Document:

Exhibit 10.3  

AFFXMAX, INC.

NOTICE OF GRANT OF STOCK OPTION  

        Notice is hereby given of the following option grant (the "Option") to purchase shares of the Common Stock of Affymax, Inc. (the "Corporation"): 

	Optionee:                                        
                                          
                  
	
Grant Date:                                        
                                          
                  
	
Vesting Commencement Date:                                        
                                    
	
Exercise Price:                                        
                                          
                  
	
Number of Option Shares:                                        
                                          
                  
	
Expiration Date:                                        
                                          
                  
	
Type of Option:                                  Incentive Stock Option
	
                                        
                  Non-Statutory Stock Option
	
Date Exercisable:    Immediately Exercisable
	
Vesting Schedule:    The Option Shares shall initially be unvested and subject to repurchase by the Corporation at the Exercise Price paid per share.
Optionee shall acquire a vested interest in, and the Corporation's repurchase right shall accordingly lapse with respect to, (i) twenty-five percent (25%) of the Option Shares upon Optionee's completion of one (1) year of Service measured
from the Vesting Commencement Date and (ii) the balance of the Option Shares in a series of thirty-six (36) successive equal monthly installments upon Optionee's completion of each additional month of Service over the thirty-six (36)-month
period measured from the first anniversary of the Vesting Commencement Date. In no event shall any additional Option Shares vest after Optionee's cessation of Service.

        Optionee
understands and agrees that the Option is granted subject to and in accordance with the terms of the Affymax, Inc. 2001 Stock Option/Stock Issuance Plan (the "Plan").
Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A. 

        Optionee
understands that any Option Shares purchased under the Option will be subject to the terms set forth in the Stock Purchase Agreement attached hereto as Exhibit B.
Optionee hereby acknowledges receipt of a copy of the Plan in the form attached hereto as Exhibit C. 

 

        REPURCHASE RIGHTS.    OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE
RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE AGREEMENT.

        At Will Employment.    Nothing in this Notice or in the attached Stock Option Agreement or Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining
Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason, with or without cause. 

        Definitions.    All capitalized terms in this Notice shall have the meaning assigned to them in this Notice or in the attached
Stock Option Agreement. 

DATED:
                                         
       ,                         
 

	 	 	AFFYMAX, INC.
	
 	
 	

By:
                                         
                                    
	

 	
 	

Title: VP, Finance and Administration                   
	

 	
 	

                                         
                                          
    
	 	 	          Optionee
	

 	
 	

Address:
                                         
                     
	

 	
 	

                                         
                                   

Attachments:

Exhibit A – Stock Option Agreement

Exhibit B – Stock Purchase Agreement

Exhibit C – 2001 Stock Option/Stock Issuance Plan  

2

 NON-EXEMPT EMPLOYEE

UNDER FAIR LABOR STANDARDS ACT  

AFFYMAX, INC.

NOTICE OF GRANT OF STOCK OPTION  

        Notice is hereby given of the following option grant (the "Option") to purchase shares of the Common Stock of Affymax, Inc. (the "Corporation"): 

	Optionee:                                        
                                          
                  
	
Grant Date:                                        
                                          
                  
	
Vesting Commencement Date:                                        
                                    
	
Exercise Price:    $                                    
                                     per share
	
Number of Option Shares:                                        
             shares of Common Stock
	
Expiration Date:                                        
                                          
        
	
Type of Option:                             Incentive Stock Option
	
                                        
             Non-Statutory Stock Option
	
Date Exercisable:    The Option shall become exercisable for all the Option Shares upon the Optionee's completion of six
(6) months of Service measured from the Grant Date.
	
Vesting Schedule:    The Option Shares shall initially be unvested and subject to repurchase by the Corporation at the Exercise Price paid per share.
Optionee shall acquire a vested interest in, and the Corporation's repurchase right shall accordingly lapse with respect to, (i) twenty-five percent (25%) of the Option Shares upon Optionee's completion of one (1) year of Service measured
from the Vesting Commencement Date and (ii) the balance of the Option Shares in a series of thirty-six (36) successive equal monthly installments upon Optionee's completion of each additional month of Service over the thirty-six (36)-month
period measured from the first anniversary of the Vesting Commencement Date. In no event shall any additional Option Shares vest after Optionee's cessation of Service.

        Optionee
understands and agrees that the Option is granted subject to and in accordance with the terms of the Affymax, Inc. 2001 Stock Option/Stock Issuance Plan (the "Plan").
Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A. 

 

        Optionee
understands that any Option Shares purchased under the Option will be subject to the terms set forth in the Stock Purchase Agreement attached hereto as Exhibit B.
Optionee hereby acknowledges receipt of a copy of the Plan in the form attached hereto as Exhibit C. 

        REPURCHASE RIGHTS.    OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE
RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE AGREEMENT.

        At Will Employment.    Nothing in this Notice or in the attached Stock Option Agreement or Plan shall confer upon Optionee any
right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining
Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason, with or without cause. 

        Definitions.    All capitalized terms in this Notice shall have the meaning assigned to them in this Notice or in the attached
Stock Option Agreement. 

DATED:
                                         
       ,                         
 

	 	 	AFFYMAX, INC.
	
 	
 	

By:
                                         
                                    
	

 	
 	

Title:
                                         
                                    
	

 	
 	

                                         
                                          
    
	 	 	          OPTIONEE
	

 	
 	

Address:
                                         
                     
	

 	
 	

                                         
                                   

Attachments:

Exhibit A – Stock Option Agreement

Exhibit B – Stock Purchase Agreement

Exhibit C – 2001 Stock Option/Stock Issuance Plan  

4

EXHIBIT A

STOCK OPTION AGREEMENT  

AFFYMAX, INC.

STOCK OPTION AGREEMENT  

RECITALS  

        A.    The
Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or the board of directors of
any Parent or Subsidiary and consultants and other independent advisors in the service of the Corporation (or any Parent or Subsidiary). 

        B.    Optionee
is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the Corporation's grant of an option to Optionee. 

        C.    All
capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix. 

        NOW, THEREFORE, it is hereby agreed as follows: 

        1.    Grant of Option.    The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to
the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price. 

        2.    Option Term.    This option shall have a term of ten (10) years measured from the Grant Date and shall
accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6. 

        3.    Limited Transferability.    

        (a)   This
option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee's death and may be exercised,
during Optionee's lifetime, only by Optionee. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death while holding this option. Such beneficiary or beneficiaries shall take the transferred option
subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following
Optionee's death. 

        (b)   If
this option is designated a Non-Statutory Option in the Grant Notice, then this option may be assigned in whole or in part during Optionee's lifetime to
one or more members of Optionee's family or to a trust established for the exclusive benefit of one or more such family members or to Optionee's former spouse, to the extent such assignment is in
connection with the Optionee's estate plan or pursuant to a domestic relations order. The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the
option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment. 

 

        4.    Dates of Exercise.    This option shall become exercisable for the Option Shares in one or more installments as
specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments
until the Expiration Date or sooner termination of the option term under Paragraph 5 or 6. 

        5.    Cessation of Service.    The option term specified in Paragraph 2 shall terminate (and this option shall
cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable: 

        (a)   Should
Optionee cease to remain in Service for any reason (other than death, Disability or Misconduct) while holding this option, then Optionee shall have a period of
three (3) months (commencing with the date of such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration
Date. 

        (b)   Should
Optionee die while holding this option, then the personal representative of Optionee's estate or the person or persons to whom the option is transferred pursuant
to Optionee's will or the laws of inheritance shall have the right to exercise this option. However, if Optionee has designated one or more beneficiaries of this option, then those persons shall have
the exclusive right to exercise this option following Optionee's death. Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the  earlier of
(i) the expiration of the twelve (12)-month period measured from the date of Optionee's death or (ii) the Expiration Date. 

        (c)   Should
Optionee cease Service by reason of Disability while holding this option, then Optionee shall have a period of twelve (12) months (commencing with the date
of such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date. 

Note: Exercise of this option on a date later than three (3) months following cessation of Service due to Disability will result in loss of
favorable Incentive Option treatment, unless such Disability constitutes Permanent Disability. In the event that Incentive Option treatment is not
available, this option will be taxed as a Non-Statutory Option upon exercise. 

        (d)   During
the limited period of post-Service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares in
which Optionee is, at the time of Optionee's cessation of Service, vested pursuant to the Vesting Schedule specified in the Grant Notice or the special vesting acceleration provisions of
Paragraph 6. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any vested Option Shares
for which the option has not been exercised. To the extent Optionee is not vested in one or more Option Shares at the time of Optionee's cessation of Service, this option shall immediately terminate
and cease to be outstanding with respect to those shares. 

2

 

        (e)   Should
Optionee's Service be terminated for Misconduct or should Optionee otherwise engage in Misconduct while this option is outstanding, then this option shall
terminate immediately and cease to remain outstanding. 

        6.    Accelerated Vesting.    

        (a)   In
the event of any Corporate Transaction, the Option Shares at the time subject to this option but not otherwise vested shall automatically vest in full so that this
option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those
Option Shares as vested shares. However, the Option Shares shall not vest on such an accelerated basis if and to the extent: (i) this option is
assumed by the successor corporation (or parent thereof) in the Corporate Transaction and the Corporation's repurchase rights with respect to the unvested Option Shares are assigned to such successor
corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested Option
Shares at the time of the Corporate Transaction (the excess of the Fair Market Value of those Option Shares over the Exercise Price payable for such shares) and provides for subsequent payout in
accordance with the same Vesting Schedule applicable to those unvested Option Shares as set forth in the Grant Notice. 

        (b)   Immediately
following the Corporate Transaction, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or
parent thereof) in connection with the Corporate Transaction. 

        (c)   If
this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to
apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same. To the
extent the actual holders of the Corporation's outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may,
in connection with the assumption of this option, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in
such Corporate Transaction. 

        (d)   This
Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

3

 

        7.    Adjustment in Option Shares.    Should any change be made to the Common Stock by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration,
appropriate adjustments shall be made to (i) the total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder. 

        8.    Stockholder Rights.    The holder of this option shall not have any stockholder rights with respect to the
Option Shares until such person shall have exercised the option, paid the Exercise Price and become the record holder of the purchased shares. 

        9.    Manner of Exercising Option.    

        (a)   In
order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or
persons exercising the option) must take the following actions: 

        (i)    Execute
and deliver to the Corporation a Purchase Agreement for the Option Shares for which the option is exercised. 

        (ii)   Pay
the aggregate Exercise Price for the purchased shares in one or more of the following forms: 

        (A)  cash
or check made payable to the Corporation; or 

        (B)  a
promissory note payable to the Corporation, but only to the extent authorized by the Plan Administrator in accordance with Paragraph 14. 

        Should
the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the Exercise Price may also be paid as follows: 

        (C)  in
shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or 

        (D)  to
the extent the option is exercised for vested Option Shares, through a special sale and remittance procedure pursuant to which Optionee (or any other person or
persons exercising the option) shall
concurrently provide irrevocable instructions (a) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment
taxes required to be withheld by the Corporation by reason of such exercise and (b) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale. 

4

 

Except
to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Purchase Agreement delivered to the
Corporation in connection with the option exercise. 

        (iii)  Furnish
to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option. 

        (iv)  Execute
and deliver to the Corporation such written representations as may be requested by the Corporation in order for it to comply with the applicable requirements of
Federal and state securities laws. 

        (v)   Make
appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income
and employment tax withholding requirements applicable to the option exercise. 

        (b)   As
soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a
certificate for the purchased Option Shares, with the appropriate legends affixed thereto. 

        (c)   In
no event may this option be exercised for any fractional shares. 

        10.    REPURCHASE RIGHTS.    ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL
BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT.

        11.    Compliance with Laws and Regulations.    

        (a)   The
exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable
requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the
time of such exercise and issuance. 

5

 

        (b)   The
inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale
of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals. 

        12.    Successors and Assigns.    Except to the extent otherwise provided in Paragraphs 3 and 6, the provisions of
this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee's assigns and the legal representatives, heirs and legatees of
Optionee's estate. 

        13.    Notices.    Any notice required to be given or delivered to the Corporation under the terms of this Agreement
shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified. 

        14.    Financing.    The Plan Administrator may, in its absolute discretion and without any obligation to do so,
permit Optionee to pay the Exercise Price for the purchased Option Shares (to the extent such Exercise Price is in excess of the par value of those shares) by delivering a full-recourse,
interest-bearing promissory note secured by those Option Shares. The payment schedule in effect for any such promissory note shall be established by the Plan Administrator in its sole discretion. 

        15.    Construction.    This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and
are in all respects limited by and subject to the terms of the Plan. All decisions of the
Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option. 

        16.    Governing Law.    The interpretation, performance and enforcement of this Agreement shall be governed by the
laws of the State of California without resort to that State's conflict-of-laws rules. 

        17.    Stockholder Approval.    If the Option Shares covered by this Agreement exceed, as of the Grant Date, the
number of shares of Common Stock which may be issued under the Plan as last approved by the stockholders, then this option shall be void with respect to such excess shares, unless stockholder approval
of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan. 

6

 

        18.    Additional Terms Applicable to an Incentive Option.     In the event this option is designated an Incentive
Option in the Grant Notice, the following terms and conditions shall also apply to the grant: 

        (a)   This
option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent) this option is exercised for one or more Option Shares:
(i) more than three (3) months after the date Optionee ceases to be an Employee for any reason other than death or Permanent Disability or (ii) more than twelve (12) months
after the date Optionee ceases to be an Employee by reason of Permanent Disability. 

        (b)   This
option shall not become exercisable in the calendar year in which granted if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of
the Common Stock for which this option would otherwise first become exercisable in such calendar year would, when added to the aggregate value (determined as of the respective date or dates of grant)
of the Common Stock and any other securities for which one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. To the extent the exercisability of
this option is deferred by reason of the foregoing limitation, the deferred portion shall become exercisable in the first calendar year or years thereafter in which the One Hundred Thousand Dollar
($100,000) limitation of this Paragraph 18(b) would not be contravened, but such deferral shall in all events end immediately prior to the effective date of a Corporate Transaction in which
this option is not to be assumed, whereupon the option shall become immediately exercisable as a Non-Statutory Option for the deferred portion of the Option Shares. 

        (c)   Should
Optionee hold, in addition to this option, one or more other options to purchase Common Stock which become exercisable for the first time in the same calendar
year as this option, then the foregoing limitations on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. 

7

   APPENDIX  

        The following definitions shall be in effect under the Agreement: 

        A.    Agreement shall mean this Stock Option Agreement. 

        B.    Board shall mean the Corporation's Board of Directors. 

        C.    Code shall mean the Internal Revenue Code of 1986, as amended. 

        D.    Common Stock shall mean the Corporation's common stock. 

        E.    Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a
party: 

        (i)    a
merger, consolidation or other reorganization approved by the Corporation's stockholders, unless securities
representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation's outstanding voting securities immediately prior to such transaction, or 

        (ii)   the
sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation. 

        F.     Corporation shall mean Affymax, Inc., a Delaware corporation, and any successor corporation to all or substantially
all of the assets or voting stock of Affymax, Inc. which shall by appropriate action assume this option. 

        G.    Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances.
Disability shall be deemed to constitute Permanent Disability in the event that such Disability is expected to result in death or has lasted or can be
expected to last for a continuous period of twelve (12) months or more. 

        H.    Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the
control and direction of the employer entity as to both the work to be performed and the manner and method of performance. 

        I.     Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of
the Agreement. 

A-1

 

        J.     Exercise Price shall mean the exercise price payable per Option Share as specified in the Grant Notice. 

        K.    Expiration Date shall mean the date on which the option expires as specified in the Grant Notice. 

        L.    Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following
provisions: 

        (i)    If
the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the
date in question, as the price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street
Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists. 

        (ii)   If
the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such
exchange and published in The Wall
Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists. 

        (iii)  If
the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market Value shall be determined by the
Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate. 

        M.   Grant Date shall mean the date of grant of the option as specified in the Grant Notice. 

        N.    Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has
been informed of the basic terms of the option evidenced hereby. 

        O.    Incentive Option shall mean an option which satisfies the requirements of Code Section 422. 

        P.     Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or
disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business
or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or
Subsidiary) to discharge or dismiss Optionee or any other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall
not be deemed, for purposes of the Plan or this Agreement, to constitute grounds for termination for Misconduct. 

A-2

 

        Q.    1934 Act shall mean the Securities Exchange Act of 1934, as amended. 

        R.    Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. 

        S.     Option Shares shall mean the number of shares of Common Stock subject to the option. 

        T.     Optionee shall mean the person to whom the option is granted as specified in the Grant Notice. 

        U.    Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the
Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain. 

        V.     Plan shall mean the Corporation's 2001 Stock Option/Stock Issuance Plan. 

        W.    Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the
Plan. 

        X.    Purchase Agreement shall mean the stock purchase agreement in substantially the form of Exhibit B to the Grant
Notice. 

        Y.    Service shall mean the Optionee's performance of services for the Corporation (or any Parent or Subsidiary) in the
capacity of an Employee, a non-employee member of the board of directors or an independent consultant. 

        Z.    Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange. 

        AA  Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain. 

        BB   Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest
in the Option Shares in a series of installments over his or her period of Service. 

A-3

EXHIBIT B

STOCK PURCHASE AGREEMENT  

AFFYMAX, INC.

STOCK PURCHASE AGREEMENT  

        AGREEMENT made this              day of
                        ,              by and between
Affymax, Inc., a Delaware corporation, and
                        , Optionee under the Corporation's 2001 Stock Option/Stock Issuance Plan. 

        All
capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix. 

A.    EXERCISE OF OPTION  

        1.    Exercise.    Optionee hereby purchases
                         shares of Common Stock (the
"Purchased Shares") pursuant to that certain option (the "Option") granted Optionee on                          (the "Grant
Date") to purchase up to
             shares of Common Stock (the "Option Shares") under the Plan at the exercise price of $             per
share (the "Exercise
Price"). 

        2.    Payment.    Concurrently with the delivery of this Agreement to the Corporation, Optionee shall pay the Exercise
Price for the Purchased Shares in accordance with the provisions of the Option Agreement and shall deliver whatever additional documents may be required by the Option Agreement as a condition for
exercise, together with a duly-executed blank Assignment Separate from Certificate (in the form attached hereto as Exhibit I) with respect to the Purchased Shares. 

        3.    Stockholder Rights.    Until such time as the Corporation exercises the Repurchase Right or the First Refusal
Right, Optionee (or any successor in interest) shall have all the rights of a stockholder (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to
the transfer restrictions of Articles B and C. 

B.    SECURITIES LAW COMPLIANCE  

        1.    Restricted Securities.    The Purchased Shares have not been registered under the 1933 Act and are being issued
to Optionee in reliance upon the exemption from such registration provided by SEC Rule 701 for stock issuances under compensatory benefit plans such as the Plan. Optionee hereby confirms that
Optionee has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the
Federal securities laws or unless an exemption from such registration is available. Accordingly, Optionee hereby acknowledges that Optionee is prepared to hold the Purchased Shares for an indefinite
period and that Optionee is aware that SEC Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the
Purchased Shares from the registration requirements of the 1933 Act. 

 

        2.    Restrictions on Disposition of Purchased Shares.    Optionee shall make no disposition of the Purchased Shares
(other than a Permitted Transfer) unless and until there is compliance with all of the following requirements: 

        (i)    Optionee
shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition. 

        (ii)   Optionee
shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares. 

        (iii)  Optionee
shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed disposition
does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any
exemption from registration available under the 1933 Act (including Rule 144) has been taken. 

        The
Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in
violation of the provisions of this Agreement or (ii) to treat as the owner of
the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Purchased Shares have been transferred in contravention of this Agreement. 

        3.    Restrictive Legends.    The stock certificates for the Purchased Shares shall be endorsed with one or more of
the following restrictive legends: 

"The
shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of (a) an effective
registration statement for the shares under such Act, (b) a "no action" letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory assurances
to the Corporation that registration under such Act is not required with respect to such sale or offer." 

"The
shares represented by this certificate are subject to certain repurchase rights and rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred,
encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated
                        ,             
between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Corporation's principal corporate
offices." 

2

 

C.    TRANSFER RESTRICTIONS  

        1.    Restriction on Transfer.    Except for any Permitted Transfer, Optionee shall not transfer, assign, encumber or
otherwise dispose of any of the Purchased Shares which are subject to the Repurchase Right. In addition, Purchased Shares which are released from the Repurchase Right shall not be transferred,
assigned, encumbered or otherwise disposed of in contravention of the First Refusal Right or the Market Stand-Off. 

        2.    Transferee Obligations.    Each person (other than the Corporation) to whom the Purchased Shares are transferred
by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this
Agreement and that the transferred shares are subject to (i) the Repurchase Right, (ii) the First Refusal Right and (iii) the Market Stand-Off, to the same extent such
shares would be so subject if retained by Optionee. 

        3.    Market Stand-Off.    

        (a)   In
connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act,
including the Corporation's initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for
value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters. Such restriction
(the "Market Stand-Off") shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or
such underwriters. In no event, however, shall such period exceed one hundred eighty (180) days, and the Market Stand-Off shall in no event be applicable to any underwritten public
offering effected more than two (2) years after the effective date of the Corporation's initial public offering. 

        (a)   Owner
shall be subject to the Market Stand-Off provided and only if the officers and directors of the
Corporation are also subject to similar restrictions. 

        (b)   Any
new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be
immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions. 

        (c)   In
order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the
end of the applicable stand-off period. 

3

 

D.    REPURCHASE RIGHT  

        1.    Grant.    The Corporation is hereby granted the right (the "Repurchase Right"), exercisable at any time during
the sixty (60)-day period following the date Optionee ceases for any reason to remain in Service or (if later) during the sixty (60)-day period following the execution
date of this Agreement, to repurchase at the Exercise Price any or all of the Purchased Shares in which Optionee is not, at the time of his or her cessation of Service, vested in accordance with the
Vesting Schedule applicable to those shares or the special vesting acceleration provisions of Paragraph D.6 of this Agreement (such shares to be hereinafter referred to as the "Unvested
Shares"). 

        2.    Exercise of the Repurchase Right.    The Repurchase Right shall be exercisable by written notice delivered to
each Owner of the Unvested Shares prior to the expiration of the sixty (60)-day exercise period. The notice shall indicate the number of Unvested Shares to be repurchased and the date on
which the repurchase is to be effected, such date to be not more than thirty (30) days after the date of such notice. The certificates representing the Unvested Shares to be repurchased shall
be delivered to the Corporation on the closing date specified for the repurchase. Concurrently with the receipt of such stock certificates, the Corporation shall pay to Owner, in cash or cash
equivalents (including the cancellation of any purchase-money indebtedness), an amount equal to the Exercise Price previously paid for the Unvested Shares which are to be repurchased from Owner. 

        3.    Termination of the Repurchase Right.    The Repurchase Right shall terminate with respect to any Unvested Shares
for which it is not timely exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate and cease to be exercisable with respect to any and all Purchased Shares in which
Optionee vests in accordance with the Vesting Schedule. All Purchased Shares as to which the Repurchase Right lapses shall, however, remain subject to (i) the First Refusal Right and
(ii) the Market Stand-Off. 

        4.    Aggregate Vesting Limitation.    If the Option is exercised in more than one increment so that Optionee is a
party to one or more other Stock Purchase Agreements (the "Prior Purchase Agreements") which are executed prior to the date of this Agreement, then the total number of Purchased Shares as to which
Optionee shall be deemed to have a fully-vested interest under this Agreement and all Prior Purchase Agreements shall not exceed in the aggregate the number of Purchased Shares in which Optionee would
otherwise at the time be vested, in accordance with the Vesting Schedule, had all the Purchased Shares (including those acquired under the Prior Purchase Agreements) been acquired exclusively under
this Agreement. 

        5.    Recapitalization.    Any new, substituted or additional securities or other property (including cash paid other
than as a regular cash dividend) which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the Repurchase Right and any escrow
requirements hereunder, but only to the extent the Purchased Shares are at the time covered by such right or escrow requirements. Appropriate adjustments to reflect such distribution shall be made to
the number and/or class of Purchased Shares subject to this Agreement and to the price per share to be paid upon the exercise of the Repurchase Right in order to reflect the effect of any such
Recapitalization upon the Corporation's capital structure; provided, however, that the aggregate purchase price shall remain the same. 

4

 

        6.    Corporate Transaction.    

        (a)   The
Repurchase Right shall automatically terminate in its entirety, and all the Purchased Shares shall vest in full, immediately prior to the consummation of any
Corporate Transaction, except to the extent the Repurchase Right is to be assigned to the successor entity in such Corporate Transaction. 

        (b)   To
the extent the Repurchase Right remains in effect following a Corporate Transaction, such right shall apply to any new securities or other property (including any
cash payments) received in exchange for the Purchased Shares in consummation of the Corporate Transaction, but only to the extent the Purchased Shares are at the time covered by such right.
Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Right to reflect the effect of the Corporate Transaction upon the Corporation's capital structure;  provided, however, that the aggregate purchase price shall remain the same. The new securities or other property (including any cash payments) issued or
distributed with respect to the Purchased Shares in consummation of the Corporate Transaction shall be immediately deposited in escrow with the Corporation (or the successor entity) and shall not be
released from escrow until Optionee vests in such securities or other property in accordance with the same Vesting Schedule in effect for the Purchased Shares. 

E.    RIGHT OF FIRST REFUSAL  

        1.    Grant.    The Corporation is hereby granted the right of first refusal (the "First Refusal Right"), exercisable
in connection with any proposed transfer of the Purchased Shares in which Optionee has vested in accordance with the provisions of Article D. For purposes of this Article E, the term
"transfer" shall include any sale, assignment, pledge, encumbrance or other disposition of the Purchased Shares intended to be made by Owner, but shall not include any Permitted Transfer. 

        2.    Notice of Intended Disposition.    In the event any Owner of Purchased Shares in which Optionee has vested
desires to accept a bona fide third-party offer for the transfer of any or all of such shares (the Purchased Shares subject to such offer to be hereinafter referred to as the "Target Shares"), Owner
shall promptly (i) deliver to the Corporation written notice (the "Disposition Notice") of the terms of the offer, including the purchase price and the identity of the third-party offeror, and
(ii) provide satisfactory proof that the disposition of the Target Shares to such third-party offeror would not be in contravention of the provisions set forth in Articles B and C. 

5

 

        3.    Exercise of the First Refusal Right.    The Corporation shall, for a period of twenty-five
(25) days following receipt of the Disposition Notice, have the right to repurchase any or all of the Target Shares subject to the Disposition Notice upon the same terms as those specified
therein or upon such other terms (not materially different from those specified in the Disposition Notice) to which Owner consents. Such right shall be exercisable by delivery of written notice (the
"Exercise Notice") to Owner prior to the expiration of the twenty-five (25)-day exercise period. If such right is exercised with respect to all the Target Shares, then the
Corporation shall effect the repurchase of such shares, including payment of the purchase price, not more than five (5) business days after delivery of the Exercise Notice; and at such time the
certificates representing the Target Shares shall be delivered to the Corporation. 

        Should
the purchase price specified in the Disposition Notice be payable in property other than cash or evidences of indebtedness, the Corporation shall have the right to pay the
purchase price in the form of cash equal in amount to the value of such property. If Owner and the Corporation cannot agree on such cash value within ten (10) days after the Corporation's
receipt of the Disposition Notice, the valuation shall be made by an appraiser of recognized standing selected by Owner and the Corporation or, if they cannot agree on an appraiser within twenty
(20) days after the Corporation's receipt of the Disposition Notice, each shall select an appraiser of recognized standing and the two (2) appraisers shall designate a third appraiser of
recognized standing, whose appraisal shall be determinative of such value. The cost of such appraisal shall be shared equally by Owner and the Corporation. The closing shall then be held on the  later of
(i) the fifth (5th) business day following delivery of the Exercise Notice or (ii) the fifth (5th) business day after such
valuation shall have been made. 

        4.    Non-Exercise of the First Refusal Right.    In the event the Exercise Notice is not given to Owner
prior to the expiration of the twenty-five (25)-day exercise period, Owner shall have a period of thirty (30) days thereafter in which to sell or otherwise dispose of
the Target Shares to the third-party offeror identified in the Disposition Notice upon terms (including the purchase price) no more favorable to such third-party offeror than those specified in the
Disposition Notice; provided, however, that any such sale or disposition must not be effected in contravention of the provisions of Articles B and C.
The third-party offeror shall acquire the Target Shares subject to the First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3, and any subsequent
disposition of the acquired shares must be effected in compliance with the terms and conditions of such First Refusal Right and the provisions and restrictions of Article B and
Paragraph C.3. In the event Owner does not effect such sale or disposition of the Target Shares within the specified thirty (30)-day period, the First Refusal Right shall continue
to be applicable to any subsequent disposition of the Target Shares by Owner until such right lapses. 

        5.    Partial Exercise of the First Refusal Right.    In the event the Corporation makes a timely exercise of the
First Refusal Right with respect to a portion, but not all, of the Target Shares specified in the Disposition Notice, Owner shall have the option, exercisable by written notice to the Corporation
delivered within five (5) business days after Owner's receipt of the Exercise Notice, to effect the sale of the Target Shares pursuant to either of the following alternatives: 

6

 

        (i)    sale
or other disposition of all the Target Shares to the third-party offeror identified in the Disposition Notice, but in full compliance with the requirements of
Paragraph E.4, as if the Corporation did not exercise the First Refusal Right; or 

        (ii)   sale
to the Corporation of the portion of the Target Shares which the Corporation has elected to purchase, such sale to be effected in substantial conformity with the
provisions of Paragraph E.3. The First Refusal Right shall continue to be applicable to any subsequent disposition of the remaining Target Shares until such right lapses. 

        Owner's
failure to deliver timely notification to the Corporation shall be deemed to be an election by Owner to sell the Target Shares pursuant to alternative (i) above. 

        6.    Recapitalization/Reorganization.    

        (a)   Any
new, substituted or additional securities or other property which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be
immediately subject to the First Refusal Right, but only to the extent the Purchased Shares are at the time covered by such right. 

        (b)   In
the event of a Reorganization, the First Refusal Right shall remain in full force and effect and shall apply to the new capital stock or other property received in
exchange for the Purchased Shares in consummation of the Reorganization, but only to the extent the Purchased Shares are at the time covered by such right. 

        7.    Lapse.    The First Refusal Right shall lapse upon the earliest
to occur of (i) the first date on which shares of the Common Stock are held of record by more than five hundred (500) persons, (ii) a determination made by the Board that a public
market exists for the outstanding shares of Common Stock or (iii) a firm commitment underwritten public offering, pursuant to an effective registration statement under the 1933 Act, covering
the offer and sale of the Common Stock in the aggregate amount of at least twenty million dollars ($20,000,000). However, the Market Stand-Off shall continue to remain in full force and
effect following the lapse of the First Refusal Right. 

F.     SPECIAL TAX ELECTION  

        The acquisition of the Purchased Shares may result in adverse tax consequences which may be avoided or mitigated by filing an election under Code
Section 83(b). Such election must be filed within thirty (30) days after the date of this Agreement. A description of the tax consequences applicable to the acquisition of the Purchased
Shares and the form for making the Code Section 83(b) election are set forth in Exhibit II. OPTIONEE SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE
TAX CONSEQUENCES OF ACQUIRING THE PURCHASED SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b) ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND
NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER
BEHALF.

7

 

G.    GENERAL PROVISIONS  

        1.    Assignment.    The Corporation may assign the Repurchase Right and/or the First Refusal Right to any person or
entity selected by the Board, including (without limitation) one or more stockholders of the Corporation. 

        2.    At Will Employment.    Nothing in this Agreement or in the Plan shall confer upon Optionee any right to continue
in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of
Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason, with or without cause. 

        3.    Notices.    Any notice required to be given under this Agreement shall be in writing and shall be deemed
effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph to all other parties to this
Agreement. 

        4.    No Waiver.    The failure of the Corporation in any instance to exercise the Repurchase Right or the First
Refusal Right shall not constitute a waiver of any other repurchase rights and/or rights of first
refusal that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and Optionee. No waiver of any breach or condition of this Agreement shall be
deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature. 

        5.    Cancellation of Shares.    If the Corporation shall make available, at the time and place and in the amount and
form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom
such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such
shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation shall be deemed the owner and holder of such shares, whether or not the certificates therefor
have been delivered as required by this Agreement. 

8

 

H.    MISCELLANEOUS PROVISIONS  

        1.    Optionee Undertaking.    Optionee hereby agrees to take whatever additional action and execute whatever
additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement. 

        2.    Agreement is Entire Contract.    This Agreement constitutes the entire contract between the parties hereto with
regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the terms of the Plan. 

        3.    Governing Law.    This Agreement shall be governed by, and construed in accordance with, the laws of the State
of California without resort to that State's conflict-of-laws rules. 

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

        5.    Successors and Assigns.    The provisions of this Agreement shall inure to the benefit of, and be binding upon,
the Corporation and its successors and assigns and upon Optionee, Optionee's permitted assigns and the legal representatives, heirs and legatees of Optionee's estate, whether or not any such person
shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof. 

9

 

        IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above. 

	 	 	AFFYMAX, INC.
	
 	
 	

By:	

 Ali Mahdavi
	 	 	Title:	VP, Finance and Administration
	

 	
 	

Address:	

4001 Miranda Avenue

Palo Alto, CA 94304
	
 	
 	

 	

 
	

 	
 	

Name:	

OPTIONEE
	

 	
 	

Address:	

	
 	
 	

 	

10

 
SPOUSAL ACKNOWLEDGMENT  

        The undersigned spouse of Optionee has read and hereby approves the foregoing Stock Purchase Agreement. In consideration of the Corporation's granting Optionee
the right to acquire the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Agreement, including (without
limitation) the right of the Corporation (or its assigns) to purchase any Purchased Shares in which Optionee is not vested at time of his or her cessation of Service. 

	 	 	Name:	
OPTIONEE'S SPOUSE
	

 	
 	

Address:	

	
 	
 	

 	

11

EXHIBIT I

ASSIGNMENT SEPARATE FROM CERTIFICATE  

        FOR VALUE RECEIVED
                         hereby sell(s), assign(s) and transfer(s) unto
Affymax, Inc. (the "Corporation"),                         
(            ) shares of the Common Stock of the Corporation standing in his or
her name on the books of the Corporation represented by Certificate No.              herewith and do(es) hereby irrevocably constitute and
appoint                          Attorney to transfer the said stock on the books of the Corporation with full power
of substitution in the premises. 

	Dated:
                                    	 	Signature
                                    

  Instruction: Please do not fill in any blanks other than the signature line. Please sign exactly as you would like your name to appear on the issued
stock certificate. The purpose of this assignment is to enable the Corporation to exercise the Repurchase Right without requiring additional signatures on the part of Optionee. 

   EXHIBIT II

FEDERAL INCOME TAX CONSEQUENCES AND

SECTION 83(b) TAX ELECTION  

        I.    Federal Income Tax Consequences and Section 83(b) Election For Exercise of Non-Statutory
Option.    If the Purchased Shares are acquired pursuant to the exercise of a Non-Statutory Option, as specified in the Grant Notice, then under Code
Section 83, the excess of the Fair Market Value of the Purchased Shares on the date any forfeiture restrictions applicable to such shares lapse over the Exercise Price paid for those shares
will be reportable as ordinary income on the lapse date. For this purpose, the term "forfeiture restrictions" includes the right of the Corporation to repurchase the Purchased Shares pursuant to the
Repurchase Right. However, Optionee may elect under Code Section 83(b) to be taxed at the time the Purchased Shares are acquired, rather than when and as such Purchased Shares cease to be
subject to such forfeiture restrictions. Such election must be filed with the Internal Revenue Service within thirty (30) days after the date of the Agreement. Even if the Fair Market Value of
the Purchased Shares on the date of the Agreement equals the Exercise Price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future. The form for
making this election is attached as part of this exhibit. FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF
ORDINARY INCOME BY OPTIONEE AS THE FORFEITURE RESTRICTIONS LAPSE. 

        II.    Federal Income Tax Consequences and Conditional Section 83(b) Election For Exercise of Incentive
Option.    If the Purchased Shares are acquired pursuant to the exercise of an Incentive Option, as specified in the Grant Notice, then the following tax principles
shall be applicable to the Purchased Shares: 

        (i)    For
regular tax purposes, no taxable income will be recognized at the time the Option is exercised. 

        (ii)   The
excess of (a) the Fair Market Value of the Purchased Shares on the date the Option is exercised or (if later) on the date any forfeiture restrictions
applicable to the Purchased Shares lapse over (b) the Exercise Price paid for the Purchased Shares will be includible in Optionee's taxable income for alternative minimum tax purposes. 

        (iii)  If
Optionee makes a disqualifying disposition of the Purchased Shares, then Optionee will recognize ordinary income in the year of such disposition equal in amount to
the excess of (a) the Fair Market Value of the Purchased Shares on the date the Option is exercised or (if later) on the date any forfeiture restrictions applicable to the Purchased Shares
lapse over (b) the Exercise Price paid for the Purchased Shares. Any additional gain recognized upon the disqualifying disposition will be either short-term or long-term
capital gain depending upon the period for which the Purchased Shares are held prior to the disposition. 

II-1

 

        (iv)  For
purposes of the foregoing, the term "forfeiture restrictions" will include the right of the Corporation to repurchase the Purchased Shares pursuant to the
Repurchase Right. The term "disqualifying disposition" means any sale or other disposition(1) of the Purchased Shares within two (2) years after the Grant Date or within one (1) year
after the exercise date of the Option. 

        (v)   In
the absence of final Treasury Regulations relating to Incentive Options, it is not certain whether Optionee may, in connection with the exercise of the Option for any
Purchased Shares at the time subject to forfeiture restrictions, file a protective election under Code Section 83(b) which would limit Optionee's ordinary income upon a disqualifying
disposition to the excess of the Fair Market Value of the Purchased Shares on the date the Option is exercised over the Exercise Price paid for the Purchased Shares. Accordingly, such election if
properly filed will only be allowed to the extent the final Treasury Regulations permit such a protective election. 

        (vi)  The
Code Section 83(b) election will be effective in limiting the Optionee's alternative minimum taxable income to the excess of the Fair Market Value of the
Purchased Shares at the time the Option is exercised over the Exercise Price paid for those shares. 

        Page
2 of the attached form for making the election should be filed with any election made in connection with the exercise of an Incentive Option. 

 

	(1)
	Generally,
a disposition of shares purchased under an Incentive Option includes any transfer of legal title, including a transfer by sale, exchange or gift, but does not include a
transfer to the Optionee's spouse, a transfer into joint ownership with right of survivorship if Optionee remains one of the joint owners, a pledge, a transfer by bequest or inheritance or certain
tax-free exchanges permitted under the Code. 

II-2

SECTION 83(b) ELECTION  

        This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2. 

	(1)
	The
taxpayer who performed the services is: 

Name:

Address:

Taxpayer ID. No.: 

	(2)
	The
property with respect to which the election is being made is                          shares of the common stock of
Affymax, Inc.

	(3)
	The
property was issued on                         ,
             .

	(4)
	The
taxable year in which the election is being made is the calendar year         .

	(5)
	The
property is subject to a repurchase right pursuant to which the issuer has the right to acquire the property at the original purchase price if for any reason taxpayer's service
with the issuer terminates. The issuer's repurchase right will lapse in a series of annual and monthly installments over a four (4)-year period ending on
                        , 20        .

	(6)
	The
fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is
$             per share.

	(7)
	The
amount paid for such property is $             per share.

	(8)
	A
copy of this statement was furnished to Affymax, Inc. for whom taxpayer rendered the services underlying the transfer of property.

	(9)
	This
statement is executed on                         ,         .

	                                        
                    

Spouse (if any)	 	                                        
                    

Taxpayer

This election must be filed with the Internal Revenue Service Center with which taxpayer files his or her Federal income tax returns and must be made within thirty
(30) days after the execution date of the Stock Purchase Agreement. This filing should be made by registered or certified mail, return receipt requested. Optionee must retain two
(2) copies of the completed form for filing with his or her Federal and state tax returns for the current tax year and an additional copy for his or her records.

 

        The
property described in the above Section 83(b) election is comprised of shares of common stock acquired pursuant to the exercise of an incentive stock option under
Section 422 of the Internal
Revenue Code (the "Code"). Accordingly, it is the intent of the Taxpayer to utilize this election to achieve the following tax results: 

        1.     One
purpose of this election is to have the alternative minimum taxable income attributable to the purchased shares measured by the amount by which the fair market value
of such shares at the time of their transfer to the Taxpayer exceeds the purchase price paid for the shares. In the absence of this election, such alternative minimum taxable income would be measured
by the spread between the fair market value of the purchased shares and the purchase price which exists on the various lapse dates in effect for the forfeiture restrictions applicable to such shares. 

        2.     Section 421(a)(1)
of the Code expressly excludes from income any excess of the fair market value of the purchased shares over the amount paid for such shares.
Accordingly, this election is also intended to be effective in the event there is a "disqualifying disposition" of the shares, within the meaning of Section 421(b) of the Code, which would
otherwise render the provisions of Section 83(a) of the Code applicable at that time. Consequently, the Taxpayer hereby elects to have the amount of disqualifying disposition income measured by
the excess of the fair market value of the purchased shares on the date of transfer to the Taxpayer over the amount paid for such shares. Since Section 421(a) presently applies to the shares
which are the subject of this Section 83(b) election, no taxable income is actually recognized for regular tax purposes at this time, and no income taxes are payable, by the Taxpayer as a
result of this election. The foregoing election is to be effective to the full extent permitted under the Code. 

THIS PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(b) ELECTION FILED IN CONNECTION WITH THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX
LAWS.

2

   APPENDIX  

        The following definitions shall be in effect under the Agreement: 

        A.    Agreement shall mean this Stock Purchase Agreement. 

        B.    Board shall mean the Corporation's Board of Directors. 

        C.    Code shall mean the Internal Revenue Code of 1986, as amended. 

        D.    Common Stock shall mean the Corporation's common stock. 

        E.    Corporate Transaction shall mean either of the following stockholder-approved transactions: 

        (i)    a
merger, consolidation or other reorganization approved by the Corporation's stockholders, unless securities
representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation's outstanding voting securities immediately prior to such transaction, or 

        (ii)   the
sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation. 

        F.     Corporation shall mean Affymax, Inc., a Delaware corporation, and any successor corporation to all or substantially
all of the assets or voting stock of Affymax, Inc. which shall by appropriate action adopt the Plan. 

        G.    Disposition Notice shall have the meaning assigned to such term in Paragraph E.2. 

        H.    Exercise Price shall have the meaning assigned to such term in Paragraph A.1. 

        I.     Fair Market Value of a share of Common Stock on any relevant date, prior to the initial public offering of the Common
Stock, shall be determined by the Plan Administrator after taking into account such factors as it shall deem appropriate. 

        J.     First Refusal Right shall mean the right granted to the Corporation in accordance with Article E. 

        K.    Grant Date shall have the meaning assigned to such term in Paragraph A.1. 

A-1

 

        L.    Grant Notice shall mean the Notice of Grant of Stock Option pursuant to which Optionee has been informed of the basic
terms of the Option. 

        M.   Incentive Option shall mean an option which satisfies the requirements of Code Section 422. 

        N.    Market Stand-Off shall mean the market stand-off restriction specified in Paragraph C.3. 

        O.    1933 Act shall mean the Securities Act of 1933, as amended. 

        P.     1934 Act shall mean the Securities Exchange Act of 1934, as amended. 

        Q.    Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. 

        R.    Option shall have the meaning assigned to such term in Paragraph A.1. 

        S.     Option Agreement shall mean all agreements and other documents evidencing the Option. 

        T.     Optionee shall mean the person to whom the Option is granted under the Plan. 

        U.    Owner shall mean Optionee and all subsequent holders of the Purchased Shares who derive their chain of ownership through a
Permitted Transfer from Optionee. 

        V.     Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the
Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain. 

        W.    Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares, provided and only if Optionee
obtains the Corporation's prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Optionee's will or the laws of inheritance following
Optionee's death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Optionee in connection with the acquisition of the Purchased
Shares. 

        X.    Plan shall mean the Corporation's 2001 Stock Option/Stock Issuance Plan. 

        Y.    Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the
Plan. 

        Z.    Prior Purchase Agreement shall have the meaning assigned to such term in Paragraph D.4. 

A-2

 

        AA. Purchased Shares shall have the meaning assigned to such term in Paragraph A.1. 

        BB.  Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of shares, exchange of shares
or other change affecting the Corporation's outstanding Common Stock as a class without the Corporation's receipt of consideration. 

        CC. Reorganization shall mean any of the following transactions: 

        (i)    a
merger or consolidation in which the Corporation is not the surviving entity, 

        (ii)   a
sale, transfer or other disposition of all or substantially all of the Corporation's assets, 

        (iii)  a
reverse merger in which the Corporation is the surviving entity but in which the Corporation's outstanding voting securities are transferred in whole or in part to a
person or persons different from the persons holding those securities immediately prior to the merger, or 

        (iv)  any
transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure. 

        DD. Repurchase Right shall mean the right granted to the Corporation in accordance with Article D. 

        EE. SEC shall mean the Securities and Exchange Commission. 

        FF.   Service shall mean the Optionee's performance of services for the Corporation (or any Parent or Subsidiary) in the
capacity of an employee, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance, a non-employee member of
the board of directors or an independent consultant. 

        GG. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with
the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain. 

        HH. Target Shares shall have the meaning assigned to such term in Paragraph E.2. 

        II.    Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest
in the Option Shares in a series of installments over his or her period of Service. 

        JJ.   Unvested Shares shall have the meaning assigned to such term in Paragraph D.1. 

A-3

EXHIBIT C

2001 STOCK OPTION/STOCK ISSUANCE PLANExhibit 10.4  

AFFYMAX, INC.

STOCK ISSUANCE AGREEMENT  

        AGREEMENT made as of this              day of
                        ,
             by and between Affymax, Inc., a Delaware corporation, and
                        , Participant in the Corporation's 2001 Stock
Option/Stock Issuance Plan. 

        All
capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix. 

        A.    ISSUANCE OF SHARES

        1.     Award.    Participant is issued              shares
of Common Stock (the "Purchased Shares") in consideration for Participant's past services from                          to
                         to the
Corporation, pursuant to the provisions of the Plan. The fair market value of such Purchased Shares is $     per share (the "Purchase Price"). 

        2.     Stockholder Rights.    Until such time as the Corporation exercises the First
Refusal Right, Participant (or any successor in interest) shall have all stockholder rights (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however,
to the transfer restrictions of Articles B and C. 

        B.    SECURITIES LAW COMPLIANCE

        1.     Restricted Securities.    The Purchased Shares have not been registered under the
1933 Act and are being issued to Participant in reliance upon the exemption from such registration provided by SEC
Rule 701 for stock issuances under compensatory benefit plans such as the Plan. Participant hereby confirms that Participant has been informed that the Purchased Shares are restricted
securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is
available. Accordingly, Participant hereby acknowledges that Participant is prepared to hold the Purchased Shares for an indefinite period and that Participant is aware that SEC Rule 144 issued
under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Purchased Shares from the registration requirements of the 1933 Act. 

        2.     Disposition of Purchased Shares.    Participant shall make no disposition of the
Purchased Shares (other than a Permitted Transfer) unless and until there is compliance with all of the following requirements: 

          (i)  Participant
shall have provided the Corporation with a written summary of the terms and conditions of the proposed disposition. 

         (ii)  Participant
shall have complied with all requirements of this Agreement applicable to the disposition of the Purchased Shares. 

        (iii)  Participant
shall have provided the Corporation with written assurances, in form and substance satisfactory to the Corporation, that (a) the proposed
disposition does not require registration of the Purchased Shares under the 1933 Act or (b) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or
any exemption from registration available under the 1933 Act (including Rule 144) has been taken. 

        The
Corporation shall not be required (i) to transfer on its books any Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement or (ii) to treat as the owner of the Purchased Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee
to whom the Purchased Shares have been transferred in contravention of this Agreement. 

 

        3.     Restrictive Legends.    The stock certificates for the Purchased Shares shall be
endorsed with one or more of the following restrictive legends: 

        "The
shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of (a) an
effective registration statement for the shares under such Act, (b) a "no action" letter of the Securities and Exchange Commission with respect to such sale or offer or (c) satisfactory
assurances to the Corporation that registration under such Act is not required with respect to such sale or offer." 

        "The
shares represented by this certificate are subject to certain rights of first refusal granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered,
or in any manner disposed of except in conformity with the terms of a written agreement dated                         ,
            , between the
Corporation and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Corporation's principal corporate offices." 

        C.    TRANSFER RESTRICTIONS

        1.     Restriction on Transfer.    Except for any Permitted Transfer, Purchased Shares
shall not be transferred, assigned, encumbered or otherwise disposed of in contravention of the First Refusal Right or the Market Stand-Off. 

        2.     Transferee Obligations.    Each person (other than the Corporation) to whom the
Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound
by the provisions of this Agreement and that the transferred shares are subject to (i) the First Refusal Right and (ii) the Market Stand-Off, to the same extent such shares
would be so subject if retained by Participant. 

        3.     Market Stand-Off. 

        (a)   In
connection with any underwritten public offering by the Corporation of its equity securities pursuant to an effective registration statement filed under the 1933 Act,
including the Corporation's initial public offering, Owner shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for
value or otherwise agree to engage in any of the foregoing transactions with respect to, any Purchased Shares without the prior written consent of the Corporation or its underwriters. Such restriction
(the "Market Stand-Off") shall be in effect for such period of time from and after the effective date of the final prospectus for the offering as may be requested by the Corporation or
such underwriters. In no event, however, shall such period exceed one hundred eighty (180) days, and the Market Stand-Off shall in no event be applicable to any underwritten public
offering effected more than two (2) years after the effective date of the Corporation's initial public offering. 

        (b)   Owner
shall be subject to the Market Stand-Off provided and only if the officers and directors of the Corporation are also
subject to similar restrictions. 

        (c)   Any
new, substituted or additional securities which are by reason of any Recapitalization or Reorganization distributed with respect to the Purchased Shares shall be
immediately subject to the Market Stand-Off, to the same extent the Purchased Shares are at such time covered by such provisions. 

        (d)   In
order to enforce the Market Stand-Off, the Corporation may impose stop-transfer instructions with respect to the Purchased Shares until the
end of the applicable stand-off period. 

2

 

        D.    RIGHT OF FIRST REFUSAL

        1.     Grant.    The Corporation is hereby granted the right of first refusal (the "First
Refusal Right"), exercisable in connection with any proposed transfer of the Purchased Shares. For purposes of this Article D, the term "transfer" shall include any sale, assignment, pledge,
encumbrance or other disposition of the Purchased Shares intended to be made by Owner, but shall not include any Permitted Transfer. 

        2.     Notice of Intended Disposition.    In the event any Owner of Purchased Shares in
which Participant has vested desires to accept a bona fide third-party offer for the transfer of any or all of such shares (the Purchased Shares subject to such offer to be hereinafter referred to as
the "Target Shares"), Owner shall promptly (i) deliver to the Corporation written notice (the "Disposition Notice") of the terms of the offer, including the purchase price and the identity of
the third-party offeror, and (ii) provide satisfactory proof that the disposition of the Target Shares to such third-party offeror would not be in contravention of the provisions set forth in
Articles B and C. 

        3.     Exercise of the First Refusal Right.    The Corporation shall, for a period of
twenty-five (25) days following receipt of the Disposition Notice, have the right to repurchase any or all of the Target Shares subject to the Disposition Notice upon the same terms
as those specified therein or upon such other terms (not materially different from those specified in the Disposition Notice) to which Owner consents. Such right shall be exercisable by delivery of
written notice (the "Exercise Notice") to Owner prior to the expiration of the twenty-five (25)-day exercise period. If such right is exercised with respect to all the Target
Shares, then the Corporation shall effect the repurchase of such shares, including payment of the purchase price, not more than five (5) business days
after delivery of the Exercise Notice; and at such time the certificates representing the Target Shares shall be delivered to the Corporation. 

        Should
the purchase price specified in the Disposition Notice be payable in property other than cash or evidences of indebtedness, the Corporation shall have the right to pay the
purchase price in the form of cash equal in amount to the value of such property. If Owner and the Corporation cannot agree on such cash value within ten (10) days after the Corporation's
receipt of the Disposition Notice, the valuation shall be made by an appraiser of recognized standing selected by Owner and the Corporation or, if they cannot agree on an appraiser within twenty
(20) days after the Corporation's receipt of the Disposition Notice, each shall select an appraiser of recognized standing and the two (2) appraisers shall designate a third appraiser of
recognized standing, whose appraisal shall be determinative of such value. The cost of such appraisal shall be shared equally by Owner and the Corporation. The closing shall then be held on the
later of (i) the fifth (5th) business day following delivery of the Exercise Notice or (ii) the fifth (5th) business day after such valuation shall have been
made. 

        4.     Non-Exercise of the First Refusal Right.    In the event the Exercise
Notice is not given to Owner prior to the expiration of the twenty-five (25)-day exercise period, Owner shall have a period of thirty (30) days thereafter in which to
sell or otherwise dispose of the Target Shares to the third-party offeror identified in the Disposition Notice upon terms (including the purchase price) no more favorable to such third-party offeror
than those specified in the Disposition Notice; provided, however, that any such sale or disposition must not be effected in contravention of the provisions of Articles B
and C. The third-party offeror shall acquire the Target Shares subject to the First Refusal Right and the provisions and restrictions of Article B and Paragraph C.3, and any subsequent
disposition of the acquired shares must be effected in compliance with the terms and conditions of such First Refusal Right and the provisions and restrictions of Article B and
Paragraph C.3. In the event Owner does not effect such sale or disposition of the Target Shares 

3

 

within
the specified thirty (30)-day period, the First Refusal Right shall continue to be applicable to any subsequent disposition of the Target Shares by Owner until such right lapses. 

        5.     Partial Exercise of the First Refusal Right.    In the event the Corporation makes
a timely exercise of the First Refusal Right with respect to a portion, but not all, of the Target Shares specified in the Disposition Notice, Owner shall have the option, exercisable by written
notice to the Corporation delivered within five (5) business days after Owner's receipt of the Exercise Notice, to effect the sale of the Target Shares pursuant to either of the following
alternatives: 

          (i)  sale
or other disposition of all the Target Shares to the third-party offeror identified in the Disposition Notice, but in full compliance with the requirements of
Paragraph D.4, as if the Corporation did not exercise the First Refusal Right; or 

         (ii)  sale
to the Corporation of the portion of the Target Shares which the Corporation has elected to purchase, such sale to be effected in substantial conformity with the
provisions of Paragraph D.3. The First Refusal Right shall continue to be applicable to any subsequent disposition of the remaining Target Shares until such right lapses. 

        Owner's
failure to deliver timely notification to the Corporation shall be deemed to be an election by Owner to sell the Target Shares pursuant to alternative (i) above. 

        6.     Recapitalization/Reorganization. 

        (a)   Any
new, substituted or additional securities or other property which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be
immediately subject to the First Refusal Right, but only to the extent the Purchased Shares are at the time covered by such right. 

        (b)   In
the event of a Reorganization, the First Refusal Right shall remain in full force and effect and shall apply to the new capital stock or other property received in
exchange for the Purchased Shares in consummation of the Reorganization, but only to the extent the Purchased Shares are at the time covered by such right. 

        7.     Lapse.    The First Refusal Right shall lapse upon the earliest to occur of
(i) the first date on which shares of the Common Stock are held of record by more than five hundred (500) persons, (ii) a determination made by the Board that a public market
exists for the outstanding shares of Common Stock or (iii) a firm commitment underwritten public offering, pursuant to an effective registration statement under the 1933 Act, covering the offer
and sale of the Common Stock in the aggregate amount of at least twenty million dollars ($20,000,000). However, the Market Stand-Off shall continue to remain in full force and effect
following the lapse of the First Refusal Right. 

        E.    GENERAL PROVISIONS

        1.     Assignment.    The Corporation may assign the First Refusal Right to any person or
entity selected by the Board, including (without limitation) one or more stockholders of the Corporation. 

        2.     At Will Employment.    Nothing in this Agreement or in the Plan shall confer upon
Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing
or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant's Service at any time for any reason, with or without cause. 

        3.     Notices.    Any notice required to be given under this Agreement shall be in
writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at
the address indicated below such party's signature line on this Agreement or at such other address as 

4

 

such
party may designate by ten (10) days advance written notice under this paragraph to all other parties to this Agreement. 

        4.     No Waiver.    The failure of the Corporation in any instance to exercise the First
Refusal Right shall not constitute a waiver of any other repurchase rights and/or rights of first refusal that may subsequently arise under the provisions of this Agreement or any other agreement
between the Corporation and Participant. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or
different nature. 

        5.     Cancellation of Shares.    If the Corporation shall make available, at the time and
place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such
time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance
with this Agreement). Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement. 

        F.     MISCELLANEOUS PROVISIONS

        1.     Governing Law.    This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California without resort to that State's conflict-of-laws rules. 

        2.     Participant Undertaking.    Participant hereby agrees to take whatever additional
action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either
Participant or the Purchased Shares pursuant to the provisions of this Agreement. 

        3.     Agreement is Entire Contract.    This Agreement constitutes the entire contract
between the parties hereto with regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the terms
of the Plan. 

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

        5.     Successors and Assigns.    The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns and upon Participant, Participant's assigns and the legal representatives, heirs and legatees of Participant's estate,
whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof. 

5

 

        IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above. 

	 	 	AFFYMAX, INC.
	

 	
 	

By:	

    

	

 	
 	

Title:	

Director of Finance

	

 	
 	

Address:	

4001 Miranda Avenue
Palo Alto, CA 94304

	

 	
 	

 	

    
PARTICIPANT
	

 	
 	

Address:	

    

	

 	
 	

 	

    

6

SPOUSAL ACKNOWLEDGMENT  

        The undersigned spouse of Participant has read and hereby approves the foregoing Stock Issuance Agreement. In consideration of the Corporation's granting
Participant the right to acquire the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Agreement. 

	 	 	 	    
PARTICIPANT'S SPOUSE
	

 	
 	

Address:	

    

	

 	
 	

 	

    

EXHIBIT I

2001 STOCK OPTION/STOCK ISSUANCE PLAN  

 
APPENDIX  

        The following definitions shall be in effect under the Agreement: 

        A.    Agreement shall mean this Stock Issuance Agreement. 

        B.    Board shall mean the Corporation's Board of Directors. 

        C.    Code shall mean the Internal Revenue Code of 1986, as amended. 

        D.    Common Stock shall mean the Corporation's common stock. 

        E.    Corporation shall mean Affymax, Inc., a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of Affymax, Inc. which shall by appropriate action adopt the Plan. 

        F.     Disposition Notice shall have the meaning assigned to such term in Paragraph D.2. 

        G.    Exercise Notice shall have the meaning assigned to such term in Paragraph D.3. 

        H.    Fair Market Value of a share of Common Stock on any relevant date, prior to the initial
public offering of the Common Stock, shall be determined by the Plan Administrator after taking into account such factors as it shall deem appropriate. 

        I.     First Refusal Right shall have the meaning assigned to such term in Article D. 

        J.     Market Stand-Off shall mean the market stand-off restriction
specified in Paragraph C.4. 

        K.    1933 Act shall mean the Securities Act of 1933, as amended. 

        L.    Owner shall mean Participant and all subsequent holders of the Purchased Shares who derive
their chain of ownership through a Permitted Transfer from Participant. 

        M.   Parent shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

        N.    Participant shall mean the person to whom shares are issued under the Stock Issuance Program. 

        O.    Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares,
provided and only if Participant obtains the Corporation's prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected
pursuant to Participant's will or the laws of inheritance following Participant's death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred
by Participant in connection with the acquisition of the Purchased Shares. 

        P.     Plan shall mean the Corporation's 2001 Stock Option/Stock Issuance Plan attached hereto as
Exhibit I. 

        Q.    Plan Administrator shall mean either the Board or a committee of the Board acting in its
capacity as administrator of the Plan. 

        R.    Purchase Price shall have the meaning assigned to such term in Paragraph A.1. 

        S.     Purchased Shares shall have the meaning assigned to such term in Paragraph A.1. 

        T.     Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the Corporation's outstanding Common Stock as a class without the Corporation's receipt of consideration. 

A-1

 

        U.    Reorganization shall mean any of the following transactions: 

          (i)  a
merger or consolidation in which the Corporation is not the surviving entity, 

         (ii)  a
sale, transfer or other disposition of all or substantially all of the Corporation's assets, 

        (iii)  a
reverse merger in which the Corporation is the surviving entity but in which the Corporation's outstanding voting securities are transferred in whole or in part to a
person or persons different from the persons holding those securities immediately prior to the merger, or 

        (iv)  any
transaction effected primarily to change the state in which the Corporation is incorporated or to create a holding company structure. 

        V.     SEC shall mean the Securities and Exchange Commission. 

        W.    Service shall mean the Participant's performance of services for the Corporation (or any
Parent or Subsidiary) in the capacity of an employee, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance, a
non-employee member of the board of directors or an independent consultant. 

        X.    Stock Issuance Program shall mean the Stock Issuance Program under the Plan. 

        Y.    Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

        Z.    Target Shares shall have the meaning assigned to such term in Paragraph D.2. 

A-2

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