Document:

Exhibit 4.9

 

Form of warrant to purchase shares of Common Stock issued by the Registrant

to various parties expiring on March 10, 2016

 

	
Holder
    	
 
    	
Issue date
    	
 
    	
Number of shares
    	
 
    
	
Brookbridge Associates, LP
    	
 
    	
8/25/2010
    	
 
    	
122,383
    	
 
    
	
David E. Eisenberg
    	
 
    	
8/25/2010
    	
 
    	
122,383
    	
 
    
	
Stuart Russo
    	
 
    	
1/18/2011
    	
 
    	
109,919
    	
 
    
	
Adam Weis
    	
 
    	
2/8/2011
    	
 
    	
42,350
    	
 
    

 

 

MERRIMACK PHARMACEUTICALS, INC.

 

THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.

 

AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT

 

                SHARES

 

[ISSUE DATE]

 

(originally issued on March 11, 2004)

 

Merrimack Pharmaceuticals, Inc., a Massachusetts corporation (f/k/a Atlantic BioPharmaceuticals, Inc.), hereby certifies that, for value received,                  (the “Holder”) is entitled, subject to the terms set forth below, to purchase from the Company, up to                      shares of the Company’s Common Stock (the “Warrant Shares”), at a purchase price per share (the “Purchase Price”) of $3.00 per share.  The number and character of the Warrant Shares and the Purchase Price are subject to adjustment as provided herein.

 

This Amended and Restated Common Stock Purchase Warrant (the “Warrant”) was transferred to the Holder by Wharton-Merrimack Investors, LLC (the “Transferor”) on the date hereof from that certain Amended and Restated Common Stock Purchase Warrant issued by the Company to the Transferor on the date hereof (the “Amended and Restated Warrant”), which amended and restated that certain Common Stock Purchase Warrant issued by the Company to the Transferor on March 11, 2004, as subsequently amended on March 3, 2006 (the “Original Warrant”).  The Original Warrant was issued pursuant to that certain Series C Convertible Preferred Stock Purchase Agreement dated as of December 10, 2003 (the “Stock Purchase Agreement”), a copy of which is on file at the principal office of the Company.  The Original Warrant and the Amended and Restated Warrant, and any amendments thereto, shall have no further force or effect.  The terms of this Warrant shall be subject to all the terms and conditions set forth in the Stock Purchase Agreement to which the Original Warrant was subject.  Furthermore, the Common Stock issuable upon exercise of the Warrant Shares shall be subject to the provisions of the articles of organization, certificate of incorporation or similar constituent documents of the Company, as from time to time amended and/or restated (the “Articles of Organization”), to which Holder hereby assents.

 

 

1.                                      Definitions.

 

As used herein, the following terms, unless the context otherwise requires, have the following respective meanings:

 

(a)           The term “Company” shall mean Merrimack Pharmaceuticals, Inc., a Massachusetts corporation (f/k/a Atlantic BioPharmaceuticals, Inc.), and any corporation that shall succeed to or assume the obligations of Merrimack Pharmaceuticals, Inc. hereunder.

 

(b)           The term “Common Stock” shall mean the Company’s common stock, without par value.

 

(c)           The term “Market Price” shall mean, on any date specified herein, the amount per share of the Common Stock, equal to (i) the last reported sale price of such Common Stock, regular way, on such date or, in case no such sale takes place on such date, the average of the losing bid and asked prices thereof, regular way, on such date, in either case as officially reported on the principal national securities exchange on which such Common Stock is then listed or admitted for trading, or (ii) if such Common Stock is not then listed or admitted for trading on any national securities exchange but is designated as a national market system security by FINRA, the last reported trading price of the Common Stock on such date, or (iii) if there shall have been no trading on such date or if the Common Stock is not so designated, the average of the closing bid and asked prices of the Common Stock on such date as shown by the principal automated quotation system on which such Common Stock is quoted, or (iv) if such Common Stock is not then listed or admitted for trading on any national exchange or quoted in the over-the-counter market, the fair value thereof (as of a date which is within 20 days of the date as of which the determination is to be made) determined in good faith by the Board of Directors of the Company.

 

(d)           The term “Other Securities” shall mean any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which Holder at any time shall be entitled to receive, or shall have received, upon exercise of this Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock.

 

(e)           The term “Person” shall mean an individual, firm, partnership, association, unincorporated organization, trust, corporation, or any other entity.

 

2.                                      Exercise of Warrant.

 

2.1           Exercise Procedure.  This Warrant may be exercised by the Holder hereof, in whole or in part, at any time or from time to time prior to the Expiration Date, by surrendering to the Company at its principal office this Warrant, with the form of Election to Purchase Shares attached hereto as Exhibit A duly executed by the Holder and accompanied by payment of the Purchase Price for the number of shares of Common Stock specified in such form.

 

2.2           Payment of Purchase Price.  Payment of the Purchase Price may be made as follows (or by any combination of the following):  (i) in United States currency by cash or delivery of a certified check or bank draft payable to the order of the Company or by wire 

 

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transfer to the Company, (ii) by cancellation of such number of the shares of Common Stock otherwise issuable to the Holder upon such exercise as shall be specified in such Election to Purchase Shares, such that the excess of the aggregate current Market Price of such specified number of shares on the date of exercise over the portion of the Purchase Price attributable to such shares shall equal the Purchase Price attributable to the shares of Common Stock to be issued upon such exercise, in which case such amount shall be deemed to have been paid to the Company and the number of shares issuable upon such exercise shall be reduced by such specified number, or (iii) by surrender to the Company for cancellation of certificates representing shares of Common Stock of the Company owned by the Holder (properly endorsed for transfer in blank) having a current Market Price on the date of Warrant exercise equal to the Purchase Price.

 

2.3           Effective Date of Exercise.  Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the business day on which this Warrant shall have been surrendered to, and the Purchase Price shall have been received by, the Company as provided in Section 2.1, and at such time the person of persons in whose name or names any certificate of certificates for shares of Common Stock shall be issuable upon such exercise as provided in Section 3 shall be deemed to have become the holder or holders of record thereof for all purposes.

 

2.4           Fractional Shares.  In no event shall any fractional share of Common Stock be issued upon any exercise of this Warrant.  If, upon exercise of this Warrant, Holder would, except as provided in this Section 2.4, be entitled to receive a fractional share of Common Stock, then the Company shall issue the next higher round number of full shares of Common Stock, issuing a full share with respect to such fractional share.

 

3.                                      Delivery of Stock Certificates.

 

As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 3 business days thereafter, the Company at its expense (including the payment by it of any applicable taxes) will cause to be issued in the name of and delivered to Holder (or its designee), a certificate or certificates for the number of fully paid and nonassessable shares of Common Stock (or Other Securities) to which Holder shall be entitled on such exercise, together with any other stock or other securities and property (including cash, where applicable) to which Holder is entitled upon such exercise pursuant to Section 2 or otherwise.  As used in this Warrant the term “business day” shall mean any day other than a Saturday or a Sunday on which commercial banking industries in the Commonwealth of Massachusetts are authorized to be closed.

 

4.                                      Consolidation, Merger, etc.

 

4.1           Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc.  In case the Company after the date hereof (a) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation of such consolidation or merger, or (b) shall permit any other Person to consolidate with or merge into the Company and the Company shall be the continuing or surviving Person but, in connection with such consolidation or merger, the Common Stock shall be changed into or exchanged for stock or other securities of any other 

 

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Person or cash or any other property, or (c) shall transfer all or substantially all of its properties or assets to any other Person, or (d) shall effect a capital reorganization or reclassification of the Common Stock, then, and in the case of each such transaction, proper provision shall be made so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant, upon the exercise hereof at any time after the consummation of such transaction, shall be entitled to receive (at the aggregate Purchase Price in effect at the time of such consummation for all Common Stock issuable upon such exercise immediately prior to such consummation), in lieu of the Common Stock issuable upon such exercise prior to such consummation, the highest amount of securities, cash or other property to which such Holder would actually have been entitled as a shareholder upon such consummation if such Holder had exercised this Warrant immediately prior thereto, subject to adjustments (subsequent to such consummation) as nearly equivalent as possible to the adjustments provided for in Section 5, provided that if a purchase, tender or exchange offer shall have been made to and accepted by the holders of more than 50% of the outstanding shares of Common Stock, and if the Holder so designates in a notice given to the Company on or before the date immediately preceding the date of the consummation of such transaction, the Holder of such Warrants shall be entitled to receive the highest amount of securities, cash or other property to which it would actually have been entitled as a shareholder if the Holder of such Warrants had exercised such Warrants prior to the expiration of such purchase, tender or exchange offer and accepted such offer, subject to adjustments (from and after the consummation of such purchase, tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in Sections 3 and 4.

 

4.2           Assumption of Obligations.  Notwithstanding anything contained in the Warrants or in the Stock Purchase Agreement to the contrary, the Company shall not effect any of the transactions described in clauses (a) through (d) of Section 4.1 unless, prior to the consummation thereof, each Person (other than the Company) which may be required to deliver any stock, securities, cash or property upon the exercise of this Warrant as provided herein shall assume any obligations of the Company under this Warrant (and if the Company shall survive the consummation of such transaction, such assumption shall be in addition to and shall not release the Company from, any continuing obligations under this Warrant), and (b) the obligation to deliver to the Holder such shares of stock, securities, cash or property as, in accordance with the foregoing provisions of this Section 4, the Holder may be entitled to receive.

 

4.3           No Dilution or Impairment.  The Company shall not, by amendment of its Articles of Organization or through any consolidation, merger, reorganization, transfer of the assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Warrant against dilution or other impairment.  Without limiting the generality of the foregoing, the Company (a) shall not permit the par value of any shares of stock receivable upon the exercise of this Warrant to exceed the amount payable therefor upon such exercise, (b) shall take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock, and (c) shall not take any action which results in any adjustment of the Purchase Price if the total number of shares of Common Stock issuable after the action upon the exercise of all of the Warrants would exceed the total number of shares of 

 

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Common Stock then authorized by the Articles of Organization and available for the purpose of issue upon such exercise.

 

5.                                      Adjustments of Purchase Price and Number of Warrant Shares.

 

5.1           Adjustments For Stock Dividends and Stock Splits.  In the event that the Company shall (i) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock or (ii) subdivide or combine its outstanding shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect.

 

5.2           Adjustment of Number of Shares Issuable Pursuant to Warrant.  Upon each adjustment of the Purchase Price in accordance with the provisions of this Section 5, the number of Warrant Shares issuable upon exercise of the Warrant shall also be adjusted by multiplying the number of shares of Warrant Shares that would otherwise be issuable (but for the provisions of this Section 5) by a fraction of which (x) the numerator is the Purchase Price in effect immediately prior to the relevant adjustment and (y) the denominator is the Purchase Price as adjusted hereby.

 

5.3           Notice of Adjustment.  Upon any adjustment of the number of Warrant Shares issuable upon exercise of this Warrant or any adjustment of the Purchase Price, then and in such case the Company shall give notice thereof to the Holder, in accordance with Section 10.4 hereof, which notice shall state the number of Warrant Shares issuable upon exercise of this Warrant and the Purchase Price of such Warrant Shares resulting from such adjustment, setting forth in reasonable detail the method upon which such adjustment is based.

 

6.                                      Investment Representations.

 

6.1           Accredited Investor.  Holder is an “accredited investor” as such term is defined under Regulation D of the Securities Act of 1933, as amended (the “Act”).

 

6.2           Investment Purpose.  This Warrant and the right to purchase shares of Common Stock upon the exercise thereof, are being acquired for investment purposes only and not with a view towards, or for sale in connection with, the distribution thereof, and Holder has no present intention of distributing or selling the same except pursuant to an applicable registration or exemption under the Act.

 

7.                                      No Voting Rights.

 

This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company.

 

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8.                                      Registration Rights.

 

Pursuant to, and subject to the terms and conditions of, that certain Fourth Amended and Restated Investor Rights Agreement, dated as of the date hereof, among Holder, the Company and the Investors listed therein, as from time to time amended and/or restated, Holder is entitled to certain registration rights with respect to the Warrant Shares.

 

9.                                      Termination of Warrant.

 

Holder’s right to exercise this Warrant shall expire as of 5:00 p.m., Eastern Time, on March 10, 2016 (the “Expiration Date”).

 

10.                               Miscellaneous.

 

10.1         Transfer of Warrant.  Subject to Holder’s compliance with applicable Federal and state securities laws, this Warrant may be transferred by Holder in whole or in part.  Upon surrender of this Warrant for transfer, properly endorsed, to the Company, the Company at its expense will issue and deliver a new Warrant or Warrants of the same denomination and terms, in the name of Holder’s transferee(s).

 

10.2         Replacement of Warrants.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction of any Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor; provided, however, if any Warrant is lost, stolen or destroyed, the affidavit of an officer of Holder setting forth the circumstances with respect to such loss, theft or destruction shall be accepted as satisfactory evidence thereof, and no indemnity bond or other security shall be required as a condition to the execution and delivery by the Company of a new Warrant in replacement of such lost, stolen or destroyed Warrant.

 

10.3         Remedies.  The Company stipulates that the remedies at law of Holder in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

 

10.4         Notices.  Any notice or other communication required or which may be given hereunder shall be in writing and shall be delivered personally, sent by facsimile transmission (with a copy by mail) or sent by certified, registered or express mail (including Federal Express or other established overnight delivery service), postage prepaid, as follows:

 

to the Company:                                                                                                        Merrimack Pharmaceuticals, Inc.
  One Kendall Square, Suite B7201
 Cambridge, MA 02139
 Attention:  Robert J. Mulroy, President
 Fax: (617) 441-1000

 

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with a copy to:                                                                                                                 Wilmer Cutler Pickering Hale and Dorr LLP
 60 State Street
 Boston, MA 02109
 Attention: David E. Redlick, Esq.
 Fax: (617) 526-5000

 

to Holder:

 

The parties may from time to time amend the above addresses and names by written notice given the other party.

 

10.5         Significance of Captions.  The captions of the Articles, Sections and subsections of this Warrant are for convenience of reference only and shall not affect the meaning or interpretation of any of the provisions hereof.

 

10.6         Benefit and Binding Effect.  This Warrant shall inure to the benefit of the respective personal representatives, successors and assigns of the parties hereto.

 

10.7         Governing Law.  This Warrant shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts.

 

10.8         Reservation of Stock.  The Company shall at all times reserve and keep available, solely for issuance and delivery upon exercise of the Warrants, the number of shares of Common Stock from time to time issuable upon exercise of all Warrants at the time outstanding.  All shares of Common Stock issuable upon exercise of any Warrants shall be duly authorized and, when issued upon such exercise, shall be validly issued and, in the case of shares, fully paid and nonassessable.  All Warrant Certificates surrendered upon the exercise of the rights thereby evidenced shall be canceled, and such canceled Warrants shall constitute sufficient evidence of the number of shares of stock which have been issued upon the exercise of such Warrants.  Subsequent to the Expiration Date, no shares of stock need to be reserved in respect of any unexercised Warrant.

 

10.9         Entire Agreement.  This Warrant, together with the Stock Purchase Agreement, represents the entire agreement of the parties hereto with respect to the transactions contemplated hereby and supersedes all prior agreements and understandings.

 

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IN WITNESS WHEREOF, the parties have executed this Warrant under seal as of the day and year first written above.

 

 

	
 
    	
MERRIMACK PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Robert J. Mulroy
    
	
 
    	
 
    	
President and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[HOLDER]
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
[Name of Authorized   Signatory]
    

 

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EXHIBIT A

 

Election to Purchase Shares

 

To:  Merrimack Pharmaceuticals, Inc.

 

	
Date:
    	
 
    	
 
    

 

The undersigned hereby subscribes for                          shares of Common Stock of Merrimack Pharmaceuticals, Inc. (the “Company”), as such term is defined in the attached Warrant, evidenced by the attached Warrant and herewith:

 

(i)            makes payment of the Purchase Price, as defined in the attached Warrant, in the amount of $                                by means of:

 

(a)           cash or delivery of a certified bank check or bank draft payable to the Company in the amount of $                         ; and/or

 

(b)           wire transfer of funds to the Company in the amount of $                           .

 

or

 

(ii)           elects to make a cashless exercise pursuant to Section 2.2(ii) and/or 2.2(iii) of the attached Warrant, in which case                      shares of Common Stock shall be deemed payment of the Purchase Price, and/or to the extent a cashless exercise is pursuant to Section 2.2(iii), certificates representing                          shares of Common Stock have been surrendered herewith.

 

The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

 

	
 
    	
 
    
	
Signature
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Name   for Registration
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Mailing   AddressExhibit 10.1

 

Merrimack Pharmaceuticals, Inc.
 1999 Stock Option Plan

(as amended)

 

This 1999 Stock Option Plan (the “Plan”) is intended to encourage ownership of Common Stock, no par value (the “Stock”) of Merrimack Pharmaceuticals, Inc., formerly known as Atlantic BioPharmaceuticals, Inc. (the “Company”) by its officers, employees and consultants so as to provide additional incentives to promote the success of the Company through the grant of Incentive Stock Options and Nonstatutory Stock Options (as such terms are defined in Section 3(a) below (collectively, “Options”).

 

1.             Administration of the Plan.

 

The administration of the Plan shall be under the general supervision of the Board of Directors of the Company or any Board of the Board of Directors of the Company to whom authority to administer this Plan is delegated (the “Board”). In the event the Board of Directors delegates administrative authority to a committee, such committee shall be comprised of not less than two members of the Board of Directors who are not also employees of the Company and each of whom shall qualify as a “disinterested person” under Rule l6b-3(c)(2)(i) promulgated under the Securities Exchange Act of 1934, as amended, or any successor definition under said Rule. On and after the date the Company becomes subject to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), each member of such committee shall also be an “outside director” within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder. Within the limits of the Plan, the Board shall determine the individuals to whom, and the times at which, Options shall be granted, the type of Option to be granted, the duration of each Option, the price and method of payment for each Option, and the time or times within which (during its term) all or portions of each Option may be exercised. The Board may establish such rules as it deems necessary for the proper administration of the Plan, make such determinations and interpretations with respect to the Plan and Options granted under it as may be necessary or desirable and include such further provisions or conditions in Options granted under the Plan as it deems advisable. To the extent permitted by law, the Board may delegate its authority under the Plan to a sub-committee of the Board.

 

2.             Shares Subject to the Plan.

 

                (a) Number and Tyne of Shares. The aggregate number of shares of Stock of the Company which may be optioned under the Plan is 12,600,000 shares, provided, however, that on and after the date the Company is subject to Section 162(m) of the Internal Revenue Code of 1986, as amended, Options with respect to no more than 250,000 shares of Common Stock may be granted to any one individual Participant during any fiscal year period. In the event that the Board in its discretion determines that any stock dividend, split-up, combination or reclassification of shares, recapitalization or other similar capital change affects the Stock such that adjustment is required in order to preserve the benefits or potential benefits of

 

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the Plan or any Option granted under the Plan, the maximum aggregate number and kind of shares or securities of the Company as to which Options may be granted under the Plan and as to which Options then outstanding shall be exercisable, and the option price of such Options, shall be appropriately adjusted by the Board (whose determination shall be conclusive) so that the proportionate number of shares or other securities as to which Options may be granted and the proportionate interest of holders of outstanding Options shall be maintained as before the occurrence of such event.

 

(b)           Effect of Certain Transactions. In the event of a consolidation or merger of the Company with another corporation, or the sale or exchange of all or substantially all of the assets of the Company, or a reorganization or liquidation of the Company, each holder of an outstanding Option shall be entitled to receive upon exercise and payment in accordance with the terms of the Option the same shares, securities or property as he would have been entitled to receive upon the occurrence of such event if he had been, immediately prior to such event, the holder of the number of shares of Stock purchasable under his Option; provided, however, that in lieu of the foregoing the Board of Directors of the Company (the “Board”) may upon written notice to each holder of an outstanding Option provide that such Option shall terminate on a date not less than 20 days after the date of such notice unless theretofore exercised. In connection with such notice, the Board may in its discretion accelerate or waive any deferred exercise period.

 

(c)           Restoration of Shares. If any Option expires or is terminated unexercised or is forfeited for any reason or settled in a manner that results in fewer shares outstanding than were initially awarded, including without limitation the surrender of shares in payment of the Option exercise price or any tax obligation thereon, the shares subject to such Option or so surrendered, as the case may be, to the extent of such expiration, termination, forfeiture or decrease, shall again be available for granting Options under the Plan, subject, however, in the case of Incentive Stock Options, to any requirements under the Code (as defined below).

 

(d)           Reservation of Shares. The Company shall at all times while the Plan is in force reserve such number of shares of Stock as will be sufficient to satisfy the requirements of the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

 

3.             Grant of Options: Eligible Persons

 

(a)           Types of Options. Options shall be granted under the Plan either as incentive stock options (“Incentive Stock Options”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) or as Options which do not meet the requirements of Section 422 (“Nonstatutory Stock Options”). Options may be granted from time to time by the Board, within the limits set forth in Sections l and 2 of the Plan, to all employees of the Company or of any parent corporation or subsidiary corporation of the Company (as defined in Sections 424(e) and (f), respectively, of the Code), and, with regard to Nonstatutory Stock Options, to all consultants of the Company.

 

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(b)           Date of Grant. The date of grant for each Option shall be the date on which it is approved by the Board, or such later date as the Board may specify. No Options shall be granted hereunder after ten years from the date on which the Plan was approved by the Board.

 

(c)           Automatic Awards. The Board may provide for the automatic award of an Option upon the delivery of shares to the Company in payment of an Option for up to the number of shares so delivered.

 

4.             Form of Options.

 

Options granted hereunder shall be evidenced by a writing delivered to the optionee specifying the terms and conditions thereof and containing such other terms and conditions not inconsistent with the provisions of the Plan as the Board considers necessary or advisable to achieve the purposes of the Plan or comply with applicable tax and regulatory laws and accounting principles. The form of such Options may vary among optionees.

 

5.             Option Price.

 

In the case of Incentive Stock Options, the price at which shares may from time to time be optioned shall be determined by the Board, provided that such price shall not be less than the fair market value of the Stock on the date of granting as determined in good faith by the Board; and provided further that no Incentive Stock Option shall be granted to any individual who is ineligible to be granted an Incentive Stock Option because his ownership of stock of the Company or its parent or subsidiary corporations exceeds the limitations set forth in Section 422(b)(6) of the Code unless such option price is at least 110% of the fair market value of the Stock on the date of grant.

 

In the case of Nonstatutory Stock Options, the price at which shares may from time to time be optioned shall be determined by the Board.

 

The Board may in its discretion permit the option price to be paid in whole or in part by a note or in installments or with shares of Stock of the Company or such other lawful consideration as the Board may determine.

 

6.             Term of Option and Dates of Exercise.

 

(a)           Exercisability. The Board shall determine the term of all Options, the time or times that Options are exercisable and whether they are exercisable in installments; provided, however, that the term of each non-statutory stock option granted under the Plan shall not exceed a period of eleven years from the date of its grant and the term of each Incentive Stock Option granted under the Plan shall not exceed a period of ten years from the date of its grant, provided that no Incentive Stock Option shall be granted to any individual who is ineligible to be granted such Option because his ownership of stock of the Company or its parent or subsidiary corporations exceeds the limitations set forth in Section 422(b)(6) of the Code unless the term of his Incentive Stock Option does not exceed a period of five years from the date of its grant. In the absence of such determination, the Option shall be exercisable at any time or from time to 

 

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time, in whole or in part, during a period of ten years from the date of its grant or, in the case of an Incentive Stock Option, the maximum term of such Option.

 

(b)           Effect of Disability Death or Termination of Employment. The Board shall determine the effect on an Option of the disability, death, retirement or other termination of employment of an optionee and the extent to which, and during the period which, the optionee’s estate, legal representative, guardian, or beneficiary on death may exercise rights thereunder. Any beneficiary on death shall be designated by the optionee, in the manner determined by the Board, to exercise rights of the optionee in the case of the optionee’s death.

 

(c)           Other Conditions. The Board may impose such conditions with respect to the exercise of Options, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.

 

(d)           Withholding. The optionee shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in respect of any Options under the Plan no later than the date of the event creating the tax liability. In the Board’s discretion, such tax obligations may be paid in whole or in part in shares of Stock, including shares retained from the exercise of the Option creating the tax obligation, valued at the fair market value of the Stock on the date of delivery to the Company as determined in good faith by the Board. The Company and any parent corporation or subsidiary corporation of the Company (as defined in Sections 424(e) and (f), respectively, of the Code) may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the optionee.

 

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

 

7.             Non-transferability.

 

Options granted under the Plan shall not be transferable by the holder thereof otherwise than by will or the laws of descent and distribution, and shall be exercisable, during the holder’s lifetime, only by him or her.

 

8.             No Right to Employment.

 

No persons shall have any claim or right to be granted an Option, and the grant of an Option shall not be construed as giving an optionee the right to continued employment. The Company expressly reserves the right at any time to dismiss an optionee free from any liability or claim under the Plan, except as specifically provided in the applicable Option.

 

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9.             No Rights as a Shareholder.

 

Subject to the provisions of the applicable Option, no optionee or any person claiming through an optionee shall have any rights as a shareholder with respect to any shares of Stock to be distributed under the Plan until he or she becomes the holder thereof.

 

10.           Amendment or Termination.

 

The Board may amend or terminate the Plan at any time, provided that no amendment shall be made without stockholder approval if such approval is necessary to comply with any applicable tax or regulatory requirement, including any requirement for exemptive relief under Section 16(b) of the Securities Exchange Act of 1934, or any successor provision.

 

11.           Stockholder Approval.

 

The Plan is subject to approval by the stockholders of the Company by the affirmative vote of the holders of a majority of the shares of capital stock of the Company entitled to vote thereon and present or represented at a meeting duly held in accordance with the laws of the State of Massachusetts, or by any other action that would be given the same effect under the laws of such jurisdiction, which action in either case shall be taken within twelve (12) months from the date the Plan was adopted by the Board. In the event such approval is not obtained, all Options granted under the Plan shall be void and without effect.

 

12.           Governing Law.

 

The provisions of the Plan shall be governed by and interpreted in accordance with the laws of Massachusetts.

 

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