After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock.  The Participant will have no right to retain such stock dividends or stock distributions with respect to Unvested Shares that are repurchased as described in this Section 10.

 

10.2                        Rights of First Refusal and Repurchase.  At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement (a) a right of first refusal to purchase all Shares that a Participant (or a subsequent transferee) may propose to transfer to a third party, provided that such right of first refusal terminates upon the Company’s initial public offering of Common Stock pursuant to an effective registration statement filed under the Securities Act and (b) a right to repurchase Unvested Shares held by a Participant for cash and/or cancellation of purchase money indebtedness owed to the Company by the Participant following such Participant’s Termination at any time.

 

10.3                        Escrow; Pledge of Shares. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated.  The Committee may cause a legend or legends referencing such restrictions to be placed on the certificate. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral.  In connection with any pledge of the Shares, Participant will be required to execute and deliver a written pledge agreement in such form as the

 

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Committee will from time to time approve.  The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

 

10.4                        Securities Law Restrictions.  All certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.

 

11.                               CORPORATE TRANSACTIONS.

 

11.1                        Assumption or Replacement of Awards by Successor or Acquiring Entity.  If an Acquisition or Other Combination shall occur, then any or all outstanding Awards may be assumed, converted or replaced by the successor or acquiring entity (if any) of such Acquisition or Other Combination (or by any of its Parents, if any), which assumption, conversion or replacement will be binding on all Participants.  In the alternative, any successor or acquiring entity in such Acquisition or Other Combination (or any of its Parents, if any) may substitute equivalent awards for outstanding Awards or provide substantially similar consideration to Participants in respect of their outstanding Awards as was provided to stockholders of the Company in such Acquisition or Other Combination after taking into account the existing provisions of the outstanding Awards (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code).  Any successor or acquiring entity in such Acquisition or Other Combination (or any of its Parents, if any) may also substitute by issuing, in place of any Award of outstanding Shares of the Company held by a Participant, substantially similar shares of stock or other property subject to repurchase restrictions and other provisions no less favorable to such Participant than those that applied to such outstanding Shares immediately prior to such Acquisition or Other Combination.

 

11.2                        Awards Not Assumed or Replaced in an Acquisition.  If, in the event of an Acquisition, neither the successor or acquiring entity (if any) nor any Parent (if any) of such successor or acquiring entity assumes, converts, replaces or substitutes outstanding Awards as provided above in Section 11.1, then notwithstanding any other provision in this Plan to the contrary, and unless otherwise approved by the Committee or otherwise required by the terms of any Award Agreement or any separate written agreement governing such Award that has been approved by the Board, each such Award that has not already terminated in accordance with the Plan or the applicable Award Agreement shall terminate, without accelerating vesting, immediately prior to the consummation of such Acquisition (or if such Acquisition is an Acquisition by Sale of Assets, immediately prior to the Company’s distribution of any funds or assets to the Company’s stockholders following such Acquisition by Sale of Assets) at such times and upon such conditions as the Committee may determine.

 

11.3                        Assumption of Awards by the Company.  The Company, from time to time, also may substitute or assume outstanding awards granted by another entity, whether in connection with an acquisition of such other entity or otherwise, by either (a) granting an Award under this Plan in substitution of such other entity’s award or (b) assuming and/or converting such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan.  Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other entity had applied the rules of this Plan to such grant.  In the event the Company assumes an award granted by another entity, the terms and conditions of such award will remain unchanged (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code).  In the event the Company elects to grant a new Option or SAR rather than

 

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assuming an existing option or stock appreciation right, such new Option or SAR may be granted with a similarly adjusted Exercise Price.

 

12.                               ADMINISTRATION.

 

12.1                        Committee Authority.  This Plan will be administered by the Committee or the Board if no Committee is created by the Board.  Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan.  Without limitation, the Committee will have the authority to:

 

(a)                     construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

 

(b)                     prescribe, amend, expand, modify and rescind or terminate rules and regulations relating to this Plan;

 

(c)                      approve persons to receive Awards;

 

(d)                     determine the form and terms of Awards;

 

(e)                      determine the number of Shares or other consideration subject to Awards granted under this Plan;

 

(f)                       determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or awards under any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;

 

(g)                      grant waivers of any conditions of this Plan or any Award;

 

(h)                     determine the terms of vesting, exercisability and payment of Awards to be granted pursuant to this Plan;

 

(i)                         correct any defect, supply any omission, or reconcile any inconsistency in this Plan, any Award, any Award Agreement, any Exercise Agreement or any Restricted Stock Purchase Agreement;

 

(j)                        determine whether an Award has been earned;

 

(k)                     extend the vesting period beyond a Participant’s Termination Date; and

 

(l)                         make all other determinations necessary or advisable in connection with the administration of this Plan.

 

12.2                        Committee Composition and Discretion.  The Board may delegate full administrative authority over the Plan and Awards to a Committee consisting of at least one member of the Board (or such greater number as may then be required by applicable law). Unless in contravention of any express terms of this Plan or Award, any determination made by the Committee with respect to any Award will be made in its sole discretion either (a) at the time of grant of the Award, or (b) subject to Section 4.9 hereof, at any later time.  Any such determination will be final and binding on the Company and on all persons having an interest in any Award under this Plan.  To the extent permitted by applicable law, the Committee may delegate to one or more officers of the Company the authority to grant an Award under this Plan, provided that each such officer is a member of the Board.

 

12.3                        Nonexclusivity of the Plan.  Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock options

 

10

 

and other equity awards otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

 

12.4                        Governing Law.  This Plan and all agreements hereunder shall be governed by and construed in accordance with the laws of the State of California, without giving effect to that body of laws pertaining to conflict of laws.

 

13.                               EFFECTIVENESS, AMENDMENT AND TERMINATION OF THE PLAN.

 

13.1                        Adoption and Stockholder Approval.  This Plan will become effective on the date that it is adopted by the Board (the “Effective Date”).  This Plan will be approved by the stockholders of the Company (excluding Shares issued pursuant to this Plan), consistent with applicable laws, within twelve (12) months before or after the Effective Date.  Upon the Effective Date, the Board may grant Awards pursuant to this Plan; provided, however, that:  (a) no Option or SAR may be exercised prior to initial stockholder approval of this Plan; (b) no Option or SAR granted pursuant to an increase in the number of Shares approved by the Board shall be exercised prior to the time such increase has been approved by the stockholders of the Company; (c) in the event that initial stockholder approval is not obtained within the time period provided herein, all Awards for which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply shall be canceled, any Shares issued pursuant to any such Award shall be canceled and any purchase of such Shares issued hereunder shall be rescinded; and (d) Awards (to which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply) granted pursuant to an increase in the number of Shares approved by the Board which increase is not approved by stockholders within the time then required under Section 25102(o) shall be canceled, any Shares issued pursuant to any such Awards shall be canceled, and any purchase of Shares subject to any such Award shall be rescinded.

 

13.2                        Term of Plan.  Unless earlier terminated as provided herein, this Plan will terminate ten (10) years from the Effective Date or, if earlier, ten (10) years from the date of stockholder approval.

 

13.3                        Amendment or Termination of Plan.  Subject to Section 4.9 hereof, the Board may at any time (a) terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan and (b) terminate any and all outstanding Options or SARs upon a dissolution or liquidation of the Company, followed by the payment of creditors and the distribution of any remaining funds to the Company’s stockholders; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval pursuant to Section 25102(o) or pursuant to the Code or the regulations promulgated under the Code as such provisions apply to ISO plans.

 

14.                               DEFINITIONS.  For all purposes of this Plan, the following terms will have the following meanings.

 

“Acquisition,” for purposes of Section 11, means:

 

(a)                                 any consolidation or merger in which the Company is a constituent entity or is a party in which the voting stock and other voting securities of the Company that are outstanding immediately prior to the consummation of such consolidation or merger represent, or are converted into, securities of the surviving entity of such consolidation or merger (or of any Parent of such surviving entity) that, immediately after the consummation of such consolidation or merger, together possess less than fifty percent (50%) of the total voting power of all voting securities of such surviving entity (or of any of

 

11

 

its Parents, if any) that are outstanding immediately after the consummation of such consolidation or merger;

 

(b)                                 a sale or other transfer by the holders thereof of outstanding voting stock and/or other voting securities of the Company possessing more than fifty percent (50%) of the total voting power of all outstanding voting securities of the Company, whether in one transaction or in a series of related transactions, pursuant to an agreement or agreements to which the Company is a party and that has been approved by the Board, and pursuant to which such outstanding voting securities are sold or transferred to a single person or entity, to one or more persons or entities who are Affiliates of each other, or to one or more persons or entities acting in concert; or

 

(c)                                  the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company and/or any Subsidiary or Subsidiaries of the Company, of all or substantially all the assets of the Company and its Subsidiaries taken as a whole, (or, if substantially all of the assets of the Company and its Subsidiaries taken as a whole are held by one or more Subsidiaries, the sale or disposition (whether by consolidation, merger, conversion or otherwise) of such Subsidiaries of the Company), except where such sale, lease, transfer or other disposition is made to the Company or one or more wholly owned Subsidiaries of the Company (an “Acquisition by Sale of Assets”).

 

“Affiliate” of a specified person means a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified (where, for purposes of this definition, the term “control” (including the terms controlling, controlled by and under common control with) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

 

“Award” means any award pursuant to the terms and conditions of this Plan, including any Option, Restricted Stock Unit, Stock Appreciation Right or Restricted Stock Award.

 

“Award Agreement” means, with respect to each Award, the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award as approved by the Committee.

 

“Board” means the Board of Directors of the Company.

 

“Cause” means Termination because of (a) any willful, material violation by the Participant of any law or regulation applicable to the business of the Company or a Parent or Subsidiary of the Company, the Participant’s conviction for, or guilty plea to, a felony or a crime involving moral turpitude, or any willful perpetration by the Participant of a common law fraud, (b) the Participant’s commission of an act of personal dishonesty which involves personal profit in connection with the Company or any other entity having a business relationship with the Company, (c) any material breach by the Participant of any provision of any agreement or understanding between the Company or any Parent or Subsidiary of the Company and the Participant regarding the terms of the Participant’s service as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company, including without limitation, the willful and continued failure or refusal of the Participant to perform the material duties required of such Participant as an employee, officer, director or consultant of the Company or a Parent or Subsidiary of the Company, other than as a result of having a Disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company or a Parent or Subsidiary of the Company and the Participant, (d) Participant’s disregard of the policies of the Company or any Parent or Subsidiary of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company or a Parent or Subsidiary of the Company, or (e) any other misconduct by the Participant which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or a Parent or Subsidiary of the Company.

 

12

 

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

 

“Committee” means the committee created and appointed by the Board to administer this Plan, or if no committee is created and appointed, the Board.

 

“Company” means Dermira, Inc., a Delaware corporation, or any successor corporation.

 

“Disability” means a disability, whether temporary or permanent, partial or total, as determined by the Committee.

 

“Exercise Price” means the price per Share at which a holder of an Option may purchase Shares issuable upon exercise of the Option.

 

“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

 

(a)                                 if such Common Stock is then publicly traded on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal;

 

(b)                                 if such Common Stock is publicly traded but is not listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported by The Wall Street Journal (or, if not so reported, as otherwise reported by any newspaper or other source as the Committee may determine); or

 

(c)                                  if none of the foregoing is applicable to the valuation in question, by the Committee in good faith.

 

“Option” means an award of an option to purchase Shares pursuant to Section 4 of this Plan.

 

“Other Combination” for purposes of Section 11 means any (a) consolidation or merger in which the Company is a constituent entity and is not the surviving entity of such consolidation or merger or (b) any conversion of the Company into another form of entity; provided that such consolidation, merger or conversion does not constitute an Acquisition.

 

“Parent” of a specified entity means, any entity that, either directly or indirectly, owns or controls such specified entity, where for this purpose, “control” means the ownership of stock, securities or other interests that possess at least a majority of the voting power of such specified entity (including indirect ownership or control of such stock, securities or other interests).

 

“Participant” means a person who receives an Award under this Plan.

 

“Plan” means this 2010 Equity Incentive Plan, as amended from time to time.

 

“Purchase Price” means the price at which a Participant may purchase Restricted Stock pursuant to this Plan.

 

“Restricted Stock” means Shares purchased pursuant to a Restricted Stock Award under this Plan.

 

“Restricted Stock Award” means an award of Shares pursuant to Section 5 hereof.

 

“Restricted Stock Unit” or “RSU” means an award made pursuant to Section 6 hereof.

 

“Rule 701” means Rule 701 et seq promulgated by the Commission under the Securities Act.

 

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“SEC” means the Securities and Exchange Commission.

 

“Section 25102(o)” means Section 25102(o) of the California Corporations Code.

 

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

 

“Shares” means shares of the Company’s Common Stock, $0.001, par value per share, reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and 11 hereof, and any successor security.

 

“Stock Appreciation Right” or “SAR” means an award granted pursuant to Section 7 hereof.

 

“Subsidiary” means any entity (other than the Company) in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain owns stock or other equity securities representing fifty percent (50%) or more of the total combined voting power of all classes of stock or other equity securities in one of the other entities in such chain.

 

“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company.  A Participant will not be deemed to have ceased to provide services in the case of sick leave, military leave, or any other leave of absence approved by the Committee; provided that such leave is for a period of not more than ninety (90) days (a) unless reinstatement (or, in the case of an employee with an ISO, reemployment) upon the expiration of such leave is guaranteed by contract or statute, or (b) unless provided otherwise pursuant to formal policy adopted from time to time by the Company’s Board and issued and promulgated in writing.  In the case of any Participant on sick leave, military leave or an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Option be exercised after the expiration of the term set forth in the Stock Option Agreement.  The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).

 

“Unvested Shares” means “Unvested Shares” as defined in the Award Agreement for an Award.

 

“Vested Shares” means “Vested Shares” as defined in the Award Agreement.

 

* * * * * * * * * * *

 

14

 

Option Grant No. [  ]

 

DERMIRA, INC.

2010 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Agreement”) is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between Dermira, Inc., a Delaware corporation (the “Company”), and the participant named below (the “Participant”).  Capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s 2010 Equity Incentive Plan (the “Plan”).

 

	
Participant’s Name
    	
 
    	
Option
   Shares
    	
 
    	
Exercise
   Price
   Per Share
    	
 
    	
Date of
   Grant
    	
 
    	
First
   Vesting
   Date
    	
 
    	
Expiration
   Date
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

	
Classification   of Participant
    	
 
    	
o Exempt   Employee
    	
 
    	
 
    	
 
    	
o Nonexempt   Employee
    	
 
    	
 
    	
 
    	
o Non-employee
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Type   of Stock Option:
    	
 
    	
o Incentive   Stock Option
    	
 
    	
 
    	
 
    	
o Nonqualified   Stock Option
    	
 
    	
 
    	
 
    	
 
    

 

1.                                      GRANT OF OPTION.  The Company hereby grants to Participant an option (this “Option”) to purchase the total number of shares of common stock, $0.001 par value per share, of the Company (“Common Stock”) set forth above as Total Option Shares (the “Shares”) at the Exercise Price Per Share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Agreement and the Plan.  If designated as an Incentive Stock Option above, the Option is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code, except that if on the Date of Grant the Participant is not subject to U.S. income tax, then this Option shall be a NQSO.  This Option is not transferable.

 

[ALTERNATIVE #1:  ONE YEAR CLIFF THEN MONTHLY VESTING SCHEDULE]

 

2.                                      EXERCISE PERIOD.  Only Vested Shares may be purchased pursuant to this Exercise Agreement.  Shares that are vested pursuant to the schedule set forth in this Section 2 are “Vested Shares.”  Shares that are not vested pursuant to such schedule are “Unvested Shares.”  On the Date of Grant                                  of the Shares will be Unvested Shares (the “Initial Unvested Shares”).  Provided Participant continues to provide services to the Company or any Subsidiary or Parent of the Company at all times from the Date of Grant until the First Vesting Date set forth above, then on the First Vesting Date [one-fourth (1/4th)] of the Initial Unvested Shares will become Vested Shares, and on the same day of each succeeding calendar month thereafter (or if there is no such day in any month, then the last day of such calendar month), an additional [one forty-eighth 1/48th] of the Initial Unvested Shares shall vest and become exercisable until (a) all of the Shares are vested, (b) the Termination Date or (c) vesting otherwise terminates pursuant to this Agreement or the Plan.  If application of the vesting schedule above causes a fractional share, such share shall be rounded down to the nearest whole share for each month except for the last month in such vesting period, at the end of which last month this Option shall become vested for the full remainder of the Shares.  The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 4 below in accordance with Section 4.6 of the Plan.

 

1

 

[ALTERNATIVE #2:  MONTHLY VESTING SCHEDULE(1)]

 

2.                                      EXERCISE PERIOD.  Only Vested Shares may be purchased pursuant to this Exercise Agreement.  Shares that are vested pursuant to the schedule set forth in this Section 2 are “Vested Shares.”  Shares that are not vested pursuant to such schedule are “Unvested Shares.”  On the Date of Grant                                  of the Shares will be Unvested Shares (the “Initial Unvested Shares”).  Provided Participant continues to provide services to the Company or any Subsidiary or Parent of the Company at all times from the Date of Grant until the First Vesting Date set forth above, then on the First Vesting Date [one forty-eighth 1/48th] of the Initial Unvested Shares will become Vested Shares, and on the same day of each succeeding calendar month thereafter (or if there is no such day in any month, then the last day of such calendar month), an additional [one forty-eighth 1/48th] of the Initial Unvested Shares shall vest and become exercisable until (a) all of the Shares are vested, (b) the Termination Date or (c) vesting otherwise terminates pursuant to this Agreement or the Plan.  If application of the vesting schedule above causes a fractional share, such share shall be rounded down to the nearest whole share for each month except for the last month in such vesting period, at the end of which last month this Option shall become vested for the full remainder of the Shares.  The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 4 below in accordance with Section 4.6 of the Plan.

 

[ALTERNATIVE #3:  ANNUAL VESTING SCHEDULE]

 

2.                                      EXERCISE PERIOD.  Only Vested Shares may be purchased pursuant to this Exercise Agreement.  Shares that are vested pursuant to the schedule set forth in this Section 2 are “Vested Shares.”  Shares that are not vested pursuant to such schedule are “Unvested Shares.”  On the Date of Grant                                  of the Shares will be Unvested Shares (the “Initial Unvested Shares”).  Provided Participant continues to provide services to the Company or any Subsidiary or Parent of the Company at all times from the Date of Grant until the First Vesting Date set forth above, then on the First Vesting Date [one-fourth 1/4th] of the Initial Unvested Shares will become Vested Shares, and on the same day of each succeeding calendar year thereafter, an additional [1/4th] of the Initial Unvested Shares shall vest and become exercisable until (a) all of the Shares are vested, (b) the Termination Date or (c) vesting otherwise terminates pursuant to this Agreement or the Plan.  If application of the vesting percentage causes a fractional share, such share shall be rounded down to the nearest whole share for each year except for the last year in such vesting period, at the end of which last year this Option shall become vested for the full remainder of the Shares.  The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 4 below in accordance with Section 4.6 of the Plan.

 

3.                                      MANNER OF EXERCISE.  To exercise this Option, Participant (or in the case of exercise after Participant’s death or incapacity, Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit A, or in such other form as may be approved by the Committee from time to time (the “Exercise Agreement”).  If someone other than Participant exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option and such person shall be subject to all of the restrictions contained herein as if such person were the Participant.  The Option may not be exercised unless such exercise is in compliance with all applicable securities laws, as they are in effect on the date of exercise.  The Option may not be exercised as to fewer than one hundred (100) Shares unless it is exercised as to all Shares as to which the Option is then exercisable.

 

(1)                                 Do not use this alternative for a non-exempt employee.  Non-exempt employees must not be able to exercise options for 6 months after grant or the value of the option must be included in base pay when calculating overtime.

 

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4.                                      TERMINATION.

 

4.1                                                   Termination for Any Reason Except Death, Disability or Cause.  If Participant is Terminated for any reason, except death, Disability or for Cause, the Option, to the extent (and only to the extent) that it would have been exercisable by Participant on the Termination Date, may be exercised by Participant no later than three (3) months after the Termination Date, but in any event no later than the Expiration Date. Any exercise beyond three (3) months after the Termination Date will be deemed the exercise of an NQSO.

 

4.2                                                   Termination Because of Death or Disability.  If Participant is Terminated because of Participant’s death or Disability (or Participant dies within three (3) months after Termination when Termination is for any reason other than Participant’s Disability or for Cause), the Option, to the extent that it is exercisable by Participant on the Termination Date, may be exercised by Participant (or Participant’s legal representative) no later than twelve (12) months after the Termination Date, but in any event no later than the Expiration Date.  Any exercise beyond (a) three (3) months after the Termination Date when the Termination is for any reason other than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code; or (b) twelve (12) months after the Termination Date when the termination is for Participant’s disability, within the meaning of Section 22(e)(3) of the Code, will be deemed to be the exercise of an NQSO.

 

4.3                                                   Termination for Cause.  If the Participant is terminated for Cause, Participant’s Options shall expire on the Termination Date, or at such later time and on such conditions as are determined by the Committee.

 

5.                                      COMPLIANCE WITH LAWS AND REGULATIONS.  Although the Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act, grants may be made pursuant to the Plan that do not qualify for exemption under Rule 701 and Section 25102(o) of the California Corporations Code.  Any requirement of this Agreement or the Exercise Agreement that is required in law only because of Section 25102(o) need not apply if the Committee so determines.

 

6.                                      ENTIRE AGREEMENT.  The Plan is incorporated herein by reference.  This Agreement, the Exercise Agreement and the Plan constitute the entire agreement of the parties and supersede all prior undertakings and agreements with respect to the subject matter hereof.

 

7.                                      ACCEPTANCE.  Participant hereby acknowledges receipt of a copy of the Plan, this Agreement and the Exercise Agreement.  Participant has read and understands the terms and provisions thereof, and accepts the Option subject to all the terms and conditions of therein.  The Exercise Price has been determined by the Committee based upon the best evidence available to the Committee and is intended to equal the Fair Market Value of the Shares as of the date of grant, or in some cases 110% of Fair Market Value, as required by the Code.  However, the tax treatment of this Option is not guaranteed.  Neither the Company, the Committee nor any of their designees shall be liable for any taxes, penalties or other monetary amounts owed by any Participant, employee, beneficiary or other person as a result of the grant, amendment, modification, exercise and/or payment of, or under, any Award, notwithstanding any challenge made to the determination of Fair Market Value by any taxing authority.  By accepting this Option, Participant acknowledges and agrees to the foregoing.  Participant acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares and that Participant should consult a tax adviser prior to such exercise or disposition.

 

8.                                      EXECUTION.  This Agreement and the Exercise Agreement may be entered into in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement.  This Agreement and the Exercise Agreement may be executed and delivered by facsimile and, upon such delivery, the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

 

3

 

IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement to be executed by its duly authorized representative and Participant has executed this Stock Option Agreement, effective as of the Date of Grant.

 

	
DERMIRA, INC.
    	
 
    	
PARTICIPANT
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Please   print name and title)
    	
 
    	
(Please   print name)
    
				

 

4

 

EXHIBIT A

 

FORM OF STOCK OPTION EXERCISE AGREEMENT

 

1

 

DERMIRA, INC.

2010 EQUITY INCENTIVE PLAN

STOCK OPTION EXERCISE AGREEMENT

 

This Stock Option Exercise Agreement (the “Exercise Agreement”) is made and entered into as of                                         ,            by and between Dermira, Inc. a Delaware corporation (the “Company”), and the purchaser named below (the “Purchaser”).  Capitalized terms not defined herein shall have the meanings ascribed to them in the Company’s 2010 Equity Incentive Plan (the “Plan”).

 

	
Name of Purchaser
    	
 
    	
Social Security
   Number
    	
 
    	
Total
   Number of
   Shares
    	
 
    	
Exercise
   Price Per
   Share
    	
 
    	
Option No.
   or
   Date of 
   Grant
    	
 
    	
ISO or
   NQSO
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    	
 
    
												

 

1.                            EXERCISE OF OPTION.

 

1.1                               Agreement to Exercise.  Pursuant to exercise of that certain option (the “Option”) granted to Purchaser under the Plan and subject to the terms and conditions of this Exercise Agreement, Purchaser hereby purchases from the Company, and the Company hereby sells to Purchaser, the Total Number of Shares set forth above (the “Shares”) of the Company’s Common Stock, $0.001 par value per share, at the Exercise Price Per Share set forth above (the “Exercise Price”).  As used in this Exercise Agreement, the term “Shares” refers to the Shares purchased under this Exercise Agreement and includes all securities received (a) in replacement of the Shares, (b) as a result of stock dividends or stock splits with respect to the Shares, and (c) all securities received in replacement of the Shares in a merger, recapitalization, reorganization or similar corporate transaction.

 

1.2                               Payment.  Purchaser hereby delivers payment of the Exercise Price in the manner permitted in the Plan, and as explicitly provided by the Committee, as follows (check and complete as appropriate):

 

o                        in cash (by check) in the amount of $                                  , receipt of which is acknowledged by the Company.

 

o                        by cancellation of indebtedness of the Company currently owed to Purchaser in the amount of $                              .

 

o                        by the waiver hereby of compensation due or accrued for services previously rendered to the Company in the amount of $                  .

 

o                        by a cashless exercise under the Company’s formal cashless exercise program adopted by the Committee in connection with the Plan.

 

o                        provided that a public market for the Company’s stock exists and subject to compliance with applicable law and solely in the discretion of the Committee: (a) through a “same day sale” commitment from Purchaser and broker-dealer whereby Purchaser irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased sufficient to pay for the total Exercise Price and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company, or (b) through a “margin” commitment from Purchaser and a broker-dealer whereby Purchaser irrevocably elects to exercise the Option and to

 

2

 

pledge the Shares so purchased to the Dealer in a margin account as security for a loan from the broker-dealer in the amount of the total Exercise Price, and whereby the broker-dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company.

 

o                        the following form of consideration approved by the Committee:                                                                                                                                                                                                                                                         .

 

2.                            DELIVERY.

 

2.1                               Documents and Payment to be Delivered.  Purchaser hereby delivers to the Company at its principal executive offices, Attn: President:  (a) this completed and signed Exercise Agreement, (b) two (2) copies of a blank Stock Power and Assignment Separate from Stock Certificate in the form of Exhibit 1 attached hereto (the “Stock Powers”), both executed by Purchaser and Purchaser’s spouse, if any, (c) if Purchaser is married, a Consent of Spouse in the form of Exhibit 2 attached hereto (the “Spouse Consent”) executed by Purchaser’s spouse, and (d) the Exercise Price and payment or other provision for any applicable tax obligations (if paid by check, a copy of such check shall be attached hereto as Exhibit 3).  Upon its receipt of the Exercise Price, payment or other provision for any applicable tax obligations and all the documents to be executed and delivered by Purchaser to the Company, the Company will issue a duly executed stock certificate evidencing the Shares in the name of Purchaser, or, if applicable, Purchaser’s estate, to be placed in escrow as provided in Section 6.2 until expiration or termination of the Company’s Refusal Right described in Section 5.

 

2.2                               Tax Withholding.  Prior to the issuance of the Shares upon exercise of the Option, Purchaser must pay or provide for any applicable federal, state and local withholding obligations of the Company.  If the Committee permits, Purchaser may provide for payment of withholding taxes upon exercise of the Option by requesting that the Company retain the minimum number of Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld; but in no event will the Company withhold Shares if such withholding would result in adverse accounting consequences to the Company.  In such case, the Company shall issue the net number of Shares to the Purchaser by deducting the Shares retained from the Shares issuable upon exercise.

 

3.                            REPRESENTATIONS AND WARRANTIES OF PURCHASER.  Purchaser represents and warrants to the Company as follows.

 

3.1                               Agrees to Terms of the Plan.  Purchaser has received a copy of the Plan and the Stock Option Agreement, has read and understands the terms of the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to be bound by their terms and conditions.  Purchaser acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares, and that Purchaser should consult a tax adviser prior to such exercise or disposition.

 

3.2                               Shares Not Registered or Qualified.  Purchaser understands and acknowledges that the Shares have not been registered with the SEC under the Securities Act, or with any securities regulatory agency administering any state securities laws, and that, notwithstanding any other provision of the Stock Option Agreement to the contrary, the exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the Securities Act and all applicable state securities laws.  Purchaser agrees to cooperate with the Company to ensure compliance with such laws.

 

3.3                               No Transfer Unless Registered or Exempt.  Purchaser understands that Purchaser may not transfer any Shares unless such Shares are registered under the Securities Act or qualified under applicable state securities laws or unless, in the opinion of counsel to the Company, exemptions from such registration and qualification requirements are available.  Purchaser understands that only the

 

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Company may file a registration statement with the SEC and that the Company is under no obligation to do so with respect to the Shares.  Purchaser has also been advised that exemptions from registration and qualification may not be available or may not permit Purchaser to transfer all or any of the Shares in the amounts or at the times proposed by Purchaser.

 

3.4                               SEC Rule 701.  The Shares are issued pursuant to SEC Rule 701 promulgated under the Securities Act and may become freely tradable by non-affiliates (under limited conditions regarding the method of sale) ninety (90) days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the SEC, subject to the lengthier market standoff agreement contained in Section 4 of this Exercise Agreement or any other agreement entered into by Purchaser.  Affiliates must comply with the provisions (other than the holding period requirements) of Rule 144 which permits certain limited sales of unregistered securities.  Rule 144 is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a minimum of six (6) months, and in certain cases one (1) year, after they have been purchased and paid for (within the meaning of Rule 144).  Purchaser understands that use of a promissory note as payment for the Shares may not be deemed to be “full payment of the purchase price” within the meaning of Rule 144 unless certain conditions are met and that, accordingly, the Rule 144 holding period of such Shares may not begin to run until such Shares are fully paid for within the meaning of Rule 144.  Purchaser understands that Rule 144 may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.

 

3.5                               Sophistication; Preexisting Relationship.  To the extent applicable, Purchaser (a) is a sophisticated investor having such knowledge and experience in financial matters that Purchaser is able to fend for him or her self in connection with an investment in the Company, is capable of evaluating the merits and risks of this investment and is financially capable of bearing a total loss of this investment or (b) has a preexisting personal or business relationship with the Company and/or certain of the Company’s officers and/or directors of a nature and duration that is sufficient to make Purchaser aware of the character, business acumen and general business and financial circumstances of the Company and/or such officers and directors.

 

3.6                               Access to Information.  To the extent applicable, Purchaser has had access to all information regarding the Company and its present and prospective business, assets, liabilities and financial condition that Purchaser reasonably considers important in making the decision to purchase the Shares, and Purchaser has had ample opportunity to ask questions of the Company’s representatives concerning such matters and this investment.

 

3.7                               Understanding of Risks.  To the extent applicable, Purchaser is fully aware of:  (a) the highly speculative nature of the investment in the Shares; (b) the financial hazards involved; (c) the lack of liquidity of the Shares and the restrictions on transferability of the Shares (e.g., that Purchaser may not be able to sell or dispose of the Shares or use them as collateral for loans); (d) the qualifications and backgrounds of the management of the Company; and (e) the tax consequences of investment in the Shares.

 

3.8                               Purchase for Own Account for Investment.  To the extent applicable, Purchaser is purchasing the Shares for Purchaser’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of the Shares within the meaning of the Securities Act.  Purchaser has no present intention of selling or otherwise disposing of all or any portion of the Shares and no one other than Purchaser has any beneficial ownership of any of the Shares.

 

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3.9                               No General Solicitation.  At no time was Purchaser presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form of general advertising or solicitation in connection with the offer, sale and purchase of the Shares.

 

3.10                        SEC Rule 144.  To the extent applicable, in addition, Purchaser has been advised that SEC Rule 144 promulgated under the Securities Act, which permits certain limited sales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a minimum of six (6) months, and in certain cases one (1) year, after they have been purchased and paid for (within the meaning of Rule 144).  Purchaser understands that use of a promissory note as payment for the Shares may not be deemed to be “full payment of the purchase price” within the meaning of Rule 144 unless certain conditions are met and that, accordingly, the Rule 144 holding period of such Shares may not begin to run until such Shares are fully paid for within the meaning of Rule 144].  Purchaser understands that Rule 144 may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.

 

4.                            MARKET STANDOFF AGREEMENT.  Purchaser agrees in connection with any registration of the Company’s securities under the Securities Act or other public offering that, upon the request of the Company or the underwriters managing any registered public offering of the Company’s securities, Purchaser will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such managing underwriters, as the case may be, for a period of time (not to exceed one hundred eighty (180) days) after the effective date of such registration requested by such managing underwriters and subject to all restrictions as the Company or the managing underwriters may specify for employee-stockholders generally.  For purposes of this Section 4, the term “Company” shall include any wholly-owned subsidiary of the Company into which the Company merges or consolidates.  In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the shares subject to this Section and to impose stop transfer instructions with respect to the Shares until the end of such period.  Purchaser further agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing and that such underwriters are express third party beneficiaries of this Section 4.

 

5.                            COMPANY’S REFUSAL RIGHT.  Before any Shares held by Purchaser or any transferee of such Shares (either sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including, without limitation, a transfer by gift or operation of law), the Company and/or its assignee(s) will have a right of first refusal to purchase the Shares to be sold or transferred (the “Offered Shares”) on the terms and conditions set forth in this Section (the “Refusal Right”).

 

5.1                               Notice of Proposed Transfer.  The Holder of the Offered Shares will deliver to the Company a written notice (the “Notice”) stating:  (a) the Holder’s bona fide intention to sell or otherwise transfer the Offered Shares; (b) the name and address of each proposed purchaser or other transferee (the “Proposed Transferee”); (c) the number of Offered Shares to be transferred to each Proposed Transferee; (d) the bona fide cash price or other consideration for which the Holder proposes to transfer the Offered Shares (the “Offered Price”); and (e) that the Holder acknowledges this Notice is an offer to sell the Offered Shares to the Company and/or its assignee(s) pursuant to the Company’s Refusal Right at the Offered Price as provided for in this Exercise Agreement.

 

5.2                               Exercise of Refusal Right.  At any time within thirty (30) days after the date the Notice is effective pursuant to Section 8.2, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all (or, with the consent of the Holder, less than all) the Offered Shares proposed to be transferred to any one or more of the Proposed Transferees named in the Notice, at the purchase price, determined as specified below.

 

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5.3                               Purchase Price.  The purchase price for the Offered Shares purchased under this Section will be the Offered Price, provided that if the Offered Price consists of no legal consideration (as, for example, in the case of a transfer by gift) the purchase price will be the fair market value of the Offered Shares as determined in good faith by the Company’s Board of Directors.  If the Offered Price includes consideration other than cash, then the value of the non-cash consideration, as determined in good faith by the Company’s Board of Directors, will conclusively be deemed to be the cash equivalent value of such non-cash consideration.

 

5.4                               Payment.  The purchase price for the Offered Shares will be paid, at the option of the Company and/or its assignee(s) (as applicable), by check or by cancellation of all or a portion of any outstanding purchase money indebtedness owed by the Holder to the Company (or to such assignee, in the case of a purchase of Offered Shares by such assignee) or by any combination thereof.  The purchase price will be paid without interest within sixty (60) days after the Company’s receipt of the Notice, or, at the option of the Company and/or its assignee(s), in the manner and at the time(s) set forth in the Notice.

 

5.5                               Holder’s Right to Transfer.  If all of the Offered 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, then the Holder may sell or otherwise transfer such Offered Shares to each Proposed Transferee at the Offered Price or at a higher price, provided that (a) such sale or other transfer is consummated within one hundred twenty (120) days after the date of the Notice, (b) any such sale or other transfer is effected in compliance with all applicable securities laws, and (c) each Proposed Transferee agrees in writing that the provisions of this Section will continue to apply to the Offered Shares in the hands of such Proposed Transferee.  If the Offered Shares described in the Notice are not transferred to each Proposed Transferee within such one hundred twenty (120) day period, then a new Notice must be given to the Company pursuant to which the Company will again be offered the right of first refusal before any Shares held by the Holder may be sold or otherwise transferred.

 

5.6                               Exempt Transfers.  Notwithstanding the foregoing, the following transfers of Shares will be exempt from the Refusal Right: (a) the transfer of any or all of the Shares during Purchaser’s lifetime by gift or on Purchaser’s death by will or intestacy to Purchaser’s “Immediate Family” (as defined below) or to a trust for the benefit of Purchaser or Purchaser’s Immediate Family, provided that each transferee agrees in a writing satisfactory to the Company that the provisions of this Section 5 will continue to apply to the transferred Shares in the hands of such transferee; (b) any transfer of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another entity or entities (except that, subject to Section 5.7, unless the agreement of merger or consolidation expressly otherwise provides, the Refusal Right will continue to apply thereafter to such Shares, in which case the surviving entity of such merger or consolidation shall succeed to the rights of the Company under this Section 5); or (c) any transfer of Shares pursuant to the winding up and dissolution of the Company.  As used herein, the term “Immediate Family” will mean Purchaser’s spouse, the lineal descendant or antecedent, father, mother, brother or sister, child, adopted child, grandchild or adopted grandchild of the Purchaser or the Purchaser’s spouse, or the spouse of any of the above, or a person registered with the state of his or her residence as a same-sex domestic partner or a person deemed to be a spousal equivalent for whom the following circumstances are true:  (a) irrespective of whether or not the Participant and the Spousal Equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (b) they intend to remain so indefinitely, (c) neither are married to anyone else, (d) both are at least 18 years of age and mentally competent to consent to contract, (e) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (f) they are jointly responsible for each other’s common welfare and financial obligations, and (g) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely.

 

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5.7                               Termination of Refusal Right.  The Refusal Right will terminate as to all Shares (a) on the effective date of the first sale of Common Stock of the Company to the public pursuant to a registration statement filed with and declared effective by the SEC under the Securities Act or, if expressly approved by the Board as terminating the Refusal Right, under the laws of any other country having substantially the same effect (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an employee incentive or benefit plan) or (b) on any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another entity or entities if the common stock of the surviving entity or any direct or indirect parent entity thereof is registered under the Securities Exchange Act of 1934, as amended.

 

6                               ADDITIONAL RESTRICTIONS UPON SHARE OWNERSHIP OR TRANSFER.

 

6.1                               Rights as a Stockholder.  Subject to the terms and conditions of this Exercise Agreement, Purchaser will have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that Shares are issued to Purchaser until such time as Purchaser disposes of the Shares or the Company and/or its assignee(s) exercise(s) the Refusal Right.  Upon an exercise of the Refusal Right, Purchaser will have no further rights as a holder of the Shares so purchased upon such exercise, other than the right to receive payment for the Shares so purchased in accordance with the provisions of this Exercise Agreement, and Purchaser will promptly surrender the stock certificate(s) evidencing the Shares so purchased to the Company for transfer or cancellation.

 

6.2                               Escrow.  As security for Purchaser’s faithful performance of this Exercise Agreement, Purchaser agrees, immediately upon receipt of the stock certificate(s) evidencing the Shares, to deliver such certificate(s), together with the Stock Powers executed by Purchaser and by Purchaser’s spouse, if any (with the date, name of transferee, stock certificate number and number of Shares left blank), to the Secretary of the Company or other designee of the Company (the “Escrow Holder”), who is hereby appointed to hold such certificate(s) and Stock Powers in escrow and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Exercise Agreement.  Purchaser and the Company agree that Escrow Holder will not be liable to any party to this Exercise Agreement (or to any other person or entity) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Exercise Agreement.  Escrow Holder may rely upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of counsel and obey any order of any court with respect to the transactions contemplated by this Exercise Agreement.  The Shares will be released from escrow upon termination of the Refusal Right.

 

6.3                               Encumbrances on Shares.  Purchaser may grant a lien or security interest in, or pledge, hypothecate or encumber Shares only if each party to whom such lien or security interest is granted, or to whom such pledge, hypothecation or other encumbrance is made, agrees in a writing satisfactory to the Company that:  (a) such lien, security interest, pledge, hypothecation or encumbrance will not apply to such Shares after they are acquired by the Company and/or its assignees under this Section; and (b) the provisions of this Section will continue to apply to such Shares in the hands of such party and any transferee of such party.  Purchaser may not grant a lien or security interest in, or pledge, hypothecate or encumber, any Unvested Shares.

 

6.4                           Restrictions on Transfers.  Purchaser hereby agrees that Purchaser shall make no disposition of the Shares (other than as permitted by this Exercise Agreement) unless and until:

 

(a)                                 Purchaser shall have notified the Company of the proposed disposition and provided a written summary of the terms and conditions of the proposed disposition;

 

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(b)                                 Purchaser shall have complied with all requirements of this Exercise Agreement applicable to the disposition of the Shares, including but not limited to the Refusal Right and the Market Standoff; and

 

(c)                                  Purchaser shall have provided the Company with written assurances, in form and substance satisfactory to counsel for the Company, that (i) the proposed disposition does not require registration of the Shares under the Securities Act or under any state securities laws, and (ii) all appropriate actions necessary for compliance with the registration and qualification requirements of the Securities Act and any state securities laws, or of any exemption from registration or qualification, available thereunder (including Rule 144) have been taken.

 

Each person (other than the Company) to whom the Shares are transferred by means of one of the permitted transfers specified in this Exercise Agreement must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Company that such person is bound by the provisions of this Exercise Agreement and that the transferred Shares are subject to the Company’s Refusal Right granted in Section 5 and the market stand-off provisions of Section 4, to the same extent such Shares would be so subject if retained by the Purchaser.

 

6.5                               Restrictive Legends and Stop-transfer Orders.  Purchaser understands and agrees that the Company will place the legends set forth below or similar legends on any stock certificate(s) evidencing the Shares, together with any other legends that may be required by applicable laws, the Company’s Certificate of Incorporation or Bylaws, any other agreement between Purchaser and the Company or any agreement between Purchaser and any third party:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, INCLUDING THE REFUSAL RIGHT HELD BY THE ISSUER AND/OR ITS ASSIGNEE(S), AND A MARKET STANDOFF AGREEMENT, AS SET FORTH IN A STOCK OPTION EXERCISE AGREEMENT 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 PUBLIC SALE AND TRANSFER RESTRICTIONS INCLUDING THE REFUSAL RIGHT AND THE MARKET STANDOFF ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

Purchaser agrees that, to ensure compliance with the restrictions imposed by this Exercise Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and if the Company transfers its own securities, it may make appropriate notations to the same effect in its own

 

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records.  The Company will not be required (a) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Agreement or (b) 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 have been so transferred.

 

7.                            TAX CONSEQUENCES.  PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER’S PURCHASE OR DISPOSITION OF THE SHARES.  PURCHASER REPRESENTS THAT:  (a) PURCHASER HAS CONSULTED WITH ANY TAX ADVISER WHO PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND (b) PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.  Set forth below is a brief summary as of the date the Plan was adopted by the Board of some of the U.S. Federal and California tax consequences of exercise of the Option and disposition of the Shares.  THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  PURCHASER SHOULD CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

 

7.1                               Exercise of Incentive Stock Option.  If the Option qualifies as an ISO, there will be no regular U.S. Federal income tax liability or California income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as a tax preference item for U.S. Federal alternative minimum tax purposes and may subject Purchaser to the alternative minimum tax in the year of exercise.

 

7.2                               Exercise of Nonqualified Stock Option.  If the Option does not qualify as an ISO, there may be a regular U.S. Federal income tax liability and a California income tax liability upon the exercise of the Option.  Purchaser will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price.  If Purchaser is a current or former employee of the Company, the Company may be required to withhold from Purchaser’s compensation or collect from Purchaser and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

 

7.3                               Disposition of Shares. The following tax consequences may apply upon disposition of the Shares.

 

7.3.1                     Incentive Stock Options.  If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an ISO and are disposed of more than two (2) years after the Date of Grant, any gain realized on disposition of the Shares will be treated as long term capital gain for U.S. Federal and California income tax purposes.  If Shares purchased under an ISO are disposed of within the applicable one (1) year or two (2) year period, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates in the year of the disposition) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price.

 

7.3.2                     Nonqualified Stock Options.  If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an NQSO, any gain realized on disposition of the Shares will be treated as long term capital gain.

 

7.3.3                     Withholding.  The Company may be required to withhold from the Purchaser’s compensation or collect from the Purchaser and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income.

 

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7.4                               Notice of Disqualifying Disposition of ISO Shares.  If the Option 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 (a) the date two (2) years after the Date of Grant, and (b) the date one (1) year after transfer of such Shares to Participant upon exercise of the Option, 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 from the early disposition by payment in cash or out of the current wages or other compensation payable to Participant.

 

8.                            GENERAL PROVSIONS.

 

8.1                               Successors and Assigns.  The Company may assign any of its rights under this Exercise Agreement, including its rights to purchase Shares under the Refusal Right.  Neither Purchaser, nor any of Purchaser’s successors and assigns, may assign, whether voluntarily or by operation of law, any of its rights and obligations under this Exercise Agreement, except with the prior written consent of the Company.  This Exercise Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Exercise Agreement will be binding upon Purchaser and Purchaser’s heirs, executors, administrators, legal representatives, successors and assigns.

 

8.2                               Notices.  Any and all notices required or permitted to be given to a party pursuant to the provisions of this Exercise Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Exercise Agreement on the earliest of the following:  (a) at the time of personal delivery, if delivery is in person; (b) by electronic scan upon its confirmed receipt; (c) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (d) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries.  All notices for delivery outside the United States will be sent by express courier.  All notices not delivered personally or be electronic scan will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified at the address set forth below the signature lines of this Exercise Agreement, or at such other address as such other party may designate by one of the indicated means of notice herein to the other parties hereto.  Notices to the Company will be marked “Attention:  President.”

 

8.3                               Further Assurances.  The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Exercise Agreement.

 

8.4                               Entire Agreement.  The Plan, the Stock Option Agreement and this Exercise Agreement, together with all Exhibits thereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of this Exercise Agreement, and supersede all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.

 

8.5                               Severability.  If any provision of this Exercise Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto.  If such clause or provision cannot be so enforced, such provision shall be stricken from this Exercise Agreement and the remainder of this Exercise Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Exercise Agreement.  Notwithstanding the forgoing, if the value of this Exercise Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or

 

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arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.

 

THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT YET QUALIFIED WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT.  THE RIGHTS OF THE PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.

 

IN WITNESS WHEREOF, the Company has caused this Stock Option Exercise Agreement to be executed by its duly authorized representative, and Purchaser has executed this Stock Option Exercise Agreement, as of the date first set forth above.

 

 

	
DERMIRA, INC.
    	
 
    	
PURCHASER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Please   print name and title)
    	
 
    	
(Please   print name)
    
	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
						

 

List of Exhibits

 

	
Exhibit 1:
    	
 
    	
Stock   Power and Assignment Separate from Stock Certificate
    
	
Exhibit 2:
    	
 
    	
Spouse   Consent
    
	
Exhibit 3:
    	
 
    	
Copy   of Purchaser’s Check
    

 

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EXHIBIT 1

 

STOCK POWER AND ASSIGNMENT
  SEPARATE FROM STOCK CERTIFICATE

 

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STOCK POWER AND ASSIGNMENT
  SEPARATE FROM STOCK CERTIFICATE

 

FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise Agreement No.                  dated as of                                 ,               , (the “Agreement”), the undersigned hereby sells, assigns and transfers unto                                                                                                           ,                                                                                                                                                                                                                shares of the Common Stock $0.001 par value per share, of Dermira, Inc., a Delaware corporation (the “Company”), standing in the undersigned’s name on the books of the Company represented by Certificate No(s).               delivered herewith, and does hereby irrevocably constitute and appoint the Secretary of the Company as the undersigned’s attorney-in-fact, with full power of substitution, to transfer said stock on the books of the Company.  THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.

 

	
Dated:                                 ,
    	
 
    
	
 
    	
 
    
	
 
    	
PURCHASER
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Signature)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Please   Print Name)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Spouse’s   Signature, if any)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Please   Print Spouse’s Name)
    

 

Instructions to Purchaser:  Please do not fill in any blanks other than the signature line.  The purpose of this Stock Power and Assignment is to enable the Company to acquire the shares to exercise its “Refusal Right” set forth in the Exercise Agreement without requiring additional signatures on the part of the Purchaser or Purchaser’s Spouse, if any.

 

13

 

EXHIBIT 2

 

SPOUSE CONSENT

 

1

 

SPOUSE CONSENT

 

The undersigned spouse of                                                              (the “Purchaser”) has read, understands, and hereby approves the Stock Option Exercise Agreement (the “Agreement”) between Purchaser and Dermira, Inc. (the “Company”).  In consideration of the Company granting my spouse the right to purchase the Shares as set forth in the Agreement, the undersigned hereby agrees to be irrevocably bound by the Agreement and further agrees that any community property interest I may have in the Shares shall similarly be bound by the Agreement.  The undersigned hereby appoints Purchaser as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Print   Name of Purchaser’s Spouse
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature   of Purchaser’s Spouse
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
o
    	
Check   this box, if Purchaser is not married.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature   of Purchaser
    

 

1

 

EXHIBIT 3

 

COPY OF PURCHASER’S CHECK

 

1Exhibit 10.5

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the date executed below by and between Thomas Wiggans (“Employee”), and Skintelligence, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, on August 18, 2010, Employee and the Company (collectively, “the parties” and individually, a “party”) entered into an Employment Agreement (the “Prior Agreement”) (i) to establish the terms and conditions of Employee’s employment with the Company, (ii) to safeguard the Company’s proprietary and confidential information and (iii) to protect the Company’s investment in its employees, customer relationships and other legitimate business interests.

 

WHEREAS, pursuant to Section 4(c)(v) of the Prior Agreement, upon completion by the Company of its first acquisition of a business in the field of developing or marketing products for dermatological applications, Employee and the Company would discuss in good faith certain amendments to the Prior Agreement.

 

WHEREAS, the Company will complete the acquisition of Valocor Therapeutics, Inc. concurrently with the execution of this Agreement.

 

WHEREAS, in accordance with Section 4(c)(v) of the Prior Agreement, Employee and the Company desire to amend and restate the Prior Agreement in order to amend certain terms therein.

 

NOW, THEREFORE, in consideration for the promises, mutual covenants and terms of this Agreement, Employee and the Company agree as follows:

 

1.                                      Employment. Subject to Employee’s compliance with U.S. immigration and right to work rules, the Company agrees to employ Employee, and Employee agrees to be employed as President and Chief Executive Officer of the Company, commencing August 18, 2010 (“Start Date”), on the terms and subject to the conditions set forth in this Agreement. As of the Start Date, Employee shall also hold the titles of Treasurer and Secretary of the Company, and shall continue to serve in these positions at the pleasure of the Company’s Board of Directors (“Board”).

 

2.                                      Duties and Responsibilities. Employee shall perform such duties as are reasonably assigned to him by the Board, consistent with his position as President and Chief Executive Officer of the Company. Employee shall conduct his duties and responsibilities in a professional manner and shall comply with the policies of the Company. Employee shall conduct himself at all times faithfully, loyally, and to the best of his abilities, and according to the best interests of the Company. Employee shall devote substantially all of his business time, attention and effort to the affairs of the Company and shall not engage in any other business activity focused on the development or marketing of products for dermatological applications without the prior written consent of the Board; provided, however, that the foregoing is not intended to restrict Employee’s ability to engage in charitable, educational, civic or community activities, or participation as a non-employee member of the boards of directors of other companies, in each case as are not materially engaged in the development or marketing of products for dermatological applications, to the extent that such activities do not materially

 

1

 

interfere with his duties hereunder. The Company further agrees that the activities set forth in Exhibit A shall not be deemed to be prohibited by this Section 2.

 

3.                                      Employment at Will. Employee’s employment with the Company is at will, meaning that either the Company or Employee may terminate the employment at any time, with or without Cause, by providing written notice to the other pursuant to Section 9 of this Agreement, subject to the payment by the Company to Employee of any compensation required pursuant to Section 8 of this Agreement.

 

4.                                      Compensation. As compensation for the services rendered by Employee to the Company, the Company shall provide compensation to Employee as follows:

 

(a)                                 Salary. Commencing on the date of this Agreement, the Company shall pay Employee a base salary of $350,000 per annum (“Salary”), The Company may adjust Employee’s Salary thereafter on an annual basis and in the sole discretion of the Board. Employee’s Salary will be payable on the Company’s regular payroll schedule, not less frequently than monthly. The Company shall deduct from the Salary paid to Employee required federal, state and local withholding taxes, as well as any other deductions required by applicable law or authorized by Employee in writing.

 

(b)                                 [Reserved].

 

(c)                                  Benefits.

 

(i)                                     Employee shall be entitled to participate in any of the Company’s employee benefit plans or programs that become available to similarly situated employees of the Company; provided, that Employee meets all eligibility requirements under those plans or programs. Unless otherwise provided herein, Employee’s participation in the employee benefit plans or programs shall be subject to the terms and conditions of said plans or programs including, without limitation, the Company’s right to amend, revise, terminate or replace the plans or programs at any time and without notice to participants. Any reduction, alteration or enhancement of the benefit plans and programs shall not be deemed to be a breach of this Agreement by the Company. The parties acknowledge that any programs for the benefit of eligible employees and the nature and design of such employee benefit plans, executive compensation programs and/or incentive arrangements shall be at the sole discretion of the Board. The parties expressly agree that the Company’s decision whether or not to adopt any benefit plans, programs or arrangements, or which plans, programs or arrangements, shall not constitute a breach of this Agreement.

 

(ii)                                  [Reserved].

 

(iii)                               [Reserved].

 

(iv)                              As of the Start Date, and until the Company adopts a vacation or paid time off policy, Employee shall accrue four weeks of paid vacation per calendar year, prorated for any partial year of employment, and any unused accrued vacation will be carried over from year to year. When the Company adopts a vacation or paid time off policy, Employee

 

2

 

will be entitled to paid vacation on the same terms and to the same extent as similarly situated employees of the Company.

 

(v)                                 [Reserved].

 

(d)                                 Bonus. The Employee shall be eligible for an annual performance bonus equal to 30% of Employee’s then-annual Salary, subject to the Employee’s achievement of specified performance targets determined by the Board after consultation with the Employee (the “Bonus”). Any Bonus for the fiscal year in which employment begins will be prorated, based on the number of days the Employee is employed by the Company. Any bonus for a fiscal year will be paid within 21⁄2 months after the close of that fiscal year, but only if the Employee is still employed by the Company at the time of payment. The determinations of the Board with respect to any bonus will be final and binding.

 

5.                                      Reimbursement of Expenses. The Company shall reimburse Employee, in accordance with the Company’s policies and procedures, for all proper and reasonable expenses approved in advance by company Management, properly substantiated, and incurred by Employee in the performance of his duties. Such expenses will be reimbursed to Employee within thirty (30) days of Employee’s submission of proper substantiation of eligible expenses. Employee agrees to submit such substantiation by the last day of the month following the month in which the expense was incurred. The parties agree that, consistent with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended, the following rules shall also apply to reimbursement of expenses: (a) in no event shall reimbursements for expenses be paid to Employee or on his behalf later than the last day of the calendar year following the calendar year in which the expense was incurred; (b) the amount of expenses eligible for reimbursement during a calendar year will not affect the expenses eligible for reimbursement in any other calendar year; and (c) Employee’s right to reimbursement for such expenses is not subject to liquidation or exchange for another benefit.

 

6.                                      Confidentiality, Non-Solicitation, Intellectual Property Protections. As a condition of this Agreement, Employee is required to comply with the “Employee Intellectual Property Protection Agreement” (the “IP Agreement”) that Employee executed concurrently with the Prior Agreement. Employee agrees that the Company may disclose this Agreement, and/or the IP Agreement, to any person or entity who, at any time during or after the Employment Period, employs or who the Company reasonably believes is considering employing Employee.

 

7.                                      Termination. Employee’s employment with the Company may be terminated as set forth below. In the event of termination, all obligations of the Company hereunder, and all rights of Employee to compensation and benefits under this Agreement, shall cease, except as provided in paragraph 8 hereof.

 

(a)                                 Written Notice. Employee’s employment shall terminate on the effective date of written notice provided by either party to the other pursuant to Section 9 of this Agreement.

 

3

 

(b)                                 Death. Employee’s employment under this Agreement shall automatically terminate upon the death of Employee.

 

(c)                                  Disability. To the extent allowable by law, the Company may, at its option, terminate Employee’s employment under this Agreement upon written notice to Employee if Employee, because of physical or mental incapacity or disability, is unable to perform the essential functions of his position (if appropriate, with reasonable accommodation) for a continuous period of ninety (90) days, or for an aggregate period of 120 days in any consecutive 12-month period. In the event of any dispute regarding the existence of Employee’s incapacity hereunder, the matter shall be resolved by the determination of a physician to be mutually selected and agreed upon by the Company and Employee. In the event Employee fails, within ten (10) days of being requested to do so, to accept or reject the physician suggested by the Company, then the physician suggested by the Company shall be deemed agreed upon by the parties. Employee agrees that he will submit to appropriate medical examinations for purposes of such determination.

 

(d)                                 Dissolution of the Company. Employee’s employment shall automatically terminate on the date specified by the Board in conjunction with the Board’s decision that the Company shall be dissolved.

 

8.                                      Compensation and Vesting Acceleration Upon Termination.

 

(a)                                 Upon termination of Employee’s employment for any reason, Employee shall be entitled to receive (i) payment of all Salary due through the date of termination; (ii) applicable employee benefits to which Employee is entitled through the date of termination, in accordance with the terms of the plans or programs of the Company then in effect; (iii) payment for accrued, unused vacation, if any, through the date of termination; (iv) any unreimbursed business expenses for which Employee submitted proper substantiation, and (v) any acceleration of vesting of stock, and options to purchase stock, as may be set forth in any agreement under which Employee may purchase stock, or be granted an option to purchase stock, and Employee shall not be entitled to any further compensation or benefits or payments of any kind.

 

(b)                                 In addition, if the Company terminates Employee’s employment at any time without Cause (as defined below), then it shall provide Employee severance in the amount of six (6) months’ Salary at the rate in effect at the time of Employee’s termination, to be paid out in a lump sum or on a monthly basis for six (6) months at the Employee’s option (the “Severance Payment”). Similarly, if Employee resigns his employment for Good Reason, then Employee shall receive the Severance Payment on the terms set forth in this Section 8(b). Employee accepts the Severance Payment in full satisfaction of all rights and entitlements to notice of termination or compensation in lieu under statute or contract law. However, the Company shall not be required to pay any part of the Severance Payment unless Employee (i) has returned all Company property in Employee’s possession, and (ii) has executed a general release of all claims that Employee may have against the Company or persons affiliated with the Company. The release must be in the form reasonably prescribed by the Company, without alterations. Employee must execute and return the release on or before the date specified by the Company in the prescribed form.

 

4

 

(c)                                  In addition, (i) all shares of the Company’s common stock subject to outstanding equity awards granted after the date of this Agreement, including, without limitation, stock options, restricted stock units, stock appreciation rights and restricted stock, granted to or held by Employee shall immediately become fully vested and exercisable, and any such outstanding equity awards that are subject to a right of repurchase, right of forfeiture, or similar right, shall be released from such right and shall be fully vested, in each case, immediately prior to the occurrence of a Termination Upon Change in Control (as defined below) and (ii) with respect to any outstanding equity grant that is not at least 25% vested, that number of shares of the Company’s common stock subject to outstanding equity awards granted after the date of this Agreement, including, without limitation, stock options, restricted stock units, stock appreciation rights and restricted stock, granted to or held by Employee shall immediately become vested and exercisable such that, after such acceleration the total number of shares of the Company’s common stock subject to such outstanding equity grant(s) shall be 25% vested and exercisable, and any such outstanding equity awards that are subject to a right of repurchase, right of forfeiture, or similar right, shall be released from such right and shall be vested, in each case, upon Employee’s Disability (as defined below) or death. In the event of a Change of Control whereby the successor or acquiring entity (if any) or any Parent (as defined in the 2010 Plan) (if any) of such successor or acquiring entity does not assume, convert, replace or substitute Employee’s outstanding equity awards as provided in Section 11.1 of the 2010 Plan, then, notwithstanding Section 11.2 of the 2010 Plan, all of Employee’s outstanding equity awards shall immediately become fully vested and exercisable, and any such outstanding equity awards that are subject to a right of repurchase, right of forfeiture, or similar right, shall be released from such right and shall be fully vested.

 

(d)                                 For purposes this Agreement, the “2010 Plan” shall mean the Company’s 2010 Equity Incentive Plan, as amended from time to time.

 

(e)                                  For purposes of this Agreement, “Cause” shall mean the reasonable determination by a majority of the members of the Board of Directors (other than Employee) that one or more of the following conditions exist:

 

(i)                                     Employee has been convicted of or pled guilty or no contest to any felony;

 

(ii)                                  Employee has committed one or more acts of fraud, theft, embezzlement or misappropriation against the Company;

 

(iii)                               Employee falsified Company records; willfully destroyed Company property; or, while an employee of the Company, engaged in conduct that constitutes harassment or discrimination prohibited by law;

 

(iv)                              Employee refused to perform his duties as reasonably directed by the Board, if such refusal is not corrected within ten business days after written notice is given to Employee by the Company; or

 

(v)                                 Employee has materially breached Employee’s obligations under this Agreement or the IP Agreement, which breach was not remedied, if remediable, within

 

5

 

thirty (30) days after delivery to Employee by the Company of a written notice specifically identifying the breach that the Company believes has occurred.

 

(f)                                   For purposes of this Agreement, “Change in Control” shall mean (i) a sale of substantially all of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation in which stockholders immediately before the merger or consolidation have, immediately after the merger or consolidation, a majority of the then-outstanding voting power); (iii) a reverse merger in which the Company is the surviving corporation but the shares of the Company’s 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 (other than a reverse merger in which shareholders immediately before the merger have, immediately after the merger, a majority of the then-outstanding voting power); or (iv) any transaction or series of related transactions in which in excess of 50% of the Company’s voting power is transferred.

 

(g)                                  For purposes of this Agreement, “Disability” shall mean a physical or mental incapacity or disability as a result of which Employee becomes unable to perform the essential functions of Employee’s job at the Company (if appropriate, with reasonable accommodation) for a continuous period of ninety days or for an aggregate period of 120 days in any consecutive 12-month period.

 

(h)                                 For purposes of this Agreement, “Good Reason” shall mean:

 

(i)                                     a material reduction in Employee’s total target annual compensation as an employee of the Company or a reduction in Employee’s base salary as an employee of the Company, except (in either case) to the extent that the Company implements an equal percentage reduction applicable to all executive officers and management personnel, or (in either case) reductions which are made with the consent of Employee;

 

(ii)                                  a material, substantial reduction in Employee’s duties, responsibilities or authority at the Company (which shall include such duties, responsibilities and authority as are normally held by a chief executive officer and president reporting directly to the board of directors) without Employee’s prior written consent;

 

(iii)                               removing Employee from the position of President or Chief Executive Officer without Employee’s prior written consent; or

 

(iv)                              a change in the geographic location at which Employee must perform services which results in an increase in Employee’s one-way commute by more than 50 miles.

 

(i)                                     For purposes of this Agreement, “Termination Upon Change of Control” shall mean:

 

(i)                                     any termination of the employment of Employee by the Company without Cause within twelve (12) months following a Change of Control; or

 

6

 

(ii)                                  any resignation by Employee of employment with the Company for Good Reason where (A) such Good Reason occurs within twelve (12) months following the Change of Control and (B) such resignation occurs within ninety (90) days following such Good Reason.

 

9.                                      Notices. Any notice, demand or communication required or permitted to be given by this Agreement or applicable law shall be made in writing and sent by either first class mail, overnight courier, hand delivery or facsimile; unless waived by the recipient, if such notice is made by facsimile, such facsimile shall be followed within 24 hours by notice in writing sent by first class mail, overnight courier or hand delivery. Charges for any notice shall be prepaid. Notices shall be addressed as follows, or to such other address as such person to whom it is to be addressed may specify by notice to the other party: in the case of Employee, to his place of residence as currently shown on the records of the Company, or in the case of the Company, to 2055 Woodside Road, Suite 290, Redwood City, CA 94061, facsimile: (650) 365-3410, Attention: Thomas Wiggans. Any notice shall be deemed to be delivered, given and received for all purposes as of the date such notice was actually delivered to the recipient or, if sent by first-class mail, five days after the date on which the same was deposited in a receptacle regularly maintained by the United States Postal Service for the deposit of mail, whichever occurs first.

 

10.                               Successors and Assigns. This Agreement is personal to Employee and shall not be assignable by Employee. The continuing obligations of Employee under this Agreement shall continue after the termination of his employment regardless of the reason for the cessation of his employment with the Company and shall be binding on Employee’s heirs, executors, and legal representatives. Such obligations shall inure to the benefit of any successors or assigns of the Company. Employee specifically acknowledges that in the event of a sale of all or substantially all of the assets of the Company, or any other event or transaction resulting in a change of ownership or control of all or a portion of the Company’s business, the rights and obligations of the parties hereunder shall inure to the benefit of any transferee, purchaser or future owner. This Agreement may be assigned only by the Company.

 

11.                               Amendment; Waiver. No change or modification of this Agreement shall be valid or binding unless in writing and signed by both parties. No waiver of any provision of this Agreement shall be valid unless in writing and signed by the party against whom the waiver is sought to be enforced. A valid waiver of any provision of this Agreement shall be limited to the instance specified in writing and, unless otherwise expressly stated, shall not be effective as a continuing waiver or repeal of such provision.

 

12.                               Governing Law. The validity, performance, construction and effect of this Agreement shall be governed by the substantive laws of the State of California, without regard to the provisions for choice of law thereunder.

 

13.                               Severability. If any provision of this Agreement is deemed invalid or unenforceable, the validity of the other provisions of this Agreement shall not be impaired. If any provision of this Agreement shall be deemed invalid as to its scope, then, notwithstanding such invalidity, such provision shall be valid to the fullest extent permitted by law, and the parties agree that, if any court or arbitrator makes such a determination, such court or arbitrator shall have the power to modify the duration, scope and/or area of such provision and/or to delete

 

7

 

specific words and phrases by “blue penciling” and, in its reduced or blue penciled form, to enforce such provision to the fullest extent permitted by law.

 

14.                               Entire Agreement. With respect to the terms addressed in this Agreement, this Agreement (including Exhibits) contains the entire agreement and understanding by and between the Company and Employee. Pursuant to Section 11 of the Prior Agreement, Employee and the Company hereby amend and restate the Prior Agreement to read in its entirety as set forth in this Agreement, such that the Prior Agreement is hereby terminated and entirely replaced and superseded by this Agreement. This Agreement supersedes all prior undertakings and agreements, written or oral, as may have existed prior to the date of execution of the Agreement with regard to the terms addressed in this Agreement, including the Prior Agreement. By the execution of this Agreement, Employee acknowledges that any such superseded understandings and agreements are terminated, and Employee disclaims any and all rights or interest that may have existed with respect thereto. Further, any representations, promises, agreements or understandings, written or oral, with regard to the terms addressed in this Agreement that are not contained in this Agreement shall be of no force or effect.

 

15.                               Employee Claims. The existence of any claim or cause of action by Employee against the Company shall not constitute a defense to the enforcement by the Company of Employee’s covenants, obligations, or undertakings in this Agreement.

 

16.                               Construction and Interpretation. Employee and the Company agree that this Agreement shall be construed as drafted by both of them, as parties of equivalent bargaining power, and not for or against either of them as drafter.

 

17.                               No Conflicting Obligations. The Company is aware of the Noncompetition Agreement in favor of LEO Pharma A/S and Peplin, Inc. effective November 2009 (the “Peplin Agreement”). Employee agrees that he will not, in the performance of his duties with the Company, breach his obligations under the Peplin Agreement. For the avoidance of doubt, “breach” as used in the prior sentence shall mean that a court of competent jurisdiction shall have determined in a final judgment that Employee has breached his non-competition obligations under the Peplin Agreement as a result of the performance of his duties with the Company. Apart from the Peplin Agreement, Employee hereby expressly and specifically warrants and represents that his execution of this amended and restated Agreement and performance of employment-related obligations and duties for the Company will not cause any breach, default, or violation of any other employment, non-disclosure, confidentiality, non-competition, or other agreement to which he may be a party or otherwise bound. Employee will not use in the performance of employment-related obligations and duties for the Company or otherwise disclose to the Company any trade secrets or confidential information of any person or entity (including any former employer) if and to the extent that such use or disclosure may cause a breach or violation of any obligation or duty owed to such employer, person, or entity under any agreement or applicable law. Employee also expressly and specifically warrants and represents that he is not a party to any agreement which contains restrictions on his ability to compete with any prior employer or any competitor of the Company or to identify, contact, or solicit clients in the pharma industry, except for the Peplin Agreement. Employee further represents, warrants, and agrees that he will not enter into any agreement or other obligation while this Agreement is in effect or during any period during which he has continuing obligations under this Agreement

 

8

 

that would reasonably be expected to conflict with the operation of this Agreement or his obligations hereunder, except such agreements and obligations expressly disclosed to the Company in writing and permitted in writing by the Company.

 

18.                               Compliance with Section 409A. Each payment or reimbursement and the provision of each benefit under this Agreement shall be considered to be a separate payment and not one of a series of payments for purposes of Section 409A. To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A so that the income inclusion provisions of Section 409A(a)(1) do not apply to Employee. This Agreement shall be administered in a manner consistent with this intent. Reference to Section 409A is to Section 409A of the Internal Revenue Code of 1986, as amended, and will also include any regulations, or any other formal guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service. The Company shall not reimburse Employee for the amount of any tax liability incurred by Employee under Section 409A. Employee acknowledges that he has had a reasonable opportunity to consult with independent legal, tax or other counsel in connection with Section 409A. To the extent that any amounts payable under this Agreement constitute a “deferral of compensation” subject to Section 409A and if, at the date of his Separation from Service, Employee is a “specified employee,” within the meaning of Section 409A, of the Company as determined by the Company from time to time, then each such payment that would otherwise be payable to Employee within the six (6) month period following Employee’s Separation from Service shall be deferred until the earlier of (i) the first day of the seventh month following Employee’s Separation from Service with the Company, or (ii) Employee’s death. Any payments or benefits delayed as a result of the preceding sentence shall be accumulated and paid in a lump sum, without interest, as soon as practicable after the first day of the seventh month following Employee’s Separation from Service or Employee’s earlier death.

 

19.                               Tax Reporting and Withholding. The Company (and any agent of the Company) shall be authorized to report income and to withhold from any payment due the amount of withholding taxes due and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. Neither the Company nor any delegatee shall be held responsible for any taxes, penalties, interest, or other monetary amounts owed by Employee or any other person as a result of amounts subject to this Agreement.

 

20.                               [Reserved].

 

21.                               Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Blank]

 

9

 

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the last date stated below.

 

 

	
 
    	
SKINTELLIGENCE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:
    	
August 4, 2011
    	
 
    	
By:
    	
/s/ Thomas Wiggans
    
	
 
    	
Name:
    	
Thomas Wiggans
    
	
 
    	
Title:
    	
President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:
    	
August 4, 2011
    	
 
    	
/s/ Thomas Wiggans
    
	
 
    	
 
    	
THOMAS WIGGANS
    

 

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

 

 

EXHIBIT A

OTHER CURRENT PROFESSIONAL ACTIVITIES

 

	
Onyx   Pharmaceuticals
    	
 
    	
 
    
	
Emeryville,   CA
    	
 
    	
Member   of Board of Directors
    
	
 
    	
 
    	
 
    
	
Sangamo   Pharmaceuticals
    	
 
    	
Member   of Board of Directors
    
	
Richmond,   CA
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Somaxon   Pharmaceuticals
    	
 
    	
Member   of Board of Directors
    
	
San   Diego, CA
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Victory   Pharmaceuticals
    	
 
    	
Member   of Board of Directors
    
	
San   Diego, CA
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Institute   for Advancing Medical Innovation
    	
 
    	
Member   of Advisory Board
    
	
(Research   Partnership between the Kauffman
    	
 
    	
 
    
	
Foundation   and The University of Kansas Medical Center)
    	
 
    	
 
    
	
Kansas   City, Kansas
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Biotechnology   Institute
    	
 
    	
Chairman   and Member of Board
    
	
(Not   for profit Institute dedicated
    	
 
    	
 
    
	
to   advancing K-12 life science education)
    	
 
    	
 
    
	
Washington,   DC
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
University   of Kansas Endowment
    	
 
    	
Member   of Board of Trustees
    
	
Lawrence,   Kansas
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Excaliard   Pharmaceuticals
    	
 
    	
Chairman   of Board of Directors
    
	
San   Diego, CA
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Lithera
    	
 
    	
Member   of Board of Directors
    
	
San   Diego, CA

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