Tyra Biosciences, Inc. 2020 Equity Incentive Plan and form of stock option agreement thereunder
TYRA BIOSCIENCES, INC.
2020 Equity Incentive Plan
Adopted by the Board of Directors: January 6, 2020
Approved by the Stockholders: January 6, 2020
Termination Date: January 6, 2030
(a) Purpose. Tyra Biosciences, Inc. (the Company) hereby establishes this 2019 Equity Incentive Plan (the Plan). This Plan is intended: (i) to attract and retain the best available personnel to ensure the Companys success and accomplish the Companys goals; (ii) to incentivize Employees, Directors, and Consultants with long-term equity-based compensation to align their interests with the interests of the Companys stockholders; and (iii) to promote the success of the Companys business.
(b) Eligible Award Recipients. Employees, Consultants, Directors, or non-Employees, non-Consultants, non-Directors to whom an offer of a service relationship as an Employee, Consultant, or Director, Investor Director Provider, has been or is being extended (together, Eligible Persons) may receive Awards, subject to the terms of this Plan.
(c) Definitions. Capitalized terms in this Plan are defined in Section 23.
(d) Effective Date. This Plan shall become effective on the date it is approved by a majority of votes cast at a duly held meeting of the Companys stockholders (or by such other stockholder vote that the Committee determines to be sufficient for the issuance of Shares and Awards according to the Companys governing documents and Applicable Law).
(e) Effect on Other Plans, Awards, and Arrangements. No payment pursuant to this Plan shall be taken into account in determining any benefits under any Company or Affiliate benefit plan, except to the extent otherwise expressly provided in writing in such other plan.
2. Types of Awards. The Company may grant the following types of Awards under this Plan:
|Share Appreciation Rights (SARs)||Section 6|
|Restricted Shares, Restricted Share Units (RSUs), and Unrestricted Shares||Section 7|
3. Shares Available for Awards.
(a) Share Reserve; In General. A total of 532,164 Shares may be issued under this Plan, subject to Section 12 below (Share Reserve). The Shares deliverable pursuant to Awards shall be authorized but unissued or reacquired Shares, including Shares that the Company repurchased on the open market or otherwise, or that the Company otherwise holds in treasury or trust.
(b) Replenishment; Counting of Shares. Any Shares reserved for a given Award will again be available for future Awards if the Shares for any reason will never be issued to a Participant or
Beneficiary (e.g., due to the Awards forfeiture, cancellation, or expiration, or pursuant to an Award providing for settlement solely in cash rather than in Shares). Further, and to the extent permitted under Applicable Law, the Share Reserve shall not be reduced by any Shares issued under this Plan through the settlement, assumption, or substitution of outstanding awards or obligations to grant future awards as a condition of the Companys or an Affiliates acquiring another entity or by any Shares issued under this Plan as inducement grants under applicable listing rules, if any. Furthermore, Shares withheld in payment of the exercise price or taxes relating to an Award and Shares equal to the number surrendered in payment of any exercise price or Withholding Taxes relating to an Award shall be deemed to not constitute Shares delivered to the Participant and shall again be available for Awards under the Plan.
(c) ISO Share Reserve. The number of Shares that are available for ISO Awards shall not exceed 532,164 Shares (as adjusted under Section 12, and to the full extent allowable under Treas. Reg. § 1.422-2(b)(3)(iii) as in effect on the Effective Date).
(a) General Rule. The Committee shall determine which Eligible Persons may receive Awards. Each Award shall be evidenced by an Award Agreement that sets forth the Grant Date and all other terms and conditions of the Award, is signed on behalf of the Company, and (unless waived by the Committee) is signed by the Eligible Person in acceptance of the Award. The grant of an Award shall not obligate the Company or any Affiliate to continue the employment or service of any Eligible Person, or to provide any future Awards or other remuneration at any time thereafter.
(b) Consultants. A Consultant is eligible for an Award only if, at grant, the offer and/or sale of Company securities to the Consultant is exempt under Rule 701, unless the Company determines the grant need not comply with Rule 701 and will satisfy another exemption under the Securities Act of 1933, as amended, and comply with all other Applicable Law.
(c) Service to Parent Companies. Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any parent of the Company, as defined in Rule 405, unless (i) the stock underlying the Awards is treated as service recipient stock under Code Section 409A (for example, because the Awards are granted pursuant to a corporate transaction such as a spin off transaction), or (ii) the Company, in consultation with its legal counsel, has determined that the Awards are otherwise exempt from or alternatively comply with Code Section 409A.
(d) Award Limits per Person. With respect to each calendar year during the term of this Plan, no Participant may receive Share-settled Awards that relate to more than [●] Shares as adjusted under Section 12.
(e) Replacement Awards. Subject to Applicable Law (including any stockholder approval requirements), in the Committees sole discretion and upon terms it deems appropriate, the Committee may grant an Award to a Participant on the condition that the Participant consent to surrender for cancellation Awards received under this Plan or otherwise.
5. Stock Options.
(a) Grants. For Eligible Persons who are subject to U.S. taxation, Options only may be granted if the Eligible Person is providing services to the Company or any of its subsidiaries such as to qualify the Company as an eligible issuer of service recipient stock within the meaning of Code Section 409A, unless the Award is an ISO. Subject to the special rules for ISOs set forth in Section 5(b) below, the Committee may grant Options to Eligible Persons pursuant to Award Agreements setting forth the type of Option (ISO or Non-ISO) and terms and conditions for exercisability, vesting, and other requirements consistent with this Plan, as the Board deems appropriate, and that may differ for any reason between Eligible Persons, provided in all instances that:
the exercise price of each Option shall be at least 100% of the Fair Market Value of the underlying Shares on the Grant Date (except the exercise price may be lower than 100% of such Fair Market Value if the Award replaces a previously issued Option or SAR or the Award is designated as a Section 409A Award and has either a fixed exercise date or a fixed delivery date); and
no Option can be exercised beyond ten years after its Grant Date (or any such shorter period specified in the Award Agreement).
(b) Special ISO Provisions. ISOs may not be granted more than ten years after Board approval of this Plan. The following provisions control any ISO grants:
Eligibility. The Committee may grant ISOs only to Employees (including officers who are Employees) of the Company or an Affiliate that is a parent corporation or subsidiary corporation within the meaning of Code Section 424.
Documentation. Each Option intended to be an ISO must be specifically designated in the Award Agreement as an ISO; provided that any Option designated as an ISO will be a Non-ISO to the extent the Option fails to meet the requirements of Code Section 422 or the provisions of this Section 5(b). In the case of an ISO, the Committee shall determine on the Grant Date the acceptable methods of paying the exercise price for Shares, and it shall be included in the Award Agreement.
$100,000 Limit. To the extent that the aggregate Fair Market Value (determined at the Grant Date) of Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under all plans of the Company and any Affiliates) exceeds $100,000 (or other limit established in the Code), the excess Options shall be treated as Non-ISOs (starting with the most recently granted Options), notwithstanding anything to the contrary in an Award Agreement. If the limitations of Code Section 422 are amended, the limitations of this subsection automatically shall be adjusted accordingly.
Grants to Ten Percent Holders. An ISO may be granted to an Employee who is a Ten Percent Holder on the Grant Date only if (A) the term of the ISO is no more than five years from the Grant Date, and (B) the exercise price is at least 110% of the Fair Market Value of the underlying Shares on the Grant Date. If the limitations in Code Section 422 are amended, the limitations of this subsection automatically shall be adjusted accordingly.
Substitution of Options. If the Company or an Affiliate acquires (whether by purchase, merger, or otherwise) all or substantially all outstanding capital stock or assets of another corporation, or in the event of any reorganization or other transaction qualifying under Code Section 424, the Committee may, in accordance with the provisions of that Code Section, substitute ISOs for ISOs previously granted under the plan of the acquired company or its affiliate, provided (A) the excess of the aggregate Fair Market Value of the Shares subject to an ISO immediately after the substitution over the aggregate exercise price of such shares is not more than the similar excess immediately before the substitution, and (B) the new ISO does not give additional benefits to the Participant, including any extension of the exercise period.
Notice of Disqualifying Dispositions. By executing an ISO Award Agreement, a Participant agrees to notify the Company in writing immediately after the Participant sells, transfers or otherwise disposes of any Shares acquired through exercise of the ISO, if such disposition occurs within either of (A) two years of the Grant Date, or (B) one year after the exercise of the ISO being exercised. Each Participant further agrees to provide any information about a disposition of Shares as may be requested by the Company to assist it in complying with any Applicable Laws.
(c) Method of Exercise. Unless otherwise provided in an Award Agreement, each Option may be exercised in whole or in part (provided that the Company shall not be required to issue fractional shares) before it expires, but only pursuant to the applicable Award Agreement, and not during any exercise blackout periods the Committee implements from time to time in its sole discretion. Exercise shall occur by delivery of both written notice of exercise to the secretary of the Company, and payment of the full exercise price for the Shares being purchased. The methods of payment that the Committee may in its discretion accept or commit to accept in an Award Agreement include:
(i) cash or check payable to the Company (in U.S. dollars);
(ii) other Shares that (A) are owned by the Participant who is purchasing Shares pursuant to an Option, (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is being exercised, (C) at the time of the surrender, are all free and clear of any and all claims, pledges, liens and encumbrances, or any restrictions which would in any manner restrict the transfer of such shares to or by the Company (other than such restrictions as may have existed prior to an issuance of such Shares by the Company to the Participant), and (D) are duly endorsed for transfer to the Company; provided that doing so would not violate the provisions of any Applicable Law or agreement restricting the redemption of the Companys stock;
(iii) a net exercise by surrendering to the Company Shares otherwise receivable upon exercise of the Option (e.g., the Company will reduce the number of Shares issued upon exercise of the Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price); provided that the Company consents at the time of exercise, the Option is a Non-ISO, the Participant must pay any remaining balance of the aggregate exercise price not satisfied by the net exercise in cash or other permitted form of payment, and Shares will no longer be outstanding under the Option and will not be exercisable thereafter if those Shares (i) are used to pay the exercise price pursuant to the net exercise, (ii) are delivered to the Participant as a result of such exercise, or (iii) are withheld to satisfy the Participants Withholding Taxes;
(iv) a cashless exercise program that the Committee may approve, from time to time in its discretion, pursuant to which a Participant may elect to concurrently provide irrevocable instructions (A) to the Participants broker or dealer to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the exercise price of the Option plus all applicable Withholding Taxes, and (B) to the Company to deliver the certificates for the purchased Shares directly to the broker or dealer in order to complete the sale;
(v) any combination of the foregoing methods of payment; or
(vi) in any other form of legal consideration acceptable to the Committee in its sole discretion.
The Company shall not be required to deliver Shares pursuant to the exercise of an Option and an Option will be deemed unexercised until the Company has received sufficient funds or value to cover the full exercise price due and all applicable Withholding Taxes.
Notwithstanding anything in this Plan to the contrary, no Participant who is a Director or an executive officer of the Company within the meaning of Section 13(k) of the Exchange Act can make payment with respect to any Awards, or continue any extension of credit with respect to such payment with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.
(d) Exercise of Unvested Non-ISOs. The Committee may in its sole discretion set forth in an Award Agreement that a Participant may exercise an unvested Non-ISO, in which case the Shares then issued shall be Restricted Shares having the same vesting restrictions as the unvested Option.
(e) Termination of Continuous Service. The Committee may set forth in the applicable Award Agreement the terms and conditions by which an Option or SAR is exercisable, if at all, after the date of a Participants termination of Continuous Service. The Committee may waive or modify these provisions at any time. To the extent that a Participant is not entitled to exercise an Option or SAR on the date of a Participants termination of Continuous Service, or if the Participant (or other Person entitled to exercise the Option) does not exercise the Option or SAR within the time and as specified in the Award Agreement or below (as applicable), the Option or SAR shall terminate. If the Company has a contingent contractual obligation to provide for accelerated vesting or extended exercisability after termination of a Participants Continuous Service, such Options or SARs shall not terminate at the time they otherwise would terminate but instead shall remain outstanding, until
the maximum contractual time for determining whether such contingency will occur, and terminate at such time if the contingency has not then occurred; provided that no such extension shall cause an Option or SAR to be exercisable after the 10-year anniversary of its Grant Date or the date such Option or SAR otherwise would have terminated had the Participant remained in Continuous Service.
Subject to Section 5(f) and to the extent an Award Agreement does not otherwise specify the terms and conditions upon which an Option or SAR shall terminate when a Participant terminates Continuous Service, the following provisions apply, subject to any contingency extensions as set forth in the first paragraph of this Section 5(e):
|(I) By the Company for Cause, or what would have been Cause if the Company had known all of the relevant facts, or due to Participants material breach of his or her unexpired employment agreement or independent contractor agreement with the Company.||All Options or SARs, whether or not vested, shall immediately expire effective on the date of termination of the Participants Continuous Service, or when Cause first existed if earlier.|
|(II) Disability or Death of the Participant during Continuous Service (in either case unless Reason I applies).||All unvested Options or SARs shall immediately expire effective as of the date of termination of the Participants Continuous Service, and all vested and unexercised Options or SARs shall expire 12 months after such termination.|
|(III) Any other reason.||All unvested Options or SARs shall immediately expire effective on the date of termination of the Participants Continuous Service. All vested Options or SARs, to the extent unexercised, shall expire effective 3 months after the date of termination of the Participants Continuous Service.|
(f) If there is a blackout period (whether under the Companys insider trading policy, Applicable Law, or a Committee-imposed blackout period) that prohibits buying or selling Shares during any part of the ten day period before an Option expires (as described above) due to a Participants termination of Continuous Service, the Option exercise period shall be extended until ten days beyond the end of the blackout period. Notwithstanding anything to the contrary in this Plan or any Award Agreement, no Option can be exercised beyond the date its original term expires as set forth in the Award Agreement or the date on which the Option otherwise would become unexercisable absent termination of Continuous Service.
(g) Company Cancellation Right. Subject to Applicable Law, if the Fair Market Value for Shares subject to any Option or SAR is more than 50% below their exercise price for more than 90 consecutive business days, the Committee unilaterally may declare the Option or SAR terminated, effective on the date the Committee provides written notice to the Option holder or SAR holder. The Committee may take such action with respect to any or all Options or SARs granted under the Plan and with respect to any individual Option holder or SAR holder or class(es) of Option holders or SAR holders, and the Committee has no obligation to be uniform, consistent, or nondiscriminatory between classes of similarly-situated Option holders or SAR holders, except as required by Applicable Law.
(h) Non-Exempt Employees. An Option or SAR granted to an Employee who is non-exempt for purposes of the Fair Labor Standards Act of 1938, as amended, will not be first exercisable for any Shares until at least six months after the Grant Date of the Option or SAR (although the Award may vest prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, the vested portion of any Options and SARs may be exercised earlier than six months after the Grant Date: (i) if the non-exempt Employee dies or suffers a Disability, (ii) upon a corporate transaction in which the Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participants retirement (as may be defined in the Participants Award Agreement or other agreement with the Company, or, if no such definition, in accordance with the Companys then current employment policies and guidelines). The foregoing provision is intended to operate so that any income derived by a non-exempt Employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay.
(a) Grants. The Committee may grant SARs to Eligible Persons pursuant to Award Agreements setting forth terms and conditions awarding appreciation-only rights relating to Shares; provided that the Award Agreement for each SAR shall set forth terms and conditions that are consistent with those for an Option, other than that settlement of the SAR shall occur pursuant to Section 6(b) below.
(b) Settlement. Subject to this Plan, a SAR shall entitle the Participant on exercise to receive Shares with a Fair Market Value on the date of exercise equal to the product of the (i) number of Shares as to which the SAR is being exercised, and (ii) the excess of (A) the Fair Market Value, on such date, of a Share covered by the exercised SAR, over (B) the exercise price designated in the SAR Award Agreement. Notwithstanding the foregoing, a SAR Award Agreement may limit the total settlement value that the Participant will be entitled to receive upon exercise, and may provide for settlement in cash, in Shares, or in any combination of cash or Shares that the Committee may authorize pursuant to an Award Agreement. If, on the date on which a SAR or portion thereof is to expire, the Fair Market Value of the underlying Shares exceeds the aggregate exercise price of such SAR, then the SAR shall be deemed exercised and the Participant shall within ten days thereafter receive the Shares and/or cash that would have been issued on such date if the Participant had affirmatively exercised the SAR on that date.
(c) Termination of Continuous Service. See Section 5(e) above.
(d) Company Cancellation Right. See Section 5(g) above.
(e) Non-Exempt Employees. See Section 5(h) above.
7. Restricted Shares, RSUs, and Unrestricted Shares.
(a) Grant. The Committee may grant Restricted Shares, RSUs, or Unrestricted Shares to Eligible Persons, in all cases pursuant to Award Agreements setting forth terms and conditions consistent with this Plan. As to each Restricted Share or RSU Award, the Committee shall establish the number of Shares deliverable or subject to the Award (which may be determined by a written formula), and the period(s) of time at the end of which all or some restrictions specified in an Award Agreement shall lapse, and the Participant shall receive vested Shares (or cash to the extent provided in the Award Agreement) in settlement of the Award. Such restrictions may include restrictions concerning voting rights and transferability, and may lapse separately or in combination at such times and pursuant to such circumstances or based on such criteria as selected by the Committee, including, without limitation, criteria based on the Participants duration of Continuous Service; individual, group, or divisional performance criteria; or Company performance; or other criteria selection by the Committee. The Committee may make Restricted Share and RSU Awards with or without the requirement for payment of cash or other consideration. In addition, the Committee may grant Awards hereunder in the form of Unrestricted Shares which shall vest in full upon the Grant Date or which the Committee may issue pursuant to any program under which one or more Eligible Persons (selected by the Committee in its sole discretion) elect to pay for such Shares or to receive Unrestricted Shares in lieu of cash bonuses that otherwise would be paid.
(b) Vesting and Forfeiture. In an Award Agreement granting Restricted Shares or RSUs, the Committee shall set forth the terms and conditions that establish a substantial risk of forfeiture under Code Section 83, and when the Participants interest in the Restricted Shares or Shares subject to RSUs become vested and non-forfeitable. Except as set forth in the Award Agreement or as the Committee otherwise determines, the Participant shall forfeit his or her non-vested Restricted Shares and RSUs upon terminating his or her Continuous Service for any reason; provided that if the Participant purchases Restricted Shares and forfeits them for any reason, the Company shall return to the Participant the lower of (i) the Fair Market Value of the Shares on the date of forfeiture or (ii) their original purchase price, to the extent set forth in an Award Agreement or required by Applicable Laws.
(c) Certificates for Restricted Shares. Unless otherwise provided in an Award Agreement, the Company shall hold certificates or, if not certificated, other indicia representing Restricted Shares until the restrictions lapse, and the Participant shall provide the Company with appropriate stock powers endorsed in blank. The Participants failure to provide such stock powers within ten days after a written request from the Company shall entitle the Committee to unilaterally declare all or some of the Participants Restricted Shares forfeited.
(d) Section 83(b) Elections. A Participant may make an election under Code Section 83(b) (the Section 83(b) Election) with respect to Restricted Shares. A Participant who has received RSUs may, within ten days after receiving the RSU Award, provide the Committee with a written notice of his or her desire to make a Section 83(b) Election with respect to the Shares subject to such RSUs. The Committee may in its discretion convert the Participants RSUs into Restricted Shares, on a one-for-one basis, in full satisfaction of the Participants RSU Award. The Participant may then make a Section 83(b) Election with respect to those Restricted Shares; provided that the Participants Section 83(b) Election normally will be invalid if not filed with the Company and the appropriate U.S. tax authorities within 30 days after the date of the transfer of property within the meaning of Code Section 83(b)(2).
(e) Issuance of Shares upon Vesting. As soon as practicable after a Participants Restricted Shares vest (or the right to receive Shares underlying RSUs vests), the Company shall deliver to the Participant, free from vesting restrictions, one Share for each surrendered and vested Restricted Share (or deliver one Share free of the vesting restriction for each vested RSU), unless an Award Agreement provides otherwise and subject to Section 10 regarding Withholding Taxes. No fractional Shares shall be distributed, and cash shall be paid in lieu thereof.
9. Right of First Refusal; Right of Repurchase
(a) Right of Repurchase. Subject to the Repurchase Limitation in Section 9(c), the Award Agreement for an Option, SAR, Restricted Shares, RSU, or Unrestricted Shares may include a provision whereby the Company or its designee may elect to repurchase all or any part of the vested Shares acquired by the Participant pursuant to the exercise of the Option, SAR, Restricted Shares, RSU, or Unrestricted Shares.
(b) Right of First Refusal. The Award Agreement for an Option, SAR, Restricted Shares, RSU, or Unrestricted Shares, may include a provision whereby the Company or its designee may elect to exercise a right of first refusal following receipt of notice from the Participant of the intent to transfer all or any part of the Shares received upon the exercise of the Award. Such right of first refusal shall be subject to the Repurchase Limitation in Section 9(c). The Shares also may be subject to whatever right of first refusal and other limitations that may exist in the Bylaws of the Company.
(c) Repurchase Limitation. The repurchase price for vested Shares shall be the Fair Market Value of the Shares on the date of repurchase, unless the Participants service relationship with the Company or its Affiliates was terminated by the Company for Cause (or what would have been Cause if the Company had known all of the relevant facts), in which case the repurchase price shall be the lower of (i) the Fair Market Value of the Shares on the date of repurchase or (ii) their original purchase price. The repurchase price for unvested Shares shall be the lower of (i) the Fair Market Value of the Shares on the date of repurchase or (ii) their original purchase price. However, the Company shall not exercise its repurchase right until at least six months (or such longer or shorter period of time necessary to avoid classification of the Award as a liability for financial accounting purposes) have elapsed following delivery of the Shares subject to the Award, unless otherwise specifically provided by the Committee.
10. Taxes; Withholding; Code §409A.
(a) General Rule. Notwithstanding any provision of this Plan or an Award Agreement to the contrary, Participants are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards, and neither the Company, nor any Affiliate, nor any of their employees, directors, or agents shall have any duty or obligation to mitigate, minimize, indemnify, or to hold any Participant harmless from any or all of such tax consequences.
(b) Withholding. The Companys obligation to deliver Shares (or to pay cash) to Participants pursuant to Awards is at all times subject to their prior or coincident satisfaction of all Withholding Taxes. Except as otherwise provided under the Plan or in an Award Agreement, no later than the date as of which an amount first becomes includible in a Participants taxable income for U.S. federal, state, local or non-U.S. income or social insurance tax purposes with respect to an Award, the Participant shall pay to the Company (or to the Affiliate employing the Participant), or make arrangements satisfactory to the Company (or such Affiliate) for the payment of, any such Withholding Taxes (which normally will not apply to non-Employees). Notwithstanding the foregoing, the Company and its Affiliates may, in each of their sole discretion, withhold a sufficient number of Shares that are otherwise issuable to the Participant pursuant to the Award (and/or cash that is otherwise payable to the Participant) in order to satisfy up to the maximum amount of Withholding Taxes. For purposes of the foregoing, the Committee may establish such procedures as it deems necessary or appropriate.
(c) U.S. Code Sections 409A and 4999. To the extent that the Committee determines that any Award granted under this Plan is subject to Code Section 409A, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Code Section 409A. To the extent applicable, this Plan and Award Agreements shall be interpreted in accordance with Code Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding the foregoing or any provision of the Plan or an Award Agreement to the contrary, Participants shall be solely responsible for the satisfaction of any taxes that may arise pursuant to Awards (including taxes arising under Code Sections 409A (regarding deferred compensation) or 4999 (regarding golden parachute excise taxes)). Nevertheless, the Committee may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures or cancelling all or some Awards with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate (i) to exempt an Award from Code Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) to comply with the requirements of Code Section 409A and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section.
(d) Unfunded Tax Status. This Plan is intended to be an unfunded plan for incentive compensation. With respect to any payments not yet made to a Person pursuant to an Award, nothing in this Plan or any Award Agreement shall give the Person any rights greater than those of a general creditor of the Company or any Affiliate, and a Participants rights under this Plan at all times constitute an unsecured claim against the Companys general assets for the collection of benefits as they come due. Neither the Participant nor his or her duly-authorized transferee or Beneficiaries shall have any claim against or rights in any specific assets, Shares, or other funds of the Company.
11. Non-Transferability of Awards.
(a) General. Except as set forth in this Section, or as otherwise approved by the Committee and subject to restrictions on transfer contained in the Bylaws of the Company, Awards may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. The designation of a death Beneficiary by a Participant will not constitute a transfer. An Award may be exercised, during the lifetime of the holder of an Award, only by such holder, by the duly-authorized legal representative of a holder who is Disabled, or by a transferee permitted by this Section.
(b) Limited Transferability Rights. Subject to restrictions on transfer contained in the Bylaws of the Company, the Committee may in its discretion provide in an Award Agreement that an Award in the form of a Non-ISO, Share-settled SAR, or Restricted Shares may be transferred, on such terms and conditions as the Committee deems appropriate, either (i) by instrument to the Participants Immediate Family, (ii) by instrument to an inter vivos or testamentary trust (or other entity) in which the Award is to be passed to the Participants designated Beneficiaries, (iii) even in the case of an ISO, pursuant to a domestic relations order (provided, however, that if an Option is an ISO, such Option may be deemed a non-ISO as a result of such transfer), or (iv) by gift to charitable institutions. Any transferee of the Participants rights shall succeed and be subject to all of the terms of the applicable Award Agreement and this Plan.
(c) Death. In the event of the death of a Participant, any outstanding vested Awards issued to the Participant shall automatically be transferred to the Participants Beneficiary (or, if no Beneficiary is designated or surviving, to the person or persons to whom the Participants rights under the Award pass by will or the laws of descent and distribution in the state in which the Participant was domiciled at the time of his or her death).
12. Change in Capital Structure; Change in Control; Etc.
(a) Changes in Capitalization. The Committee shall equitably adjust the number of Shares covered by each outstanding Award, and the number of Shares that have been authorized for issuance under this Plan but as to which no Awards have yet been granted or that have been returned to this Plan upon cancellation, forfeiture, or expiration of an Award, as well as the exercise or other price per Share covered by each such outstanding Award, to reflect any increase or decrease in the number of issued Shares resulting from a stock-split, reverse stock-split, stock dividend, combination, recapitalization or reclassification of the Shares, merger, consolidation, change in organization form, or any other increase or decrease in the number of issued Shares effected without receipt or payment of consideration by the Company. In the event of any such transaction or event, the Committee may provide in substitution for any or all outstanding Awards, or as an alternative to an adjustment, such alternative consideration (including cash or securities of any surviving entity) as it may in good faith determine to be equitable under the circumstances and may, if substitute consideration is provided, require in connection therewith the surrender of all Awards so substituted. In any case, such substitution of cash or securities shall not require the consent of any Participant. Except as expressly provided herein, or in an Award Agreement, if the Company issues for consideration shares of stock of any class or securities convertible into shares of stock of any class, the issuance shall not affect, and no adjustment by reason thereof shall be required to be made with respect to, the number or price of Shares subject to any Award.
(b) Dissolution or Liquidation. Except as otherwise provided in an Award Agreement, in the event of the dissolution or liquidation of the Company other than as part of a Change in Control, each Award will terminate immediately prior to the consummation of such dissolution or liquidation, subject to the ability of the Committee to exercise any discretion authorized in the case of a Change in Control.
(c) Change in Control. In the event of a Change in Control but subject to the terms of any Award Agreements or employment-related agreements between the Company or any Affiliates and
any Participant, each outstanding Award may be assumed or a substantially equivalent award may be substituted by the surviving or successor company or a parent or subsidiary of such successor company (in each case, the Successor Company) upon consummation of the transaction. Notwithstanding the foregoing, instead of having outstanding Awards be assumed or substituted with equivalent awards by the Successor Company, the Committee may in its sole and absolute discretion and authority, without obtaining the approval or consent of the Companys stockholders or any Participant, take one or more of the following actions (with respect to any or all of the Awards, and with discretion to differentiate between individual Participants and Awards for any reason):
(i) accelerate the vesting of Awards so that some or all Awards shall vest (and, to the extent applicable, become exercisable) as to (some or all of) the Shares that otherwise would have been unvested and/or provide that repurchase rights of the Company, if any, with respect to Shares issued pursuant to an Award shall lapse as to the Shares subject to such repurchase right;
(ii) arrange or otherwise provide for the payment of cash or other consideration to Participants in exchange for the satisfaction and cancellation of all or some outstanding Awards (based on the Fair Market Value, on the date of the Change in Control, of the Award being cancelled, based on any reasonable valuation method selected by the Committee); provided that the Committee shall have full discretion to unilaterally cancel (I) any Options or SARs whose exercise price is equal to or greater than the Fair Market Value of the Shares, as of the date of the Change in Control, with such cancellation being without the payment of any consideration whatsoever to those Participants whose Options and SARs are being cancelled and (II) either all Awards or only select Awards (such as only those that have vested on or before the Change in Control);
(iii) terminate all or some Awards upon the consummation of the transaction; provided that the Committee may provide for vesting of such Awards in full as of a date immediately prior to consummation of the Change in Control. To the extent that an Award is not exercised, settled, or cancelled prior to consummation of a transaction in which the Award is not being assumed or substituted, such Award shall terminate upon such consummation;
(iv) terminate all or some unvested Awards without compensation therefor; or
(v) make such other modifications, adjustments or amendments to outstanding Awards or this Plan as the Committee deems necessary or appropriate.
(d) Non-uniformity. Any determination made by the Committee hereunder may be made on an Award-by-Award basis.
13. Administration of this Plan. The Committee shall administer this Plan in accordance with its terms, provided that the Board may act in lieu of the Committee on any matter. The Committee shall hold meetings at such times and places as it may determine and may prescribe, amend, and rescind such rules and regulations, and procedures for the conduct of its business as it deems advisable. In the absence of a Committee, the Board shall function as the Committee for all purposes of this Plan.
(a) Committee. Subject to Applicable Law and the restrictions set forth in this Plan, the Committee may delegate administrative functions to individuals who are Directors or Employees, and may authorize one or more executive officers to make Awards to Eligible Persons other than themselves. The Committee shall have the power to delegate to a subcommittee of the Board any of the administrative powers the Committee is authorized to exercise, subject to such resolutions, consistent with this Plan, as the Board may adopt from time to time.
(b) Powers of the Committee. Subject to the provisions of this Plan, the Committee shall have the authority, in its sole discretion:
(i) to grant Awards and to determine Eligible Persons to whom Awards shall be granted from time to time, and the number of Shares, units, or dollars to be covered by each Award;
(ii) to determine, from time to time, the Fair Market Value of Shares;
(iii) to determine, and to set forth in Award Agreements, the terms and conditions of all Awards, including what type or combination of types of Awards shall be granted; any applicable exercise or purchase price; the installments and conditions under which an Award shall become vested (which may be based on performance), terminated, expired, cancelled, or replaced; the circumstances for vesting acceleration or waiver of forfeiture restrictions; and other restrictions and limitations;
(iv) to approve the forms of Award Agreements and all other documents, notices and certificates in connection therewith, which need not be identical either as to type of Award or among Participants;
(v) to construe and interpret the terms of this Plan and any Award Agreement, to determine the meaning of their terms, to correct any defect, omission or inconsistency in this Plan or any Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make this Plan or an Award fully effective, and to prescribe, amend, and rescind rules and procedures relating to this Plan and its administration;
(vi) to the extent consistent with the purposes of this Plan and without amending this Plan, to modify, to cancel, or to waive the Companys rights with respect to any Awards, to adjust or to modify Award Agreements for changes in Applicable Law, and to recognize differences in foreign law, tax policies, or customs;
(vii) to require, as a condition precedent to the grant, vesting, exercise, settlement, and/or issuance of Shares pursuant to any Award, that a Participant agree to execute a general release of claims (in any form that the Committee may require, in its sole discretion, which form may include any other provisions, e.g. confidentiality and restrictions on competition, that are found in general claims release agreements that the Company utilizes or expects to utilize);
(viii) in the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting, settlement, or exercise of
Awards, such as a system using an Internet website or interactive voice response, to implement paperless documentation, granting, settlement, or exercise of Awards by a Participant through the use of such an automated system; and
(ix) to make all determinations and to take all other actions that the Committee may consider necessary or desirable to administer the Plan or to effectuate its purposes.
(c) Local Law Adjustments and Sub-plans.
To facilitate the making of any grant of an Award under this Plan, the Committee may adopt rules and provide for such special terms for Awards to Participants who are located within the United States, foreign nationals, or employed by the Company or any Affiliate outside of the United States of America as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Without limiting the foregoing, the Company is specifically authorized to adopt rules and procedures regarding the conversion of local currency, taxes, withholding procedures and handling of stock certificates which vary with the customs and requirements of particular countries. The Company may adopt procedures or sub-plans and establish escrow accounts and trusts, and settle Awards in cash in lieu of shares, as may be appropriate, required or applicable to particular locations and countries.
Action by Committee (e.g., to permit participation in this Plan by Eligible Persons who are non-United States nationals or are primarily employed or providing services outside the United States). The Committee may modify the terms of any Award under this Plan made to or held by a Participant who is then a resident, or is primarily employed or providing services, outside of the United States, in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations, and customs of the country in which the Participant is then a resident or primarily employed or providing services, or so that the value and other benefits of the Award to the Participant, as affected by non-United States tax laws and other restrictions applicable as a result of the Participants residence, employment, or providing services abroad, shall be comparable to the value of such Award to a Participant who is a resident, or is primarily employed or providing services, in the United States. An Award may be modified under this subsection in a manner that is inconsistent with the express terms of this Plan, so long as such modifications will not contravene any Applicable Law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the Participant whose Award is modified. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by an officer or other Employee of the Company or any Affiliate, the Companys independent certified public accountants, or any executive compensation Consultant or other professional retained by the Company to assist in the administration of this Plan, or by any Participant or Beneficiary.
(d) Deference to Committee Determinations. The Committee shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms as it deems to be appropriate in its sole discretion, and to make any findings of fact needed in the administration of this Plan or Award Agreements. The Committees prior exercise of its discretionary authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committees interpretation and construction of any provision of this Plan, or of any Award or Award Agreement, and all determinations the Committee makes pursuant to this Plan shall be final, binding, and conclusive (subject only to the Committees inherent Authority to change its determinations). The validity of any such interpretation, construction, decision or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly made in bad faith or materially affected by fraud.
(e) Claims Limitations Period. Any Participant who believes he or she is being denied any benefit or right under this Plan or under any Award may file a written claim with the Committee. Any claim must be delivered to the Committee within 45 days of the specific event giving rise to the claim. Untimely claims will not be processed and shall be deemed denied. The Committee, or its designee, will notify the Participant of its decision in writing as soon as administratively practicable. Claims shall be deemed denied if the Committee does not respond in writing within 120 days of the date the written claim is delivered to the Committee. The Committees decision is final and conclusive and binding on all persons. No lawsuit relating to this Plan may be filed before a written claim is filed with the Committee and is denied or deemed denied, and any lawsuit must be filed within one year of such denial or deemed denial or be forever barred.
(f) No Liability; Indemnification. Neither the Board nor any Committee member, nor any Person acting at the direction of the Board or the Committee, shall be liable for any act, omission, interpretation, construction, or determination made in good faith with respect to this Plan, any Award, or any Award Agreement. The Company shall pay or reimburse any Director, Employee, or Consultant who in good faith takes action on behalf of this Plan, for all expenses incurred with respect to this Plan, and to the full extent allowable under Applicable Law shall indemnify each and every one of them for any claims, liabilities, and costs (including reasonable attorneys fees) arising out of their good faith performance of duties on behalf of this Plan. The Company and its Affiliates may, but shall not be required to, obtain liability insurance for this purpose.
(g) Expenses. The Company shall bear the expenses of administering this Plan.
14. Modification of Awards and Substitution of Options. Within the limitations of this Plan, the Committee may modify an Award to accelerate the rate at which an Option or SAR may be exercised, to accelerate the vesting of any Award, to extend or renew outstanding Awards, to accept the cancellation of outstanding Awards to the extent not previously exercised, or to make any change that this Plan would permit for a new Award. However, except in connection with a Change in Control or as approved by the Companys stockholders for any period during which it is subject to the reporting requirements of the Exchange Act, the Committee may not cancel an outstanding Option or SAR whose exercise price is greater than Fair Market Value at the time of cancellation for the purpose of reissuing the Option or SAR to the Participant at a lower exercise price, or granting a replacement award of a different type, or otherwise allowing for a repricing within the meaning of applicable federal securities laws or other applicable governance standards. Notwithstanding the foregoing, no modification of an outstanding Award may materially and adversely affect a Participants rights thereunder unless either (i) the Participant provides written consent to the
modification, (ii) before a Change in Control, the Committee determines in good faith that the modification is not materially adverse to the Participant, or (iii) such modification is permitted by another Section of this Plan. Notwithstanding the foregoing, subject to the limitations of Applicable Law, if any, and without the affected Participants consent, the Board may amend the terms of any one or more Awards if necessary to maintain the qualified status of the Award as an Incentive Stock Option or to bring the Award into compliance with Section 409A of the Code.
15. Plan Amendment and Termination. The Board may amend or terminate this Plan as it shall deem advisable; provided that no change shall be made that increases the total number of Shares reserved for issuance pursuant to Awards (except pursuant to Section 12 above) unless such change is authorized by the stockholders of the Company to the extent required by Applicable Law. A termination or amendment of this Plan shall not materially and adversely affect a Participants vested rights under an Award previously granted to him or her, unless the Participant consents in writing to such termination or amendment. Notwithstanding the foregoing, the Committee may amend this Plan to comply with changes in tax or securities laws or regulations, or in the interpretation thereof. Furthermore, neither the Company nor the Committee shall, without stockholder approval, amend this Plan either (a) to materially expand the class of Eligible Persons under this Plan, (b) to materially increase the benefits accruing to Participants under this Plan, (c) to materially extend the term of this Plan, (d) to expand the types of Awards available for issuance under this Plan, (e) to allow for a repricing within the meaning of either the federal securities laws applicable to proxy statement disclosures or other applicable governance standards, or (f) to cancel an outstanding Option whose exercise price is greater than Fair Market Value at the time of cancellation for the purpose of reissuing the Option to the Participant at a lower exercise price or granting a replacement award of a different type.
16. Term of Plan. If not sooner terminated by the Board, this Plan shall terminate at the close of business on the date ten years after the earlier of Board approval of this Plan and its Effective Date. No Awards shall be made under this Plan after its termination.
17. Governing Law. The terms of this Plan shall be governed by the laws of the State of Delaware, within the United States of America, without regard to the States conflict of laws rules.
18. Laws and Regulations.
(a) General Rules. This Plan, the granting of Awards, the exercise of Options and SARs, and the obligations of the Company hereunder (including those to pay cash or to deliver, sell or accept the surrender of any of its Shares or other securities) shall be subject to all Applicable Law. In the event that any Shares are not registered under any Applicable Law prior to the required delivery of them pursuant to Awards, the Company may require, as a condition to their issuance or delivery, that the persons to whom the Shares are to be issued or delivered make any written representations and warranties (such as that such Shares are being acquired by the Participant for investment for the Participants own account and not with a view to, for resale in connection with, or with an intent of participating directly or indirectly in, any distribution of such Shares) that the Committee may reasonably require, and the Committee may in its sole discretion include a legend to such effect on the certificates representing any Shares issued or delivered pursuant to this Plan.
(b) Blackout Periods. Notwithstanding any contrary terms within this Plan or any Award Agreement, the Committee shall have the absolute discretion to impose a blackout period on the
exercise of any Option or SAR, as well as the settlement of any Award, with respect to any or all Participants (including those whose Continuous Service has ended) to the extent the Committee determines that doing so is desirable or required to comply with applicable securities laws.
(c) Data Privacy. As a condition of receipt of any Award, each Participant explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of personal data as described in this Section by and among, as applicable, the Company and its Affiliates for the exclusive purpose of implementing, administering, and managing this Plan and Awards and the Participants participation in this Plan. In furtherance of such implementation, administration, and management, the Company and its Affiliates may hold certain personal information about a Participant with respect to one or more Awards under the Plan, including, but not limited to, the Participants name, home address, telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title(s), information regarding any securities of the Company or any of its Affiliates, and details of all Awards (the Data). In addition to transferring the Data amongst themselves as necessary for the purpose of implementation, administration, and management of this Plan and Awards and the Participants participation in this Plan, the Company and its Affiliates each may transfer the Data to any third parties assisting the Company in the implementation, administration, and management of this Plan and Awards and the Participants participation in this Plan. Recipients of the Data may be located in the Participants country or elsewhere, and the Participants country and any given recipients country may have different data privacy laws and protections. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain, and transfer the Data, in electronic or other form, for the purposes of assisting the Company in the implementation, administration, and management of this Plan and Awards and the Participants participation in this Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares. A Participant may, at any time, view the Data held by the Company with respect to such Participant, request additional information about the storage and processing of the Data with respect to such Participant, recommend any necessary corrections to the Data with respect to the Participant, or refuse or withdraw the consents herein in writing, in any case without cost, by contacting such Participants local human resources representative. The Company may cancel the Participants eligibility to participate in this Plan, and in the Committees discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents described herein. For more information on the consequences of refusal to consent or withdrawal of consent, Participants may contact their local human resources representative.
(e) Severability; Blue Pencil. In the event that any provision(s) of this Plan shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not be affected thereby. If in the opinion of any court of competent jurisdiction such covenants are not reasonable in any respect, such court shall have the right, power, and authority to excise or modify such provision or provisions of these covenants as to the court shall appear not reasonable and to enforce the remainder of these covenants as so amended.
19. No Stockholder Rights. Neither a Participant nor any transferee or Beneficiary of a Participant shall have any rights as a stockholder of the Company with respect to any Shares underlying any Award until the date of issuance of a share certificate to such Participant, transferee, or Beneficiary for such Shares in accordance with the Companys governing instruments and Applicable Law. Prior to the issuance of Shares or Restricted Shares pursuant to an Award, a Participant shall not have the right to vote or to receive dividends or any other rights as a
stockholder with respect to the Shares underlying the Award (unless otherwise provided in the Award Agreement for Restricted Shares), notwithstanding its exercise in the case of Options and SARs. No adjustment will be made for a dividend or other right that is determined based on a record date prior to the date the stock certificate is issued, except as otherwise specifically provided for in this Plan or an Award Agreement.
20. No Obligation to Notify. The Company shall have no duty or obligation to any Participant to advise such holder as to the time or manner of exercising an Award. Furthermore, the Company shall have no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible period in which the Award may not be exercised.
(a) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of Shares pursuant to Awards shall constitute general funds of the Company.
(b) Corporate Action Constituting Grant of Awards. Unless otherwise determined by the Board, corporate action constituting a grant by the Company of an Award to any Participant shall be deemed completed as of the date of such corporate action, regardless of when the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant.
(c) Share Replacement. Unless prohibited by Applicable Law, the Company may substitute any consideration in lieu of providing Shares to a Participant on the exercise of an Option or SAR, or the vesting of an RSU to the extent such consideration is equal to the Fair Market Value of the Shares the Participant otherwise would receive.
22. Pre-IPO Provisions. Subject to any contrary terms set forth in any Award Agreement, for any period preceding the date of an initial public offering, this Section shall be applicable to any Shares subject to or issued pursuant to Awards. The provisions set forth below shall become null and void upon the occurrence of an initial public offering.
(a) Repurchase Rights. At any time before an initial public offering, the Company may repurchase any Shares acquired pursuant to an Award for their then Fair Market Value as determined by the Committee in good faith; provided that if a Participants Continuous Service is terminated by the Company for Cause, the repurchase price shall be the lower of the purchase price the Participant paid for the Shares, if any, or the Shares Fair Market Value. The Company shall not exercise its repurchase right until the Shares have been held by the Participant for at least six (6) months, unless (i) the Companys independent auditors have advised the Committee that an earlier repurchase will not trigger adverse accounting consequences or (ii) the Committee determines that any adverse accounting consequences are acceptable to the Company. The Company shall pay the repurchase price to the Participant in a lump sum or in equal monthly installments for up to 60 months, as determined by the Company in its sole discretion.
(b) Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the federal securities laws, including the Companys initial public offering, Participants shall not directly
or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired pursuant to Awards without the prior written consent of the Company or its underwriters. Such restriction (the Market Stand-Off) shall be in effect for such period of time, not exceeding 180 days, following the date of the final prospectus for the offering as may be requested by the Company or such underwriters. The Market Stand-Off shall in any event terminate two years after the date of the Companys initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Companys outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to such Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired pursuant to Awards until the end of the applicable stand-off period. The Company and its underwriters shall be beneficiaries of the agreement in this Section. Participants who are not Directors or officers shall be subject to this Section only if Directors and officers are subject to it.
(c) Waiver of Statutory Information Rights. By executing an Award Agreement, each Participant unconditionally and irrevocably waives any and all rights that it would, but for the waiver made herein, have to inspect for any proper purpose, and to make copies and extracts from, the Companys stock ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of the Participant as may be provided for in Section 220, the Inspection Rights), whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver shall not affect any rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to any contractual inspection rights of the Participant under any other written agreement between the Participant and the Company.
(d) California Law Provisions. In order to conform with Applicable Laws for Awards to California residents, to the extent required by Section 260.140.8 of Title 10 of the California Code of Regulations and to the extent compliance with such section is required for the Shares subject to the Award to be exempt from registration in California, any repurchase right granted prior to the date on which the Shares become publicly-traded to a person who is not an officer, Director or Consultant shall be upon the following terms:
if the repurchase option gives the Company the right to repurchase the Shares upon termination of Continuous Service at not less than the Fair Market Value of the Shares to be purchased on the date of termination of Continuous Service, then
the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the Shares within six (6) months of termination of Continuous Service (or in the case of Shares issued upon exercise of Options or SARs after such date of termination, within six (6) months after the date of the exercise), and
the right terminates when the Shares become publicly traded; or
if the repurchase option gives the Company the right to repurchase the Shares upon termination of the Participants Continuous Service at the original purchase price for such Shares, then
the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the Shares per year over five (5) years from the Date of Grant (without respect to the date the Option or SAR was exercised or became exercisable), and
the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the Shares within six (6) months of termination of Continuous Service (or, in the case of Shares issued upon exercise of Options or SARs, after such date of termination, within six (6) months after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant.
Furthermore, at no time while there is any Option outstanding and held by a Participant who was a resident of the State of California on the date of grant of such Option, shall the total number of Shares issuable upon exercise of all outstanding stock options and the total number of Shares provided for under any stock bonus or similar plan or agreement of the Company (in each case whether the grants occur as Awards or under another plan of the Company or any Affiliate) exceed the applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of the California Code of Regulations, based on the Shares that are outstanding at the time the calculation is made.
Affiliate means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, control, when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person or the power to elect directors, whether through the ownership of voting securities, by contract or otherwise; and the terms affiliated, controlling and controlled have meanings correlative to the foregoing.
Applicable Law means the legal requirements as shall be in place from time to time under any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or order of any governmental authority, whether of the United States, any other country, and any provincial, state, or local subdivision, that relate to the administration of equity plans or equity awards, as well as any applicable stock exchange or automated quotation system rules or regulations.
Award means any award made, in writing or by an electronic medium, pursuant to this Plan, including awards made in the form of an Option, a SAR, a Restricted Share, a RSU, or an Unrestricted Share, or any combination thereof, whether alternative or cumulative.
Award Agreement means any written document setting forth the terms of an Award that has been authorized by the Committee. The Committee shall determine the form or forms of documents to be used, and may change them from time to time for any reason.
Beneficiary means the person or entity designated by the Participant, in a form approved by the Company, to exercise the Participants rights with respect to an Award or receive payment or settlement under an Award after the Participants death.
Board means the Board of Directors of the Company.
Cause means that the Company determines in its reasonable discretion that any of the following situations gave rise to a Participants termination from Continuous Service: (i) the Participant committed, was convicted, or pled no contest or any similar plea to a misdemeanor involving acts of dishonesty or breach of fiduciary duty or any felony; (ii) the Participant willfully or negligently failed to substantially perform his or her duties and responsibilities to the Company or deliberately violated a material Company policy; (iii) the Participant committed any act of fraud, embezzlement, dishonesty, or other willful misconduct; (iv) the Participant breached his or her Employee Proprietary Information and Inventions Agreement or similar agreement with the Company; or (v) the Participant breached of any of his or her material obligations under any written agreement with the Company. The foregoing definition does not in any way limit the Companys ability to terminate a Participants employment or other service relationship at any time, and the term Company will be interpreted herein to include any Affiliate or successor thereto, if appropriate. Furthermore, a Participants Continuous Service shall be deemed to have terminated for Cause within the meaning hereof if, at any time (whether before, on, or after termination of the Participants Continuous Service), facts or circumstances are discovered that would have justified a termination for Cause.
Change in Control means, unless another definition is set forth in an Award Agreement, the first of the following to occur after the Effective Date:
(i) Acquisition of Controlling Interest. Any Person (other than Persons who are Employees or service providers at any time more than one year before a transaction) becomes the Beneficial Owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Companys then outstanding securities; provided that the foregoing shall exclude any bona fide sale of securities of the Company by the Company to one or more third parties for purposes of raising capital. In applying the preceding sentence, an agreement to vote securities shall be disregarded unless its ultimate purpose is to cause what would otherwise be a Change in Control, as reasonably determined by the Board.
(ii) Merger. The Company consummates a merger, or consolidation of the Company with any other corporation unless: (a) the voting securities of the Company outstanding immediately before the merger or consolidation would continue to represent
(either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; and (b) no Person (other than Persons who are Employees or service providers at any time more than one year before the transaction) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Companys then outstanding securities.
(iii) Sale of Assets. The stockholders of the Company approve an agreement for the sale or disposition by the Company of all, or substantially all, of the Companys assets.
(iv) Liquidation or Dissolution. The stockholders of the Company approve a plan or proposal for liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
Code means the Internal Revenue Code of 1986, as amended from time to time.
Committee means the Compensation Committee of the Board or its successor; provided that the term Committee means (i) the Board when acting at any time in lieu of the Committee, (ii) with respect to any decision involving an Award intended to satisfy the requirements of Code Section 162(m), a committee consisting of two or more Directors of the Company who are outside directors within the meaning of Code Section 162(m), and (iii) with respect to any decision relating to a Reporting Person, a committee consisting solely of two or more Directors who are disinterested within the meaning of Rule 16b-3. The mere fact that a Committee member shall fail to qualify as an outside director or as a disinterested director within the meaning of Code Section 162(m) and Rule 16b-3, respectively, shall not invalidate any Award made by the Committee which Award is otherwise validly made under this Plan.
Common Stock means common stock, $0.001 par value per share, of the Company. In the event of a change in the capital structure of the Company affecting the common stock (as provided in Section 12), the Shares resulting from such a change in the common stock shall be deemed to be Common Stock within the meaning of this Plan.
Company means Tyra Biosciences, Inc., a Delaware corporation; provided that in the event the Company reincorporates to another jurisdiction, all references to the term Company shall refer to the Company in such new jurisdiction.
Consultant means any natural person (other than an Employee or Director), including an advisor, who provides bona fide services to the Company, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the Companys parent, if such services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the Companys securities.
Continuous Service means a Participants period of service in the absence of any interruption or termination (as defined in such individuals employment or consulting agreement with the Company, as the case may be), as an Employee, Director, or Consultant. The following sentences apply notwithstanding anything to the contrary in any Participants employment or consulting agreement with the Company, as the case may be. Continuous Service shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Committee, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; (iv) changes in status from Director to advisory director or emeritus status; or (iv) transfers between locations of the Company or between the Company and its Affiliates. Changes in status between service as an Employee, Director, and a Consultant will not constitute an interruption of Continuous Service if the individual continues to perform bona fide services for the Company. The Committee shall have the discretion to determine whether and to what extent the vesting of any Awards shall be tolled during any paid or unpaid leave of absence; provided, however, that in the absence of such determination, vesting for all Awards shall be tolled during any such unpaid leave (but not for a paid leave). Notwithstanding anything to the contrary contained in the Plan, an Investor Director Provider shall be deemed to have Continuous Service for so long as the Investor Director Provider makes available for service as a member of the Board at least one individual who provides services to, owns equity interests in, or is otherwise employed by, such investor or any of its Affiliates.
Data has the meaning set forth in Section 18(c) of this Plan.
Director means a member of the Board, or a member of the board of directors of an Affiliate.
Disabled or Disability means a physical or mental condition under which the Participant is receiving benefits under the Companys long-term disability plan applicable to such Participant, and in the absence of such a plan, in the sole discretion of the Committee, the Participant
is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or
is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, unable to provide service as defined in such individuals employment or consulting agreement with the Company or is unable to perform the essential functions of the Participants duties, as the case may be, as an Employee, Director, or Consultant.
Effective Date means the date determined in accordance with Section 1(d) of this Plan.
Eligible Person has the meaning set forth in Section 1(b).
Employee means any person whom the Company or any Affiliate classifies as an employee (including an officer) for employment tax purposes or, if in a jurisdiction that does not have employment taxes, any person whom the Company or any Affiliate classifies as an employee (including an officer), in either case whether or not that classification is correct. The payment by the Company of a directors fee to a Director shall not be sufficient to constitute employment of such Director by the Company.
Employer means the Company and each Subsidiary and Affiliate that employs one or more Participants.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Fair Market Value means, for purposes of this Plan and unless otherwise determined or provided by the Committee in the circumstances:
(i) If the Shares are listed or admitted to trade on the New York Stock Exchange or other national securities exchange (the Exchange), the Fair Market Value shall equal the closing price of Shares as reported on the composite tape for securities on the Exchange for the date in question, or, if no sales of Shares were made on the Exchange on that date, the closing price of Shares as reported on said composite tape for the next preceding day on which sales of Shares were made on the Exchange. The Committee may, however, provide with respect to one or more Awards that the Fair Market Value shall equal the closing price of Shares as reported on the composite tape for securities listed on the Exchange on the last trading day preceding the date in question or the average of the high and low trading prices of Shares as reported on the composite tape for securities listed on the Exchange for the date in question or the most recent trading day.
(i) If Shares are not listed or admitted to trade on an Exchange, the Fair Market Value shall be the value as reasonably determined by the Committee for purposes of the Award in the circumstances; provided that Fair Market Value shall be determined pursuant to a valuation of the Company by an independent appraisal that meets the requirements of Section 401(a)(28)(C) of the Code as of a date that is no more than 12 months before the date of grant of the Award or another methodology for determining fair market value that complies with Section 409A of the Code.
The Committee also may adopt a different methodology for determining Fair Market Value with respect to one or more Awards if a different methodology is necessary or advisable to secure any intended favorable tax, legal or other treatment for the particular Award(s) (for example, and without limitation, the Committee may provide that Fair Market Value for purposes of one or more Awards will be based on an average of closing prices (or the average of high and low daily trading prices) for a specified period preceding the relevant date). Any determination as to Fair Market Value made pursuant to this Plan shall be made without regard to any restriction other than a restriction which, by its terms, will never lapse, and shall be final, binding and conclusive on all persons with respect to Awards granted under this Plan.
Grant Date means the later of (i) the date designated as the Grant Date within an Award Agreement, and (ii) the date on which the Committee determines the key terms of an Award, provided that as soon as reasonably practical thereafter the Committee both notifies the Eligible Person of the Award and enters into an Award Agreement with the Eligible Person.
Immediate Family means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships. Immediate Family also shall include a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the employee) control the management of assets, any other entity in which these persons (or the employee) own more than fifty percent of the voting interests, and any person sharing the employees household (other than a tenant or employee).
Incentive Stock Option or ISO means an Option that qualifies for favorable income tax treatment under Code Section 422 and is specifically designated as an ISO in an Award Agreement.
Investor Director Provider means any investor in the Company (or Affiliate of such investor) if one or more of its employees, direct or indirect owners or service providers serves as a Director, to the extent such Director and such investor (or Affiliate) agree that the investor (or Affiliate) will receive any Awards that such Director otherwise would receive.
Market Stand-Off has the meaning set forth in Section 22(c) of this Plan.
Non-ISO means an Option not specifically designated in an Award Agreement, or not otherwise qualifying, as an Incentive Stock Option.
Option means any right to buy Shares that is granted to a Participant pursuant to Section 5.
Participant means any Eligible Person who holds an outstanding Award.
Person means any natural person, association, trust, business trust, cooperative, corporation, general partnership, joint venture, joint-stock company, limited partnership, limited liability company, real estate investment trust, regulatory body, governmental agency or instrumentality, unincorporated organization or organizational entity.
Plan means this Tyra Biosciences, Inc. 2019 Equity Incentive Plan.
Reporting Person means an Employee, Director, or Consultant who is required to file reports with the Securities and Exchange Commission pursuant to Section 16(a) of the Exchange Act and the rules promulgated thereunder.
Repurchase Limitation has the meaning set forth in Section 9(a) of this Plan.
Restricted Share means a Share awarded with restrictions imposed under Section 7.
Restricted Share Unit or RSU means a right granted to a Participant to receive Shares or cash upon the lapse of restrictions imposed under Section 7.
Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.
Rule 405 means Rule 405 promulgated under the Exchange Act.
Rule 701 means Rule 701 promulgated under the Exchange Act.
Section 409A Award has the meaning set forth in Section 5(a)(i) of this Plan.
Section 83(b) Election has the meaning set forth in Section 7(d) of this Plan.
Share means a share of Common Stock of the Company, as adjusted in accordance with Section 12 of this Plan.
Share Reserve has the meaning set forth in Section 3(a) of this Plan.
SAR or Share Appreciation Right means a right to receive amounts awarded under Section 6.
Successor Company has the meaning set forth in Section 12(c) of this Plan.
Ten Percent Holder means a Person who owns (within the meaning of Code Section 422) stock representing more than ten percent (10%) of the combined voting power of all classes of stock of the Company.
Unrestricted Shares mean Shares that are both awarded to Participants pursuant to Section 7 of this Plan, and not subject to a substantial risk of forfeiture within the meaning of Code Section 83.
Withholding Taxes means the aggregate minimum amount of federal, state, local and foreign income, social insurance, payroll, and other taxes that the Company and any Affiliates are required or permitted to withhold in connection with any Award.
Tyra Biosciences, Inc.
2020 Equity Incentive Plan
GRANT NOTICE AND OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NON-INCENTIVE STOCK OPTION)
By this Option Agreement, Tyra Biosciences, Inc. (the Company) has granted you an Option under its 2020 Equity Incentive Plan (the Plan, attached as Exhibit A), effective as of the Grant Date set forth below. If this Option Agreement conflicts with the Plan, the Plan will control. Capitalized terms not explicitly defined herein are defined in the Plan. The details of your Option, in addition to those set forth in the Plan, are as follows:
1. GRANT OF OPTION. The Company would like to give you the opportunity under the Plan to purchase all or any part of the Number of Shares Subject to the Option as provided below.
|Type of Option:|| |
☒ An Incentive Stock Option (ISO)
☐ A Non-Incentive Stock Option (Non-ISO)
Number of Shares Subject to the
|Vesting Schedule:|| |
The shares of common stock underlying the Option shall vest as follows: (i) #,### shares shall vest and be exercisable on the one-year anniversary of the date of grant, and (ii) commencing monthly after the first anniversary of the date of grant, ### shares shall vest and become exercisable (provided
that on the 48th month after the date of grant, ### shares shall vest and
|Vesting Commencement Date:|| |
☒ Same as Grant Date
|Exercise Price per Share:||$#.##|
Exercise Schedule (subject to
Section 4 below):
☐ Same as Vesting Schedule
☒ Early exercise permitted
|Expiration Date:|| |
☒ The ten-year anniversary of the Grant Date.
☐ The five-year anniversary of the Grant Date. (Select if the Participant is a Ten Percent Holder receiving an ISO.)
In all events unvested Options expire on the date your Continuous Service terminates.
By one or a combination of the following items (described in Plan Section 5(c)):
☒ By cash or check payable to the Company
☐ By delivery of already-owned Shares, as described in the Plan
☐ By a net exercise arrangement (only if this is a Non-ISO), as described in the Plan
☐ By cashless exercise, as described in the Plan
2. VESTING. Your Option will vest as provided in Section 1 above. Subject to the terms of any Employment Agreement then in effect, vesting will cease upon the termination of your Continuous Service as set forth in the Plan.
3. NUMBER OF SHARES AND EXERCISE PRICE. The number of Shares subject to your Option and your exercise price per share in Section 1 above may be adjusted as provided under the Plan.
4. EXERCISE RESTRICTION FOR NON-EXEMPT EMPLOYEES. Plan Section 5(i) is incorporated herein by reference.
5. EXERCISE PRIOR TO VESTING (EARLY EXERCISE). If the Exercise Schedule in Section 1 above indicates Early Exercise Permitted, you may elect at any time that is both (i) during the period of your Continuous Service and (ii) during the term of your Option, to exercise all or part of your Option, including the unvested portion of your Option; provided, however, that:
(a) a partial exercise of your Option will be deemed to cover first vested Shares and then the earliest vesting installment of unvested Shares;
(b) any Shares so purchased from installments unvested as of the date of exercise will be subject to the Companys Repurchase Option described in the Companys form of Early Exercise Stock Purchase Agreement; and
(c) you will enter into the Companys form of Early Exercise Stock Purchase Agreement with a vesting schedule that will result in the same vesting as if no early exercise had occurred.
6. METHOD OF EXERCISE.
(a) The Plan sets forth rules for the exercise of your Option. You must pay the full amount of the exercise price for the Shares you wish to exercise, in any manner permitted by Section 1. The applicable form of written notice of exercise is attached as Exhibit B.
(b) By exercising your Option you agree that: (i) you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any Shares or other securities of the Company held by you, for a period of 180 days following the effective date of a registration statement of the Company filed under the Securities Act of 1933, as amended (the Securities Act) or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rule or regulation (the Lock-Up Period); provided, however, that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your Shares until the end of such period. You also agree that any transferee of any Shares (or other securities) of the Company held by you will be bound by this Section 6(b). The underwriters of the Companys stock are intended third party
beneficiaries of this Section 6(b) and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto; and (ii) you will comply with Section 2.11 of the Investors Rights Agreement, dated as of January 6, 2020, by and among the Company and each of the investors listed on Schedule A thereto.
7. WHOLE SHARES. You may exercise your Option only for whole Shares.
8. SECURITIES LAW COMPLIANCE. In no event may you exercise your Option unless the Shares issuable upon exercise are then registered under the Securities Act or, if not registered, the Company has determined that your exercise and the issuance of the Shares would be exempt from the registration requirements of the Securities Act. The exercise of your Option also must comply with all other Applicable Law, and you may not exercise your Option if the Company determines that such exercise would not be in material compliance with such Applicable Law.
9. TERM. You may not exercise your Option before the Grant Date or after your Option expires.
10. TRANSFERABILITY. Except as otherwise provided in the Plan, your Option is not transferable and is exercisable during your life only by you.
11. RIGHT OF FIRST REFUSAL. Shares you acquire upon exercise of your Option are subject to any right of first refusal that may be described in the Companys bylaws in effect at such time the Company elects to exercise its right; provided, however, that if there is no right of first refusal described in the Companys bylaws at such time, the right of first refusal described below will apply. The Companys right of first refusal will expire on the first date upon which any security of the Company is listed on a national securities exchange or quotation system (the Listing Date).
(a) Prior to the Listing Date, you may not validly Transfer (as defined below) any Shares acquired upon exercise of your Option, or any interest in such Shares, unless such Transfer is made in compliance with the following provisions:
(i) Before there can be a valid Transfer of any Shares or any interest therein, the record holder of the Shares to be transferred (the Offered Shares) will give written notice (by registered or certified mail) to the Company. Such notice will specify the identity of the proposed transferee, the cash price offered for the Offered Shares by the proposed transferee (or, if the proposed Transfer is one in which the holder will not receive cash, such as an involuntary transfer, gift, donation or pledge, the holder will state that no purchase price is being proposed), and the other terms and conditions of the proposed Transfer. The date such notice is mailed will be hereinafter referred to as the Notice Date and the record holder of the Offered Shares will be hereinafter referred to as the Offeror. If, from time to time, there is any stock dividend, stock split or other change in the character or amount of any of the outstanding Common Stock which is subject to the provisions of your Option, then in such event any and all new, substituted or additional securities to which you are entitled by reason of your ownership of the Shares acquired upon exercise of your Option will be immediately subject to the Companys Right of First Refusal (as defined below) with the same force and effect as the Shares subject to the Right of First Refusal immediately before such event.
(ii) For a period of 30 calendar days after the Notice Date, or such longer period as may be required to avoid the classification of your Option as a liability for financial accounting purposes, the Company will have the option to purchase all (but not less than all) of the Offered Shares at the purchase price and on the terms set forth in Section 11(a)(iii) (the Companys Right of First Refusal). In the event that the proposed Transfer is one involving no payment of a purchase price, the purchase price will be deemed to be the Fair Market Value of the Offered Shares as determined in good faith by the Board in its discretion. The Company may exercise its Right of First Refusal by mailing (by registered or certified mail) written notice of exercise of its Right of First Refusal to the Offeror prior to the end of said 30 days (including any extension required to avoid classification of the Option as a liability for financial accounting purposes).
(iii) The price at which the Company may purchase the Offered Shares pursuant to the exercise of its Right of First Refusal will be the cash price offered for the Offered Shares by the proposed transferee (as set forth in the notice required under Section 11(a)(i)), or the Fair Market Value as determined by the Board in the event no purchase price is involved. To the extent consideration other than cash is offered by the proposed transferee, the Company will not be required to pay any additional amounts to the Offeror other than the cash price offered (or the Fair Market Value, if applicable). The Companys notice of exercise of its Right of First Refusal will be accompanied by full payment for the Offered Shares and, upon such payment by the Company, the Company will acquire full right, title and interest to all of the Offered Shares.
(iv) If, and only if, the option given pursuant to Section 11(a)(ii) is not exercised, the Transfer proposed in the notice given pursuant to Section 11(a)(i) may take place; provided, however, that such Transfer must, in all respects, be exactly as proposed in said notice except that such Transfer may not take place either before the 10th calendar day after the expiration of the 30 day option exercise period or after the 90th calendar day after the expiration of the 30 day option exercise period, and if such Transfer has not taken place prior to said 90th day, such Transfer may not take place without once again complying with this Section 11(a). The option exercise periods in this Section 11(a)(iv) will be adjusted to include any extension required to avoid the classification of your option as a liability for financial accounting purposes.
(b) As used in this Section 11, the term Transfer means any sale, encumbrance, pledge, gift or other form of disposition or transfer of Shares or any legal or equitable interest therein; provided, however, that the term Transfer does not include a transfer of such Shares or interests by will or intestacy to your Immediate Family. In such case, the transferee or other recipient will receive and hold the Shares so transferred subject to the provisions of this Section, and there will be no further transfer of such Shares except in accordance with the terms of this Section 11.
(c) No Shares purchased on exercise of your Option will be transferred on the Companys books nor will the Company recognize any such Transfer of any such Shares or any interest therein unless and until all applicable provisions of this Section 11 have been complied with in all respects. The certificates of stock evidencing Shares purchased on exercise of your Option will bear an appropriate legend referring to the transfer restrictions imposed by this Section 11.
(d) To ensure that the Shares subject to the Companys Right of First Refusal will be available for repurchase by the Company, the Company may require you to deposit the certificates evidencing the Shares that you purchase upon exercise of your Option with an escrow agent
designated by the Company under the terms and conditions of an escrow agreement approved by the Company. If the Company does not require such deposit as a condition of exercise of your Option, the Company reserves the right at any time to require you to so deposit the certificates in escrow. As soon as practicable after the expiration of the Companys Right of First Refusal, the agent will deliver to you the Shares and any other property no longer subject to such restriction. In the event the Shares and any other property held in escrow are subject to the Companys exercise of its Right of First Refusal, the notices required to be given to you will be given to the escrow agent, and any payment required to be given to you will be given to the escrow agent. Within 30 days after payment by the Company for the Offered Shares, the escrow agent will deliver the Offered Shares that the Company has repurchased to the Company and will deliver the payment received from the Company to you.
12. RIGHT OF REPURCHASE. To the extent provided in the Plan or the Companys bylaws in effect at such time the Company elects to exercise its right, the Company will have the right to repurchase all or any part of the Shares you acquire pursuant to the exercise of your Option.
13. NOT A CONTRACT OF EMPLOYMENT. By executing this Option Agreement you acknowledge and agree that (i) nothing in this Option Agreement or the Plan confers on you any right to continue an employment, service or consulting relationship with the Company, nor shall it affect in any way your right or the Companys right to terminate your employment, service, or consulting relationship at any time, with or without Cause; and (ii) the Company would not have granted this Option to you but for these acknowledgements and agreements.
14. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your Option, in whole or in part, and at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a same day sale pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the Withholding Tax obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your Option.
(b) If this Option is a Non-ISO, then upon your request and subject to approval by the Company, and compliance with any Applicable Law, the Company may withhold from fully vested Shares otherwise issuable to you upon the exercise of your Option a number of whole Shares having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by Applicable Law (or such lower amount as may be necessary to avoid classification of your Option as a liability for financial accounting purposes). If the date of determination of any tax withholding obligation is deferred to a date later than the date of exercise of your Option, Share withholding pursuant to the preceding sentence shall not be permitted unless you make a proper and timely election under Section 83(b) of the Code, covering the aggregate number of Shares acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the determination of such Withholding Tax obligation to the date of exercise of your Option. Notwithstanding the filing of such election, Shares shall be withheld solely from fully vested Shares determined as of the date of exercise of your Option that are otherwise issuable to you upon such exercise. Any adverse consequences to you arising in connection with such Share withholding procedure shall be your sole responsibility.
(c) You may not exercise your Option unless the Withholding Tax obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your Option when desired even though your Option is vested, and the Company will have no obligation to issue a certificate for such Shares or release such Shares from any escrow provided for herein, if applicable, unless such obligations are satisfied.
15. TAX CONSEQUENCES. You hereby agree that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against the Company, or any of its officers, Directors, Employees or Affiliates related to tax liabilities arising from your Option or your other compensation. In particular, you acknowledge that this Option is exempt from Section 409A of the Code only if the exercise price per Share specified in the Grant Notice is at least equal to the Fair Market Value per Share on the Grant Date and there is no other impermissible deferral of compensation associated with the Option. Because the Common Stock is not traded on an established securities market, the Fair Market Value is determined by the Board, perhaps in consultation with an independent valuation firm retained by the Company. You acknowledge that there is no guarantee that the Internal Revenue Service will agree with the valuation as determined by the Board, and you will not make any claim against the Company, or any of its officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts that the valuation determined by the Board is less than the fair market value as subsequently determined by the Internal Revenue Service.
(a) All notices required or permitted under your Option or the Plan shall be in writing (including electronically) and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed facsimile if sent during normal business hours of the recipient, and if not during normal business hours of the recipient, then on the next business day, (iii) five calendar days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the other party hereto at such partys address hereinafter set forth on the signature page hereof, addressed to you at the last address you provided to the Company, or at such other address as such party may designate by ten days advance written notice to the other party hereto.
(b) The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this Option by electronic means or to request your consent to participate in the Plan by electronic means. By accepting this Option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, though you may opt out of such electronic delivery and electronic system by notifying the Chief Executive Officer of the Company.
17. WAIVER OF STATUTORY INFORMATION RIGHTS. You understand and agree that, but for the waiver made herein, you would be entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Companys stock ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all
such other rights of the Optionee as may be provided for in Section 220, the Inspection Rights). In light of the foregoing, until the date of an initial public offering, you hereby unconditionally and irrevocably waive the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenant and agree never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver shall not affect any rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to any contractual inspection rights that you may have under any other written agreement between you and the Company.
18. GOVERNING PLAN DOCUMENT. Your Option is subject to all Plan provisions, the provisions of which are hereby made a part of your Option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan.
BY YOUR SIGNATURE BELOW, along with the signature of the Companys representative, you and the Company agree that this Option is made under and governed by the terms and conditions of this Option Agreement and the Plan.
|TYRA BIOSCIENCES, INC.|
|Title:||President and Chief Executive Officer|
|Printed Name of Optionholder:||Name:|
Tyra Biosciences, Inc.
2020 EQUITY INCENTIVE PLAN
STOCK OPTION NOTICE OF EXERCISE
Tyra Biosciences, Inc.
2333 State St. Suite 201
Carlsbad, California 92008
Attention: Chief Executive Officer
Date of Exercise:
Ladies and Gentlemen:
This letter is intended to inform you of my election pursuant to that certain Stock Option Agreement between me and Tyra Biosciences, Inc. (the Company) to purchase pursuant to my Option (as defined in the Stock Option Agreement) that number of shares of the Companys Common Stock indicated below:
|Type of option (check one):||Incentive ☐||Nonstatutory ☐|
|Number of shares as to which Option is exercised:|
|Total exercise price:||$|
|Cash payment delivered herewith:||$|
I hereby make the following certifications and representations with respect to the number of shares of Common Stock of the Company listed above (the Shares), which are being acquired by me for my own account upon exercise of the Option as set forth above:
I acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the Securities Act), and are deemed to constitute restricted securities under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling the Shares, except as permitted under the Securities Act and any applicable state securities laws.
I further acknowledge that all certificates representing any of the Shares subject to the provisions of the Option shall have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Companys Certificate of Incorporation, bylaws and/or applicable securities laws.
|Very truly yours,|